Andersen Consulting could face claims for #50 million a year from the government following a two-year delay on its implementation of the new National Insurance database, NIRS2.
The #100 million system was the first major government computer project to be designed and financed under the Private Finance Initiative. But problems plagued the system, and the consultancy is now under fire from the Commons Public Accounts Committee (CPAC).
The CPAC heard last week that hundreds of thousands of payments to pensioners and end-of-year National Insurance returns are being delayed, or having to be estimated rather than properly worked out.
Senior spokesmen for the Contributions Agency told the CPAC of ongoing concerns about Andersen's ability to fix the problems. NIRS2, with 14 million lines of code and 65 million records used for several different purposes, is believed to be the largest civil computing project in Europe.
Andersen has already paid the government #3.9 million in compensation after shelving a big bang approach in favour of a phased implementation over two years.
George Bertram, chief executive of the Contributions Agency, told the CPAC that it would be unfair to blame the consultancy entirely, but he acknowledged that Andersen "significantly underestimated the complexity of the task".
Andersen refused to comment on the specific problems with the software, but insisted that the system was delivered to agreed contractual dates.
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