Bungling civil servants see public fleeced as firm piles up vast profits

In a report published today, Comptroller and Auditor General Kieran Donnelly sets out a series of failures by civil servants who should have protected citizens in how they negotiated and then renegotiated a huge IT contract.

Mr Donnelly’s investigation was prompted by an anonymous whistleblower who “referred to over £100m being spent on the project, being wasteful of public money and lining the pockets of an IT contractor”.

Mr Donnelly said he was “alarmed” that better procedures had not been used and said he could see “no evidence to clearly demonstrate that the project has delivered value for money”.

The public finance initiative contract with BT was for digitising Northern Ireland’s Land Registry, Registry of Deeds, and Statutory Charges register, and the charges – which can run to many hundreds of pounds – are often not immediately obvious to the public because they will be built into the fees for a solicitor or other professional engaged in buying a house or other transaction.

In 1999, the Land and Property Services (LPS) – an agency under the Department of Finance – issued the contract, known as LandWeb, to BT.

It was meant to run for 17 years, to 2016. However, despite the terms of the contract having been torn apart by the Audit Office and the Assembly’s public accounts committee in 2010, the deal with BT was extended to run until at least 2021 – and civil servants are now negotiating yet another extension beyond that date.

Mr Donnelly accepted that BT had performed well in delivering the project but found that it was making exorbitant returns, while the department was also benefiting from inflated fees, something he said was “an indirect local tax”.

Although officials had secured some improvement in terms when they renegotiated the deal, Mr Donnelly said that to this day “LPS customers nonetheless continue to pay too much for the services provided”.

He said that “users of the LandWeb Registration Services are being overcharged as the Fees Order 2014 is out of date with fees set too high”, yet the Department of Finance has shown no urgency in updating the fees.

Mr Donnelly, who played an important role in bringing the RHI scandal to public attention, found that the way in which the BT contract was extended “is indicative of poor strategic planning by the department”.

BT makes its money from the fees the public pay for accessing the Landweb system. When the contract was let, it was estimated that the company would receive £46 million. However, that sum has more than doubled to almost £98 million a year ago – and continues to rise.

Mr Donnelly was critical of the renegotiation of the contract when it could have been ended, noting that the department still does not have full transparency on BT’s profits and scant evidence of how the public has benefited from the renegotiation.

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