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EDS faces SA fines

The Inland Revenue and EDS managers responsible for running the #1.6bn IT outsourcing project have admitted inaccurate assumptions about taxpayer behaviour pushed the central mainframe systems beyond their design capacity and could force the outsourcer to pay penalties to the Revenue.

John Yard, director of the Revenue’s business systems management division, and Alex Kreymer, managing director of EDS’s Inland Revenue division last week defended their performance in the face of complaints from tax agents over the recent sequence of system failures resulting from the flood of late self-assessment returns at the end of January.

Kreymer said: ‘It wasn’t so much that the systems were broken than the response time slowed with the number of hits. There are “valves” that allow you to slow down and disable certain functions,’ Because of the volume of network queries from Revenue helpline staff seeking taxpayer details from the central system, he said: ‘It may have affected people on the phone.’

Yard added: ‘We had capacity issues that we were conscious of at the time we developed the system and we have made some changes to improve it.’

The Revenue was also investigating how statement letters that combined the two annual payments on account were sent out in January. The probe was ‘part of a normal management process to learn the lessons and make sure we get it right in the future’, Yard said.

Under the terms negotiated for the ten-year, #1.6bn contract, the Revenue can levy ‘financial remedies’ on EDS for failure to meet criteria. EDS had met the 98% of the targets specified for system availability, but had to pay other penalties for unspecified shortcomings. The financial remedies were determined on a quarterly basis, and January’s erroneous statements of account could be covered by performance measures for throughput handling, Yard said.

Yard expressed frustration that media attention and criticism from accountants focused on Revenue/EDS problems, when the partners were coping with a string of massive development projects. ‘Don’t confuse issues to be managed with the idea that we are failing,’ he said.

IT File, page 15.

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