There are real dangers that Accenture and EDS will face no alternative bidders when the National Insurance computer system contract comes up for renewal, according to an influential House of Commons committee.
The Public Accounts Committee concluded that, when the National Insurance Recording System (NIRS2) contract comes up for renewal in 2004, there may be no alternatives to the current holders.
"The real concern is whether any firm will feel in a position to bid against them," explained Edward Leigh, chairman of the Committee.
In November last year the National Audit Office said that a £44m get-out clause in the original contract had placed the Government over a barrel, forcing the Inland Revenue to stick with Accenture.
But in response Sir Nicolas Montagu, chairman of the Inland Revenue, promised that the competition for the NIRS2 renewal would be "serious and robust".
The Public Accounts Committee reported that "serious questions" remained about the rigor of the performance benchmarks in the contract.
It concluded that the soft targets had allowed Accenture to make "super profits".
Accenture paid £3.9m in compensation for delays in 1997 and 1998 that held up payments worth £1.5bn to pension companies.
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