Concern over Welsh Government's £220m IT contract costs

Image caption The cost of services in support of IT projects increased from £10m in 2004-05 to £32m in 2010-11

The costs of services provided under a £220m Welsh Government IT contract were not properly monitored, says the public spending watchdog.

The budget for the 10-year contract was a minimum of £220m, but the auditor general found the Welsh Government had spent £270m over the first seven years.

The Welsh Government said this rise was due to major organisational changes.

The Conservative chairman of the assembly Public Accounts Committee asked if the deal was value for money.

It comes after the UK government was criticised last month by a group of MPs for its "appalling" record in developing and implementing new IT systems.

Earlier this month, MPs said UK government ministers should consider pulling the plug on the central part of the NHS multibillion-pound IT programme in England.

The auditor general for Wales said there had been varying degrees of success with projects provided under the assembly's Merlin contract with Siemens, which started in 2004.

The Welsh Government also had "not monitored effectively the costs and value for money of services delivered under the contract".

It found:

  • The cost of core services increased from £9m in 2004-05 to £14m in 2010-11;
  • The cost of services in support of IT projects increased from £10m in 2004-05 to £32m in 2010-11.

The Welsh Government said there had been significant changes to the organisation of government, which increased IT service costs and made business change more complex.

The report said some of these changes had been anticipated when the contract was signed, but their scale and nature were unknown and had not been factored in.

Changes included the legal separation of the assembly from the Welsh Government, and the merger of various bodies into the government.

The report said the relationship between the Welsh Government and the supplier improved following some difficulties from 2005 to 2007 and the contract was now "delivering core ICT services effectively".

The chair of the assembly's Public Accounts Committee, Darren Millar, said "effective and reliable ICT services are vitally important to the smooth running of government".

Series of recommendations

He added: "I welcome the auditor general's findings that the Welsh Government and National Assembly for Wales are now benefiting from improvements in the core ICT services being delivered under the Merlin contract.

"I am concerned, however, that the Welsh Government is unable to demonstrate that the contract as a whole represents value for money, and that for at least two years it failed to be an 'intelligent buyer'.

"The Welsh Government must improve the way in which it monitors and evaluates services in support of ICT projects - particularly during times of change in the business environment."

The report, which made a series of recommendations, concludes that the overall value for money from the contract is uncertain.

It calls on the Welsh Government to monitor how much is spent on ICT project services in a way that "enables a more meaningful analysis of their effectiveness".

A Welsh Government spokesman said: "We welcome the report by the auditor general for Wales which states that the Merlin contract is delivering core ICT services effectively.

"It would be inappropriate to make any further comments at this stage as the report is likely to be considered at a future Public Accounts Committee evidence session and we will comment more fully after that meeting."

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