Scottish Public Pensions Agency did not properly scrutinise Capita’s ‘abnormally low’ bid and failed to manage project says auditor

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The agency which runs pensions for half a million public sector workers in Scotland spent £6.3m on an abandoned project to make its processes more efficient, Audit Scotland has said.

In a report, the auditor said in October 2015 the Scottish Public Pensions Agency (SSPA) chose Capita to integrate its pension administration and payment operations, with the intention of this being operational by March 2017.

However, Capita failed to meet milestones for delivery in 2016, and in October the company said it would not meet the implementation date. New dates of October 2017 then August 2019 were agreed, but following a third project review in January 2018 the agency ended the project.

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Audit Scotland criticised SSPA for not applying enough scrutiny to Capita’s tender, describing it as “abnormally low cost”, and for setting an unrealistic 18-month timescale for the project. It also criticised the agency’s poor management, with a timeline in the report showing the agency had five permanent or interim chief executives and four senior responsible officers over the life of the project.

SSPA spent £6.3m on the project, including £800,000 for Capita, although the company paid back £700,000 in November 2018 after a legal process. The agency has also spent £2.4m to extend contracts with existing suppliers and has failed to make progress on efficiency, meaning it is seeking millions of pounds more from the Scottish Government to cover the savings it has failed to make.

“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,” said Caroline Gardner, the auditor general for Scotland.

“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.”