In April 1999 the Revenue negotiated an extension to the contract with Accenture, then called Andersen Consulting, to allow for work to be done on the administrative support system so that it could operate under a new pensions and national insurance contributions legislation.
The NAO said it had examined the Nirs2 contract to see why it was necessary for the Revenue to contract for additional development work. It also looked at what other options were available for carrying out this work, whether all risk were shared appropriately by the parties to the contract, and what steps the Revenue had taken to ensure that difficulties under the original contract with Accenture were not repeated.
Nirs2 has been dogged by problems since Accenture (then Andersen Consulting) was awarded the initial contract in 1995. It cost over Pounds 100m to develop and has constantly been criticised for being over budget and behind schedule.
Last month, the system was implicated in problems that the Revenue was experiencing with a massive backlog of open PAYE and national insurance contributions.
In November last year, it was revealed that Nirs2 had underpaid 128,000 pensioners by Pounds 340 a year since February 1997, a total yearly amount of Pounds 43.5m. More than 5,000 pensioners were also overpaid.
In August last year, a Commons Public Accounts Committee questioned why the consulting firm owned the intellectual rights to a government computer system.
In addition to looking at the Andersen Nirs2 contract, the NAO report would comment on whether PFI contracts had the ‘flexibility to accommodate government program and practice that flow from government policy developments’.
It would also look at how the Nirs2 contract had developed since the NAO’s first report on the administrative system in 1997.
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