Universal Credit IT suppliers to be left out of new digital system development

The four big IT suppliers contracted to deliver the Universal Credit benefits programme are to be frozen out of developing the new system that will eventually support full national roll-out of the government’s flagship welfare reform.

According to the latest draft, Universal Credit business case – excerpts of which have been seen by Computer Weekly – HP, Accenture, IBM and BT will have “significantly less” involvement in the revised digital solution announced last month by secretary of state Iain Duncan Smith.

The suppliers will continue to develop the existing Pathfinder system that is being used for trials of Universal Credit (UC), but the Department for Work and Pensions (DWP) intends to use its own resources to develop the “end-state” digital system as part of the new “twin-track” approach to the controversial IT development.

Under the heading “IT approach and methodology”, paragraph 5.10 of the draft business case, states: “To extend the current IT solution we will be using a standard waterfall delivery approach largely using existing suppliers and commercial frameworks, in order to de-risk delivery and ensure UC continues to have a safe and secure introduction. The end-state digital solution will be delivered using an agile, and therefore iterative, approach as advocated by the Cabinet Office with significantly less reliance on the large IT suppliers delivering the current UC IT service.”

Universal Credit director general Howard Shiplee suggested last month to MPs on the Work and Pensions Select Committee that he would seek to renegotiate the existing contracts with the four IT suppliers.

The document also reveals that IT costs for Universal Credit have reached £360m to October 2013, out of total spending of £394m. HP has been the biggest beneficiary, receiving £197m so far.

A DWP spokesman said: “We will continue to work with existing suppliers as we develop the new enhanced system and ensure existing systems build into it.”

The Pathfinder system used for the early trials of Universal Credit will still be developed to cater for the gradual introduction of new and more complex claimants for the benefits scheme, and for geographic expansion of the pilot, while the “end-state” digital system is developed in time for the planned full roll-out by the end of 2017. 

The "end-state" system will mostly replace the pilot system, although some elements of the Pathfinder are expected to be re-used in the new digital system, according to the draft business case document.

“The continued enhancement and roll-out of the current IT solution provides the space and time for the end-state solution to develop in due course,” said the document.

“Investment is required for both the existing and new end-state IT solutions; however, care has been taken to assess the likely significant extent of reuse between the two”.

More than 200,000 benefit claimants will need to be transferred on to the new IT system every month in the 14 months leading up to its full launch.

The draft business case, identified in the document as version 3.01 and dated 18 December 2013, has been produced to support approval for further funding at meetings to take place in DWP later this month and with the Treasury in March. The document said a further version will be produced in mid-January, stressing the current release is only a draft.

DWP said last month that it was writing off £40.1m of IT work on Universal Credit, with a further £91m to be written off over a five-year period instead of 15 years as previously planned.

The new approach to the role of IT suppliers may be seen by some observers as a victory for Cabinet Office IT reformers who recommended greater use of in-house resources and the use of agile development methods – although the Cabinet Office’s Government Digital Service will not be involved in the new digital system for Universal Credit.

DWP and the Cabinet Office have been at loggerheads about how best to develop the IT after the scale of problems were revealed last year by the National Audit Office and the Public Accounts Committee.

DWP originally intended to use agile for the whole system, but those initial attempts failed, and the lack of controls over the IT development were blamed for many of the problems that have caused the Universal Credit project to be so heavily criticised.