3.25 The NIRS 2 system has been the subject of three reports by the Public Accounts Committee.12 Their first report focused on the original procurement. In 1998-99 the Committee focused on the delays to the system and in 1999-00 they took evidence on the progress made in recovering the position.
3.26 As regards the development and delivery of NIRS 2, the Committee concluded that:
■ in view of the risks of attempting to deliver the system to a tight timetable, there was a need for a fall-back position, and the Contributions Agency should have taken a hard look at alternatives (46th Report of 1997-98, conclusion (xi));
■ where risks are transferred it is necessary to define responsibilities clearly (22nd Report of 1998-99 (paragraph 8));
■ post-acceptance difficulties cast doubt on the quality and rigour of the Contributions Agency's acceptance testing; sufficient time needed to be built into the implementation plan to conduct rigorous testing (22nd Report of 1998-99 conclusions (viii) and (ix));
■ the Contributions Agency and the contractor had not developed a shared understanding of what was meant by delivery of the system (22nd Report of 1998-99 conclusion (xi)); and
■ the Inland Revenue should look again at the balance of benefits and risks underpinning decisions on ownership of intellectual property rights in major government systems (31st Report of 1999-2000, conclusion (iii)).
3.27 Under the contract extension the Inland Revenue have introduced changes to the contractual relationship in order to overcome the difficulties encountered on the original contract, reduce risk and improve working relationships. They developed and agreed with Accenture a set of business principles which have been included in the contract. These change the way in which requirements are agreed, work is planned, projects are defined, accepted and tested and problems are identified and resolved. Figure 10 shows how the action taken has addressed the issues identified above.
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Action taken to deal with difficulties which arose on the original contract |
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Timetable for delivery |
Mechanisms have been introduced to manage the risks of delays in delivering software developments. Development work is managed as a series of projects leading to a single 6-monthly release. If the Inland Revenue order work to a timetable not accepted by the contractor, a grace period can be negotiated which can protect the contractor from unfair penalties. |
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Definition of responsibilities |
The contract addendum sets out each party's objectives and responsibilities. The business structure for managing the development work was endorsed by an independent adviser. |
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Acceptance testing |
The contract addendum sets out a clear framework for acceptance testing. Joint testing arrangements require the parties to agree definitions of acceptance as well as avoiding duplication of work. |
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Shared understanding of delivery |
As noted above, there is now agreement on what constitutes acceptance, and there are also joint project management arrangements. |
3.28 As regards intellectual property rights, the same contract terms applied to developments under the contract extension as were applied to intellectual property rights under the original agreement. Also, there was no change in the value of the transfer payment to Accenture (£14 million) for the rights to use the NIRS 2 system for its existing purpose after the contract expires in 2004. So the development work under the contract extension is unlikely to increase the value of the system as a whole to Accenture. The Inland Revenue did not seek to obtain explicit intellectual property rights to the software developed under the extension, but as the developments are inextricably linked to the main system software these rights would have had no separate value. By focusing on securing appropriate licence rights in line with the original development, the Inland Revenue obtained all the rights it needed at no incremental cost. Accenture offered the Inland Revenue the option of acquiring the right to use NIRS 2 for purposes other than national insurance business for a further payment of £36 million, but the Department decided not to include this option in the contract.
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12 The contract to develop and update the replacement national insurance recording system (46th Report, Session 1997-98 (HC 472))
Delays to the new national insurance recording system (22nd Report, Session 1998-99 (HC 182))
National Insurance Fund 1998-99( 31st Report, Session 1999-00 (HC 350))