HL Deb 14 June 1995 vol 564 cc1790-1

2.54 p.m.

Lord Dean of Beswick asked Her Majesty's Government:

What were the circumstances under which Andersen Consulting was awarded the contract by the Department of Social Security to build the national insurance RS2 computer system and what criteria this decision was based on.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

My Lords, Andersen Consulting was awarded the contract by DSS to build and operate the national insurance recording system (NIRS2) following an advertised procurement conformant with UK public service contracts regulations.

Award of contract was on the basis of the most economically advantageous offer, having regard to the business and technical suitability of the solution, overall value for money and contract price.

Lord Dean of Beswick

My Lords, I am grateful to the Minister for that detailed Answer. There are some disturbing features. The noble Lord, Lord Peyton of Yeovil, asked a Question yesterday about the treatment of an individual. Does the Minister understand that it came out clearly that a person who worked for Arthur Andersen has been put almost in purdah while awaiting trial in the US courts? Will the Minister say why an individual can be victimised but not a company such as Arthur Andersen which did not come out of the Wessex Regional Health Authority fiasco smelling exactly of roses?

Lord Mackay of Ardbrecknish

My Lords, I heard the exchanges on that subject yesterday between noble Lords and my noble friend Lord Henley. I have nothing to add, because, with all due respect, the subject is a little wide of the Question which has to do with the NIRS2 computer system for the DSS.

Baroness Hollis of Heigham

My Lords, will the Minister confirm that the cost of computerising the benefits system has spiralled to £2.6 billion—four times the original estimate—and, according to a recent independent Oxford University report, will not achieve any of the anticipated cost savings? Is the Minister aware that the report's author has said that the spend is in fact so large that the department has actually stopped counting it? Is that seemly at a time when the Government are unashamedly cutting benefits to disabled and unemployed people?

Lord Mackay of Ardbrecknish

My Lords, the department always counts the cost of all expenditure, including the expenditure proposed day by day by the noble Baroness in her contributions to debates on social security. As to her original question, I cannot confirm the exact figure, but I have seen something like that suggested. One of the premises upon which much of it is predicated is that some years ago when the department started computerising it made certain estimates of what it would cost to do the computer operations at that time. Computer technology has moved on. The number of things that we wish to do by computer has increased hugely and so the total cost of IT in a system which delivers about £90 billion of benefits has increased considerably over the years.

Lord Dean of Beswick

My Lords, further to my first Question, was previous performance considered in the award of the contract? If it was, why was a firm that behaved so appallingly badly in the Wessex Regional Health Authority fiasco awarded the contract, when there were other people available who could do it?

Lord Mackay of Ardbrecknish

My Lords, of course the DSS was well aware of the problems with the contract with the Wessex Regional Health Authority in the late 1980s and of the 63rd report of the PAC on that issue, but Andersen Consulting has done a number of jobs for the DSS and we have found its work satisfactory. It was one of three bidders at the final stages of the contract. Judgments were made by a team of people drawn up by the department, and by independent auditors who were brought in to audit the project at various stages. Its tender was considered to be the best. We consider that it is well able, given its previous track record with us, to carry out the contract.

Lord McIntosh of Haringey

My Lords, does the Minister acknowledge that the case referred to in the Question is but one of a number of serious examples both in his own department and across government? Can he tell the House whether the number of such cases has increased since the responsibilities of the Central Computer and Telecommunications Agency were reduced and departments were free to carry out their own negotiations?

Lord Mackay of Ardbrecknish

My Lords, the subject of the Question was the NIRS2 computer system. I have answered the Question about that project. On the question of the work done for my department, I have also answered that question by saying that Andersen Consulting has undertaken a number of projects for us in recent years, and the work it has delivered has been entirely satisfactory.