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A contract to provide information and communication technology (ICT) and business change services for the National Assembly for Wales was procured satisfactorily, but the procurement took longer than planned, according to a report by the Auditor General for Wales. It concludes that the ‘Merlin’ contract saved 40 per cent on ICT costs compared with its predecessor, ‘Osiris’. The report calls on Assembly Government officials to ensure that the contract provides value for money and delivers its full benefits.
The Merlin contract between the National Assembly for Wales and Siemens Business Services was signed on 6 January 2004, following a two-and-a-half year procurement process. It replaced ‘Osiris’, which was a private finance initiative IT contract. The ten-year contract is worth £220 million, with £80 million earmarked to ICT services and the remaining £140 million allocated to change in the Assembly’s business processes. Early business change projects include a grant processing system for the Welsh European Funding Office, a new internet site for the Assembly Government and an electronic records and document management system.
The report finds that the procurement of the contract generally followed good practice, but officials underestimated the time it would take. They decided to extend the Osiris contract by four months at an additional cost of £3.8 million. During these extended negotiations over Merlin, officials secured a reduction in the average user charge, saving £4.9 million in the first year.
The time frame for rolling out new ICT equipment was delayed and is due to be completed fifteen months later than planned. Also, the standard of ICT performance has fluctuated since May 2004 and, as a consequence, by January 2006 the Assembly had reclaimed some £358,000 from the Merlin contractors.
The report says the success of the system will be tested in the future because of a rapidly changing political environment. For example, the absorption of Assembly Sponsored Public Bodies into the Welsh Assembly Government will increase user numbers and require the merger of ICT systems and business processes.
The report makes a series of recommendations to improve future major procurements, to improve the performance of Merlin and to support the Merlin partnership in the future. ..
The Auditor General, Jeremy Colman, said today: “It is good to see that lessons have been learned from the 2003 report on the Osiris contract. The procurement of the Merlin contract was generally handled well. Officials delivered a framework that appears to be capable of meeting the Assembly’s needs. Assembly Government officials should now make sure that it manages significant risks to ensure that Merlin delivers on its promises.”
Notes to Editors:
- This report considers whether the procurement was effective and took account of the Audit Committee’s’ recommendations on Osiris. It also looks at whether the framework is in place for Merlin to deliver the benefits anticipated over its ten year lifetime.
- The report found that Assembly Government officials learnt lessons from the Audit Committee’s recommendations following its examination of the Osiris contract in 2003 and delivered a flexible framework to provide ICT services and technology-enabled improvement of business processes.
- The procurement of the Merlin contract was undertaken by Welsh Assembly Government officials on behalf of the whole of the National Assembly for Wales.
- Services under the Merlin contract are provided by the ‘Alliance’. The prime contractor among this group is Siemens Business Services Ltd. Major sub-contractors are PA Consulting, Cap Gemini, Siemens Communications and BT.
- The Auditor General for Wales reported on the Osiris contract in October 2002. In 2003, the Assembly’s Audit Committee made a number of recommendations designed to ensure that the Merlin procurement delivered a contract sufficiently flexible to meet the Assembly’s changing needs.
- The Wales Audit Office is independent of government and is responsible for the annual audit of some £19 billion of annual public expenditure.
- The Wales Audit Office was created on 1 April 2005 following the passing of the Public Audit (Wales) Act 2004, which expanded the functions of the Auditor General for Wales and enabled the transfer of staff from the Audit Commission in Wales and National Audit Office in Wales to his employment.
For more information please contact Rachel Harries (Communications and Media Officer) on 029-2026-2675 or email rachel.harries@wao.gov.uk
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