Computer mistakes bill 'runs to pounds 125m': Loss at social security systems agency is one of highest in public sector

THE Department of Social Security has wasted at least pounds 35m on unnecessary computer work and mistakes, according to senior executives. Some put the losses on computer projects and poor quality equipment by the DSS as high as pounds 125m - one of the largest losses of its kind in the public sector for more than a decade.

A secret internal report into the fiasco is now being considered by senior DSS management.

The wastage has been incurred by the Information Technology Services Agency (ITSA), which runs and develops computer systems for the DSS. It is one of the largest computer organisations in Britain, employing 4,000 permanent staff and hundreds of private sector consultants and contractors.

Despite this, however, it has wasted millions on what is termed 'rework'. Senior civil servants have said that losses on rework run to at least pounds 35m. In the internal document, which is in the possession of the Independent, rework is described as the cost of replacing or rectifying 'poor quality products and equipment and inaccurate or incomplete implementation'.

Another senior civil servant described rework as 'a straightforward waste of taxpayers' money because of mismanagement'.

Negligent management of information technology in the public sector has become a matter of increasing concern to the Commons' Public Accounts Committee, the parliamentary watchdog of public spending. In the last two years, there has been a string of scandals, including Wessex Regional Health Authority, which wasted up to pounds 63m on computer projects.

The waste at ITSA will provoke grave concern over the ability of the public sector to control spending on information technology, and the contents of the secret report constitute a major embarrassment to the DSS, which has been employing consultants at a cost of more than pounds 100m a year precisely to ensure efficient expenditure.

The report was compiled by Dave Cox, a senior official in the service delivery section of ITSA - which is where the waste has been identified. It reveals the precise percentage of the section's pounds 250m budget that was spent last year on rework.

Mr Cox would not discuss his report but documents show that some staff are estimating that the waste could be as high as 67 per cent in some areas. Other leaked documents show that in the wake of these losses, management has insisted that staff cut by at least a half the amount of time they spend fixing faults and what is termed unnecessary work. In a note, an official comments: 'Minimise inefficiency, get things right first time, and save money by doing so.'

This document also shows that the agency is wasting millions on unnecessary overheads. Senior officials are targeting a cut in ITSA overheads by 30 per cent this year.

A spokesman for ITSA said that the amount spent on rework was 'nearer 10-12 per cent' - a maximum of about pounds 30m. He denied that this money had all been wasted. 'It is entirely unreasonable to say it is all a huge cock-up. This is a human enterprise, there is the occasional error. ITSA is involved in a continuous process of improvement and these are what are called rework initiatives.'

Asked why rework was described as 'unnecessary work', he said: 'It is a question of what is necessary and what is essential.' He maintained that much of the huge cost covered the need to upgrade equipment to meet new standards and consumer demands. 'This is not something we are ashamed of. OK we are not trumpeting it; but it's not a shameful thing,' he said.