Audit Scotland has published a sharp criticism of the Scottish Public Pensions Agency (SPPA) for failures in an IT project to integrate its administration and payment operations.
In a report on the project the auditor says the agency has managed it badly, overspent and failed to meet the original timetable, along with getting into a dispute with the main supplier.
In December 2013 the SPPA, which runs retirement plans for over 500,000 people, introduced a business transformation programme that included a project to develop an integrated IT system, and in October 2015 awarded a contract to Capita, with the aim of the new PS Pensions system going live by March 2017.
But the report says the SPPA did not prepare a clear business case, the timescale was unrealistic and it did not adequately scrutinise the winning bid which came with an “abnormally low cost”. Following this there was insufficient governance and assurance and changes in the leadership of the agency.
Subsequently, Capita was not able to provide a working system or achieve any of the project milestones. This led to a legal dispute that was concluded in November 2018 when Capita paid the SPPA £700,000.
Overall the agency spent £6.3 million on the project and a further £2.4 million on extending contracts with existing suppliers when it failed to deliver. It has been unable to make progress with strategic, business and workforce plans as originally intended, and now requires an additional revenue budget of £9.8 million between 2019-23, and a capital allocation of £13.6 million.
Caroline Gardner, the auditor general for Scotland, said: "The public sector is under pressure and we are seeing more instances of bodies embarking on IT projects without the necessary staff and assurance arrangements in place to manage them properly.
"In this instance, I found no evidence of a clear business case for a new integrated system, which was pursued at a time when the SPPA was going through significant change. The result was a project that failed to provide value for money and has considerably set back the SPPA's planning."