MoD IT - late and over budget

A Ministry of Defence (MoD) programme to replace hundreds of IT systems with a single infrastructure is running more than a year late and is £182m over budget.

A National Audit Office (NAO) report into the £7.1bn Defence Information Infrastructure Programme (DII) found that problems with the rollout of the hardware and "persistent weaknesses" in the core software have led to significant delays.

The MoD is on course to miss its target of installing 62,800 computer terminals at permanent sites by the end of July 2008, with only 34,648 delivered by the end of June 2008. The completion date for the first part of the DII is 18 months late.

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The DII is aimed at improving communication and interoperability by providing a single information infrastructure serving the army, navy, airforce and central MoD command.

The DII will eventually incorporate 150,000 terminals for 300,000 users at more than 2,000 defence sites, including on board ships and in deployed operations.

The EDS-led Atlas consortium won the 10-year contract to install and manage the DII in March 2005.

The report says: "There have been efforts to remedy the problems identified but without improvement in the rate of roll out of terminals and the completion of software development to meet the latest timelines, significant risks remain to the timely delivery of the programme."

Tim Burr, head of the NAO, said in a statement: "The programme has run into difficulties and further concerted action will be needed to increase the rate of roll out of terminals and to deliver the remaining software."

Expenditure has been inflated by continuing spending on older systems and the delaying of benefits that would have brought savings, such as improved ways of working using the DII, the report finds.

The £7.1bn cost breaks down into a £4.9bn contract with Atlas, £1.2bn to deliver related IT programmes on which DII depends and a further £1bn for associated work yet to be contracted.

But the report finds that the MoD has largely controlled costs, with the £182m overrun representing only a three per cent overspend on its contract with Atlas.

The MoD says the range of improvements delivered by the DII include enhancement of existing MoD systems, delivery of two systems to forces in Afghanistan at short notice, a "single point of contact" help desk and enabling benefits totalling £972m to be delivered in the Joint Personnel Administration application programme.

Sir Bill Jeffrey, permanent under secretary of state for the MoD, said in a statement: "As the report brings out, we still have some problems to overcome in rolling out the system completely, but we are working hard to overcome these, and will be helped in doing so by the NAO's recommendations."

Among its recommendations the NAO report says the MoD should force Atlas to bring in additional expertise if large elements of the core software remain undelivered and that the ministry should ensure payments to Atlas continue to reflect what is being delivered.