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Chamber and committees

Public Audit and Post-legislative Scrutiny Committee

Meeting date: Thursday, September 5, 2019


Contents


Section 23 Report


“Scottish Public Pensions Agency: Update on management of PS Pensions project”

The Convener

Item 3 is the section 23 report, “Scottish Public Pensions Agency: Update on management of PS Pensions project”. I welcome our witnesses from Audit Scotland: Caroline Gardner, the Auditor General for Scotland; Stephen Boyle, audit director; and Tom Reid, senior audit manager.

I understand that the Auditor General would like to make an opening statement.

Caroline Gardner (Auditor General for Scotland)

Thank you, convener. I will be very brief.

The purpose of the report is to set out the problems that the Scottish Public Pensions Agency has experienced in implementing a major new IT system, and the financial implications of those problems. The agency’s principal role is to administer and pay pensions for members, deferred members and pensioners of national health service, teachers, police and firefighters pension schemes in Scotland.

In October 2015, the agency awarded a £5.6 million contract to Capita Employee Solutions to deliver a unified pensions administration and payment system. The new system—PS pensions—was to be operational by March 2017. In February 2018, the agency’s new chief executive decided to close the project. The agency spent £6.3 million on the project and has written off £1.6 million in capitalised assets that will no longer be used.

The closure of the project means that the agency has not been able to progress its strategic, business and workforce plans as originally intended. As a result, it expects to need an additional revenue budget of £9.8 million between 2019-20 and 2022-23. It also needs capital allocations of £13.6 million over the next five years. The agency has extended contracts with its existing suppliers to ensure that payment of pensions is not affected by the closure of the project.

In October 2018, I published a section 22 report on the matter but, at that time, I was unable to report on the reasons for the project’s failure, due to an on-going legal process between the agency and Capita. I prepared the section 23 report following the conclusion of the legal process. The settlement included a payment of £700,000 from Capita to the agency.

Responsibility for the failure of the project was shared between Capita and the agency. Capita failed to meet any of the agreed milestones for the project and was unable to provide a working system. Changes in the SPPA leadership and in the management of the project made it more difficult for the agency to manage the supplier effectively and properly hold it to account. The situation was compounded by inadequate governance and project-assurance arrangements. In my report, I concluded that the SPPA failed to achieve value for money for the project.

The team and I will do our best to answer the committee’s questions.

Thank you very much.

10:15  

Colin Beattie

A key issue that jumps out is something that you touched on about governance. The turnover of key members of staff seems to have had a significant impact on the project. You said in the report that “the lack of continuity” in those roles made it difficult for proper scrutiny of and challenge to Capita. What was the reason for that high turnover? Were those members of staff pushed?

Caroline Gardner

You are right that there were significant changes in the roles of chief executive and senior responsible officer for the project. We aimed to summarise that in exhibit 1 on page 10 of the report. There is not a single reason for it. A number of things are going on. With Tom Reid’s help, Stephen Boyle will take you through that.

Stephen Boyle (Audit Scotland)

Exhibit 1 outlines the volume of changes in the project that Colin Beattie mentioned, both in the accountable officer/chief executive position and that of the senior responsible officer who was leading the project. That volume was much more than we typically see over the life of a project, and that was a key contributory factor in the project’s lack of success.

There were a number of reasons. We are not aware that any individuals were pushed out of the organisation as a consequence of the unsuccessful nature of the project. There was a range of factors, which we capture in the exhibit, such as secondments to the Scottish Government, retirements and people changing jobs. There was no one reason. We are not aware that anyone was asked to move on from any position that they held during the course of the project.

That was a key project for the SPPA. Surely, someone would have noticed that, due to the extraordinary turnover, there was instability in the governance of the project. Did anybody query it?

Stephen Boyle

You are right. People who worked in the agency would have noticed and the management advisory board would have been aware that there were changes in the leadership of the project and the agency. We are not certain whether any conversations took place that sought to intervene or address those changes in leadership.

Colin Beattie

The other thing is that, from what you are saying, the project board members seem to have been kept in the dark. According to your report, they specifically asked for

“budget and cost information”

and better

“reporting on the progress of the project.”

Is there any reason why they did not get that? It seems like déjà vu from other projects that we have looked at.

Stephen Boyle

You are right. In paragraph 22 of the report, we comment on the circumstances that you outlined about the lack of information provided to the project board. As the project developed, that was raised by members of the project board.

We also made a wider point about governance and the role of the management advisory board, which is there to support the accountable officer in their decision making. At the key early stages of the project, the board members were not provided with enough information to support its implementation and then take it through the delivery phase.

When they did not get that information, what did they do about it?

Stephen Boyle

The governance arrangements were changed during the course of the project. Near the beginning of 2017, the SPPA sought to bring in extraordinary audit and risk committee meetings and extraordinary management advisory boards to consider how well the project was being implemented. In our view, that happened too late. There needed to be stronger governance right at the infancy of the project.

That brings me back to the original question that I asked. Why were those requests not met? Was any reason given?

Stephen Boyle

We are not sighted on the reason why. The SPPA would be better placed to answer that.

Colin Beattie

As a result of previous reports from the Auditor General, we have raised the question of governance and, time and again, we have come across instances of information not being passed on to the people who are responsible for governance, whether that is the board or others. We have another example of that here.

What did the individuals do? Did they make a noise about it? They were obviously unhappy at not getting correct information. This is basic stuff: budget and cost information and a report on the progress of the project. They could not possibly do their jobs without that basic information, so what did they do about it?

Stephen Boyle

We agree, Mr Beattie. Basic information about the project was missing.

Do I take it that they did nothing?

Stephen Boyle

As I said, it might be a case to be explored more closely with the SPPA. From the conversations that we had with board members, we understand that they made attempts to ask for more information. Belatedly, they got that, probably with the creation of more substantial governance for the project at the beginning of 2017. However, that was quite a long time lapse, and there ought to have been stronger representations insisting on more information being provided, essentially so that non-executive members of the management advisory board could better fulfil their responsibilities of supporting the accountable officer.

It would appear that the efforts to get more information were pretty feeble. Who was responsible for providing the information to the project board? You said that they asked people, so who did they ask?

Stephen Boyle

Responsibility rests with the senior responsible officer for the project, who is tasked with supporting the project board in their consideration. Ultimately, the senior management team is responsible, through its support of the accountable officer, as is the management advisory board in discharging its responsibilities of advising the accountable officer.

So the senior management team did not respond to requests from the project board for that basic information.

Stephen Boyle

That is certainly our understanding. As I suggested, we saw improvements as the project evolved.

Caroline Gardner

It is worth adding that one of the issues in this instance, as in others, is a confusion of roles. The chief exec of the agency is the accountable officer and also a member of the management advisory board—as it is an agency, it has a management advisory board and not a standard board. That individual also chaired the programme board. That confusion of roles makes it harder to hold to account those who should provide the information.

We have seen something similar in other cases, where the chief exec has been very involved in the hands-on detail of a programme, making it much harder to spot and react when problems start to emerge. That is some of the context for what Stephen described.

As a result of your report and everything that has come out, is there now a proper structure in place?

Caroline Gardner

We think that lessons are being learned. At the end of the report, we talk about the actions that the new chief executive has taken since she took up her post, including closing the old project and carrying out a lessons-learned review that used our publication, “Principles for a digital future”, to look at what was missing the previous time and what needs to be in place now.

They are also planning to take a more incremental approach to the replacement—which still needs to happen—than was intended this time.

It is too early for us to give you assurance that all those lessons have been learned and put into practice.

I want to focus on the Scottish Government’s interaction with and role in all of this. At the start, who was the responsible individual at the Scottish Government for oversight of the project?

Caroline Gardner

There is a sponsor department in the Scottish Government, and the team will confirm for you who the sponsor is. There is also a less direct accountability relationship with the digital directorate and internal audit, which play a role of support and challenge—you will see that coming through in the report. I ask Stephen Boyle to confirm who the sponsor relationship is with, to ensure that we get that straight.

Stephen Boyle

The Scottish Government sponsor is Gordon Wales, the chief financial officer. The sponsor has changed a number of times since the conception of the project. It was the director general for finance, Alyson Stafford, at one stage, and one of her colleagues had the role at various points during the project.

The report has clearly flagged up failures of the SPPA. What failures has it identified in the Scottish Government’s interactions with the SPPA and in its oversight of the project?

Caroline Gardner

We set out in the report a number of interactions between the SPPA and the Scottish Government at various stages. There were some instances where concerns were raised by Government—including right at the beginning, around procurement—but they were not acted on by the agency. In response to your direct question, I note that there was a point at which the office of the chief information officer carried out a review, which gave assurance about procurement and the contract that had been put in place. We have not seen evidence to support that assessment. Our view is that there were problems that were not properly recognised at that stage.

Anas Sarwar

An example of the interaction is when the SPPA said to the Scottish Government’s legal department that it did not have the skills that it required to enable it to negotiate. You rightly highlight in the report that the SPPA did not take the necessary steps to find those skills, but surely there was a point at which the Scottish Government should have asked what further support it could give, whether that involved imposing something or directing the SPPA to do something. Why did the Scottish Government not do that?

Caroline Gardner

We refer to those events in paragraph 15 of the report. In that instance, I think that the responsibility lies with the SPPA. It was given a clear steer that the tender fell into the category of being abnormally low. That raised questions about whether the supplier would be able to deliver, and the SPPA was advised that additional inquiries should take place. The SPPA said that it did not have the resources to do that, and it took no further action. I think that the responsibility in that regard sits with the agency.

Anas Sarwar

I accept that, but is there a lesson to be learned—not just for the agency, but for others—that, if an agency that is an arm of the public sector recognises that it does not have the necessary skills or looks as if it is failing to take appropriate action when it is told to do so, the Scottish Government should step in or at least interact with it more to minimise the risk of a mistake taking place?

Caroline Gardner

I think that that is the wider lesson. Since those events took place, there have been changes in the way in which the Government aims to provide challenge and support to public bodies that are undertaking big IT system projects. We have also talked a lot in this committee about the need to prioritise that and ensure that the support is provided in the right places. That involves difficult decisions about how the people involved recognise the warning signs and respond to them, given the scale of digital development that is going on. You got a sense of that in the earlier session this morning in relation to the scale of the social security programme and the amount of attention that it is taking up in a field of limited people and skills.

Anas Sarwar

You mentioned the review. I will quote one sentence from it. It says:

“careful attention needs to be paid to the procurement process, which faces a number of challenges around requirement definition, resources and its timeline”.

That review of the SPPA’s activities was undertaken by a Scottish Government officer—is that right?

Caroline Gardner

Will you give me the paragraph number that you are referring to?

It is paragraph 18.

Caroline Gardner

Yes. That quote comes from the Scottish Government’s programme and project management centre of expertise.

The SPPA did not act on that recommendation in the Scottish Government’s review.

Caroline Gardner

That was not a review of the SPPA specifically. What you are referring to is the traffic-light rating system that was used at that time by the centre of expertise. The review gave an overall rating of “Amber/Green”, which is the second bullet point in the list in paragraph 17.

What lesson will the Scottish Government and others learn from that paragraph in relation to other things that we do around agencies in future?

Caroline Gardner

It is fair to say that things have moved on significantly since 2014 and 2015, when these things happened. We reported to the committee before the summer recess on progress with enabling digital government and on some of the improvements that have been made, as well as some of the risks that remain. I think that the biggest risk is exactly the one that you are trying to probe. Given the range of digital programmes that are under way and the scale of the investment, it is important that it is clear how Government prioritises which programmes it wants to get involved in and that it has in place a good risk monitoring system to spot the early warning signs and respond to them.

Anas Sarwar

Given that we have had a number of issues around IT projects and how agencies procure support, is there a role for the Scottish Government to set up an expert group that considers procurement and IT, rather than leaving it to the agencies to engage in negotiations and put the teams together?

10:30  

Caroline Gardner

That is one of the issues that we explore in the report that I just mentioned. I think that the committee is planning to take evidence on it in due course, and that is a question to explore with the Government.

Given the scarcity of IT skills across the country and their cost, there is clearly a real challenge around how the Government makes sure that it has the right IT skills and expertise in place, and then how it makes sure that it has a clear line of sight of when they are needed so that the rolling-on and learning from one project to another can happen well. How it does that is a matter for the Government, but we have clearly identified the need for it to have much clearer sight of what is needed, where and when so that it can make sure that those skills are in place.

Liam Kerr has a brief supplementary question.

Liam Kerr

I might be completely missing something, but how does it work in terms of the finances? Did the SPPA have £5.6 million sitting in the bank that it could spend, or was it incumbent on it to go to the Scottish Government and say, “We’ve procured the system and this is how it’s going to work, so we need to have £5.6 million signed off and in our bank account at some point in the near future”? Who made the decision to go ahead?

Caroline Gardner

I will bring in Stephen Boyle in a moment. However, a key finding of the report—as of others—is that the SPPA did not have a clear business case that set out what it wanted to achieve, the scope and what it was likely to cost. It is certainly not the case that it knew that it needed £5.6 million and went and asked for that funding. Stephen Boyle will flesh that out.

Stephen Boyle

Like other agencies, the SPPA participates in the annual budget-setting process. Broadly speaking, it submits budget bids that are considered among other priorities and are subject to approval by the Parliament before the start of the financial year through the budget act.

The total of £5.6 million was phased over the lifetime of the project. Although the Government would have been aware of the totality of the sum that would be requested or that was anticipated to be needed, it would not be factored in, in totality, as a transfer of cash to the SPPA.

Liam Kerr

No, but your report says that the SPPA came forward with an inadequate set of propositions. Someone in the Scottish Government looked at that, said that it was clear to go and gave it the green light when, based on the conclusions that you have drawn, they should perhaps not have done so. Am I drawing a fair conclusion?

Stephen Boyle

We would suggest that the project was not sufficiently joined up between the agency and the Government—not just on finance, but more generally in relation to the assurance reviews that the agency was supported to do with the Government and the procurement advice that it received. As the Auditor General suggests, matters are improving. However, at the time, the project was not sufficiently well co-ordinated or challenged.

Willie Coffey

Good morning, everyone. We have had reports such as this one before. It seems to me that, at the heart of some of these software projects, we do not have a clear understanding of the requirements, and the case that we are discussing is a perfect example of that. Will the Auditor General tell us a wee bit more about that? It seems to me that there was no clear specification of the requirements. In the past, I have used the analogy that building a piece of software is—in principle—the same as building a house, in that people have to specify what they want. They do not just ask a builder to build them a house and take what the builder gives them. They specify what they want, and it is the same with software.

Caroline, you said that, ultimately, Capita was unable to provide a working system. What was the reason for that? Did we not get clear specification of what the requirements were, or was there just a complete lack of skills in the mix to deliver what was supposed to be done?

Caroline Gardner

To start with, you are absolutely right about the foundations. In this case, as in other cases that I have reported on, the foundations were not there. I say in paragraphs 7 to 9 that there was no clear business case that set out what the SPPA wanted to achieve, the scope, the likely costs, the governance arrangements and so on.

There was a paper for the senior management team in September 2014 that outlined three options. There was the option that it went for—the highest risk one—of a fully integrated, bespoke system; the option of separate solutions for pensions administration and member services; and the option of separate systems for all the things that the SPPA wanted to do. That paper set out the advantages and disadvantages of each option, but it did not go through a proper options appraisal, which we would expect to see, and I imagine that you would as well. The paper was not presented to the management advisory board for consideration. Like you, my sense is that people were making decisions without fully understanding what they were signing up for and what risks were involved.

As we said at the beginning of this session, there were significant changes at both the chief executive level and the senior responsible officer level, which made it harder to keep the oversight and challenge of what was going on. When alarm bells were sounded, for example around the procurement process and the abnormally low bid from Capita, those warnings were not acted on, and that carried on all the way through.

As we explained to Mr Beattie, the chief executive at that point was on the management advisory board, the senior management team and the programme board. That is important because it meant that there was not the degree of distance and separation that we might expect, which would have made it easier to challenge what was happening. It was not until the new chief executive came along, took a step back and looked at the progress—or lack of it—that decisive action was taken.

I cannot comment on the reasons for Capita’s inability to deliver on what it promised, beyond what we know about the abnormally low tender. However, the fact that the settlement that was reached with it after the legal process included a payment of £700,000 from Capita to the agency tells me that there was some admission of liability in there.

Willie Coffey

Your timeline of events in appendix 1 on page 16 shows that the whole project started in December 2013 and that the software started to throw up errors in June 2016. It was three years before it was discovered that user acceptance testing was identifying a high level of errors. That is quite a long time for errors to be discovered in a project that was due to be delivered the following March. That is a ridiculously late point in the project lifecycle to discover that there were errors with the delivery of the software. Am I reading the timeline correctly?

Caroline Gardner

I think that you are reading it slightly wrong. You are right that the process started in December 2013, but work did not start on the project until December 2015—the box just above the timeline points that out. Problems started to emerge quickly after that. There was a long gap between recognising the need for the project and starting work, because the SPPA did not have the people it needed to do the procurement well, so there were delays, which we outline in the report.

Those delays did not lead to a rethinking of the timeline for the project as a whole, because the expiry of the SPPA’s contracts with its existing providers meant that it had a ridiculously short time to deliver the whole thing—I think that it was planning to go from agreeing the contract to having the project up and working in 18 months, which, as we say in the report, was never going to be realistic. It was the front-end problems that led to the back-end failure of user acceptance testing.

Willie Coffey

That is a common message that this committee has heard before; if you do not get it right at the front end and the preparation and planning are not done correctly, you will pay the price at the tail end of a project. The principles for a digital future have been pretty well established for a wee while now. You are saying that the SPPA did not really embrace those principles; did it even know about them? It seemed to have the Prince2 development methodology in place but, from what I read in the report, it did not apply it. Is there a sense that the SPPA was unaware of the whole approach to delivering digital solutions?

Caroline Gardner

When the SPPA started the process, it was before we had published our “Principles for a digital future” document, but you are right—that document was not original work; it pulled together existing good practice. In my view, the SPPA did not recognise the scale of what it was trying to do and the risks involved, and it did not have the skills to manage it. Stephen Boyle can tell you more about that.

Stephen Boyle

One of the conclusions of the internal audit that reviewed and reported on the progress of the project in September 2017 was that although there was an awareness of good project management methodology—the Prince2 methodology—it was not followed effectively. The Auditor General mentioned the “Principles for a digital future” document, which came out in 2017. By that stage, the project had got to a point where the seeds of what contributed to why it was unsuccessful had been sown many years before.

Mr Coffey made a point, which we also make in our report, about the absence of an effective business case setting out right at the project’s infancy what the agency hoped to achieve from it, and the lack of a clear and detailed scope or methodology for what the agency expected the contractor to deliver. All those factors, along with Capita’s unsuccessful attempts to meet project milestones, were key contributors to the project’s failure.

Liam Kerr

Good morning. The questions that Colin Beattie asked at the outset were good ones, and I want to go right back to the start. In paragraph 8 of your report, you say that there was no clear business case for the new system, but an options paper was prepared and presented to the senior management team. However, that options paper contained no costs, benefits or financial information. Do you know why that was the case?

Caroline Gardner

I will ask the team to answer the why question, but it is worth noting that the options paper was presented later than it should have been; some key decisions had already been taken by then.

Stephen Boyle

We are not entirely clear as to why a detailed cost benefit analysis was not set out in the options paper. As we say in the report, the fact that governance decisions were taken without the availability of complete detailed analysis and scrutiny right at the start of the project was a key factor in why, ultimately, the project did not succeed.

Liam Kerr

The members of the senior management team are undoubtedly paid a decent amount of money and have qualifications to be on the team. Is there any evidence that any of them, at any point, said, “Look, this options paper has no financial information and no information about costs or benefits, so shouldn’t we be getting some more information?”?

Caroline Gardner

We do not think that they did. As we say in paragraph 9 of our report, we know that the options paper was not taken to the management advisory board and we think that it should have been. The board should have had the chance to scrutinise it for exactly that reason. If the senior management team was not asking those questions, somebody a bit further removed should have been.

That is exactly the point. Do you have any evidence as to why it never went to the management advisory board?

Caroline Gardner

We do not understand the rationale for that, which is why we have reported in the terms that we have.

Liam Kerr

I will finish by asking you to speculate, if I may. If that process had taken place and the SMT had referred the options paper to the management advisory board, is it possible that things would have played out differently?

Caroline Gardner

Speculation is always dangerous. One of the reasons why people do not make that sort of referral upwards is because they not understand the risks that they are managing. My hunch is that that is what happened in this case. One of the particular features of executive agencies is that the management advisory board does not have the same status and clout as the board of a non-departmental public body or a health board, for example, and it is harder for its members to insist on getting the sort of information that they require. That goes back to Mr Beattie’s question. I said to him that one of the challenges was that the chief executive was the accountable officer, a member of the management advisory board and the chair of the project board. Such blurring of roles does not help at all.

The Convener

Following on from that, paragraph 22 of your report says:

“The project board was chaired by the Chief Executive”

and

“there was a lack of finance information ... We note that members of the project board requested more budget and cost information.”

If the chief executive was chairing that meeting, why was he not able to provide that information to the board members?

Caroline Gardner

As the wording makes clear, rather than the chief executive—the accountable officer—insisting on it, it was members who wanted clearer reporting. I suspect that that goes back to the point about the blurring of roles. Stephen Boyle and Tom Reid might be able to add to that, but I think that that blurring is a key factor.

10:45  

Stephen Boyle

That is exactly right. There was also the change in leadership. The chief executive, in chairing the project board and the management advisory board, had that awareness, but there was an issue about whether that awareness and understanding of the progress of the project and its costs were shared across the project board and the management advisory board. That was a key factor. There was insufficient scrutiny and understanding of the initiation of the project and how well it was progressing over its life.

The Convener

We may decide to take up that issue. Last week, we released our thematic report highlighting themes that keep coming up in reports, which include IT issues, leadership and governance. In a way, this is a classic report from you, Auditor General, because it highlights all those problems.

Caroline Gardner

At the very least, it is a good example of the concerns that we and you have raised a number of times about major IT projects and of why good governance matters and what happens when it is not in place.

Bill Bowman

I agree with all the points that members have made. This is almost a case study of how things can go wrong and people can know about it but that knowledge does not work through.

I might have missed this somewhere, but was there an audit committee in the organisation?

Stephen Boyle

Yes. The audit and risk committee is part of the governance structure of the SPPA.

What was it doing?

Stephen Boyle

Similarly to what we said in earlier answers, the consideration and oversight of the audit and risk committee strengthened during the life of the project, particularly as extraordinary meetings of that committee and the management advisory board were brought in. There was awareness of the issue, but we think that the audit committee could have had a role at an earlier stage to support the accountable officer.

Did the audit committee’s knowledge or involvement actually mitigate anything?

Stephen Boyle

In the report, we make a point about the role of the internal audit function, which made suggestions about how it could help the audit and risk committee and the agency more generally in relation to the progress of the project, but that offer was not taken up by the management or pushed through by the audit and risk committee. The offer was made in 2016, but the internal audit reporting did not happen until much later, in 2017. Some of the findings from internal audit about the unsuccessful nature of the project are quite significant.

I know that you do not like to speculate or to name names but, from your knowledge of the audit committee, should its members have had the skills or competences to make more of the issue?

Stephen Boyle

The audit and risk committee membership has changed over time, but its members have included experienced accountants and auditors. Therefore, the issue was not necessarily a skills deficiency in the committee; it was perhaps more about the information and the sense that the members of that committee, as part of the executive agency model, discharged their role differently from what we would see in a non-departmental public body or a health board.

Liam Kerr

I have a brief question on an issue that the committee has been concerned about in relation to many of the reports that we have looked at. The report identifies various failings by individuals, including senior individuals who are no longer at the agency and who have, I presume, gone elsewhere to progress their careers. I am not seeking specifics at this stage, but if I were to ask a general question about whether you know where those individuals have gone in their careers, would you be able to answer me?

Caroline Gardner

I can go a bit further than that. Again, I refer you to exhibit 1, where you will see that, in the key period that we are talking about, a long-standing chief executive left through retirement in April 2015. A chief executive was then appointed in July 2015 and left in March 2017, with a secondment to the Scottish Government in between during a key part of the process. That chief executive resigned and there was no settlement involved in that. Then, after an interim chief executive, a new permanent chief executive was appointed in July 2017, and it was that new chief executive who decided to close the project based on the concerns that were apparent at that stage.

Colin Beattie

The office of the chief information officer concluded that the procurement process of the project was conducted in

“a robust and professional manner, consistent with due process”.

Do you know whether that office was aware of the advice provided by the Scottish Government’s legal department that more in-depth questioning of Capita’s bid was required and that the bid was accepted without that advice being actioned?

Caroline Gardner

I do not think that we know whether that is the case. However, in paragraph 28, I say that we have not seen evidence to support that conclusion from the office of the chief information officer.

Colin Beattie

Do you know whether that office was aware that the Scottish Government programme and project management centre of expertise had highlighted that

“careful attention needs to be paid to the procurement process, which faces a number of challenges around requirement definition, resources and its timeline”?

Caroline Gardner

As I said, I am not sure whether we can answer the specifics about what the office was aware of; I can only repeat what we say in the report, which is that we have not seen evidence to support the office’s conclusion.

Stephen Boyle might want to add to that.

Stephen Boyle

In paragraph 28, we query the conclusion that the process was robust, particularly given the evidence that we saw about the exchange between the agency and the Scottish Government legal department. That calls into question the conclusion that was reached about the quality of the procurement process.

Is it Audit Scotland’s opinion that the procurement process was not robust?

Stephen Boyle

As we touch on a couple of times in the report, an abnormally low bid was accepted and that was not subject to full scrutiny and challenge, which suggests that there were deficiencies in the procurement process.

We have a lot of figures on capital allocations that have been written off and additional revenue that has been required. Is it possible to provide an overall cost to the public?

Caroline Gardner

I am afraid that that is not straightforward, which is why we have not done it in the report. That is mainly because, as we have seen elsewhere, the most significant cost is the opportunity cost. The SPPA intended to use the programme to change the way it operates and to generate future savings as well as improvements in the services that it provides to the pension scheme members, and those benefits have been lost. We have set out what the costs were, what has been written off and what has been recovered. We know that there will be future requirements to achieve those benefits, but it is not possible to put a single figure on what has been lost.

The Convener

That is a pity.

Thank you very much for your evidence. We will now move into private session, so I close the public part of the meeting.

10:52 Meeting continued in private until 11:30.