ICL outsourcing deal condemned as 'astonishingly poor'

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The Independent Online

A Government project to install new IT systems in magistrates' courts will be condemned today as "an astonishingly poor deal for the taxpayer" by an influential committee of MPs.

The devastating indictment comes from the Commons Public Accounts Committee, which describes the Libra project, awarded to ICL under the Private Finance Initiative, as one of the worst it has ever examined.

The PAC goes on to slate the handling of the project by the Lord Chancellor's Department as "disastrous at every turn".

The project has more than doubled in cost to £400m in just four years and magistrates' courts still do not have the IT systems they need to manage their workload properly, says the committee.

The report says the LCD ran a poor competition, attracting only one bidder and failed to take decisive action when ICL failed to deliver what had been asked of it.

But ICL, which is owned by the Japanese computer giant Fujitsu, is also taken to task by the MPs who accused it of taking on excessive risk, underpricing its bid and failing to meet key delivery dates.

ICL was also heavily criticised over the Pathway project to automate the Post Office branch network ,which cost the taxpayer almost £1bn in write-offs. Edward Leigh, the chairman of the PAC, said: "The Libra deal is one of the worst PFI projects my committee has seen. It has failed to deliver the common IT solution for magistrates' courts that is so desperately needed and turned out to be an astonishingly poor deal for the taxpayer.

"Departments must be willing to terminate PFI contracts or take legal action when contractors fail to deliver."

The PAC has criticised many aspects of the PFI over the years but this is the most trenchant criticism it has made of an individual project. The committee said that competitive procurement was essential but that in the case of Libra all potential bidders bar ICL dropped out in the procurement stage.

The report says: "A single bid for a major complex project is seldom likely to achieve value for money. That only one bid was received should have alerted the department to the fact that its project may not have been sufficiently well-designed to attract competition."

Despite ICL's poor performance, the department chose to negotiate with the company rather than terminate its contract. This was a mistake, says the report. "Risk transfer does not really take place if departments are unwilling to terminate a PFI contract or take legal action when a contractor fails to deliver."