A botched ERP project at the heart of the Ministry of Justice's Shared Services Programme has led to the outsourcing of the back-office functions to Steria – the very company given the original contract to set up the "in-house" systems.
Departmental accounts for the MoJ's fiscal '14 ended 31 March reveal the cost of the failure to get the Shared Services strategy off the ground - a cool £56m - as the work undertaken to date is obsolete.
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The Shared Service Programme (SSP) was based on ERP platform running HR, operational finance, procurement, payroll and end-to-end transactional services for 90,000 civil servants. Some 1,000 civil staff ran these functions from centres in Bootle and Newport.
"The programme has endured significant time and cost pressures to complete the original solution under the initial framework design and a combination of complex contractual arrangements and weaknesses in programme governance has resulted in poorer value for money," the accounts stated.
"As a result of this," it added, "the future direction of travel for the SSP has changed from a developed in-house solution to an outsourced solution".
The decision to abandon the public run service and enter "negotiations" with a Steria 75-per-cent-owned joint venture with the government, Shared Services Connected Ltd, was taken on by the MoJ Departmental board mid-June.
The "outsourcing" is forecast to start in the "autumn of 2014", the accounts added.
As for the project work completed to date, "these outputs represent a constructive loss (expenditure that has been incurred that no longer provides any benefit)… The Shared Services constructive loss recognised in 2013-2014 is £56.3m".
This means the legacy systems and development work do not feature in the new outsourcing which is set to start in the "autumn 2014".
The recent Major Projects Authority report gave the MoJ Shared Service programme a Red rating recently. It stated delays in deployments elevated costs.
Shared Services was the brain child of the Labour government in 2009, with the rationale of consolidating fragmented back office teams and systems into a single service used by an entire department with more departments added over time.
But the strategy was revised by the current government in 2012 and the private sector were invited to bid for contracts: BPO provider Arvarto acquired the Department for Transport's Shared Service Centre in Swansea, and SSCL the centres for the DWP, Defra and the Environment Agency.
Unionised civil servants in the MoJ Shared Services back office voted in a recent ballot by the Public and Commercial Services union to strike over concerns that SSCL will cut jobs. The action is set for Monday.
Mark Serwotka, PCS general secretary, told us:
"This shows again how private companies are raking it in on the backs of taxpayers and being rewarded for failure. This contract should now be cancelled and a proper in-house bid given serious consideration to prevent millions of pounds more of our money being squandered."
El Chan asked Steria why it was not able to use some of the development and system work already completed for the new outsourcing agreement. We also put this to the MoJ, and asked why it chose to use Steria again.
The MoJ has yet to respond while Steria declined to comment.
The MoJ contacted us via email and contrary to its own official accounts claimed:
“Assets and infrastructure worth around £60m from the previous shared services programme will continue to be used under the new contract.”
It failed to tell us why Steria is its preferred supplier for the outsourcing deal when the in-house project was a failure, but apparently the new deal "will save the taxpayer millions of pounds a year".
Yep, course it will, if the recent past is anything to go by... ®