11 November 2003 The handling of a £146 million public finance initiative (PFI) project to computerise the magistrates courts system in the UK has been slammed by MPs after a catalogue of errors led to a doubling of costs.
The Public Accounts Committee, which investigates the running of government departments and major projects, concluded that the Lord Chancellor’s Department should have been warned that the project was flawed when it attracted only one bidder — ICL, since renamed Fujitsu Services.
The committee described it as, “one of the worst PFI deals that we have seen”. Edward Leigh, the chairman of the committee, blasted the Lord Chancellor’s Department and the minister of state responsible for overseeing the project, Geoff Hoon, who is now defence secretary. “The handling of the project… was disastrous at every turn,” he said.
The project was won by ICL in 1998 with a tender of £146 million. But that price was raised twice, first to £184 million shortly after ICL had been named preferred bidder, and then to £319 million in 2000, when ICL realised that it could not use the software it had originally planned to use.
Later, the project was scaled back to include just the computer hardware. Two other contracts have been signed to cover the software development.
The committee suggested that Hoon should have been wary about employing ICL because it was already in trouble with another major government project in the Benefits Agency. That was subsequently abandoned at great cost.
Also, the fact that ICL was the only bidder should have indicated that there were other shortcomings in the Lord Chancellor’s Department’s tender document. “[This] should have alerted the department to the fact that its project may not have been sufficiently well designed to attract competition.”
When the project started to go wrong, the department should have been tougher and should have been prepared to terminate the contract. ICL was criticised for taking on the project without fully understanding the department’s needs, bidding too low and taking on too great a risk.
The project will now cost about £400 million and is running late. Although the IT hardware and networking infrastructure is largely in place, courts are still waiting for the system to be switched on.
