GOVERNMENT and EU regulations were breached when the Department of Social Welfare awarded contracts worth over £8 million to two leading consultancy firms.
The Comptroller and Auditor General's office said the Department failed to get the required approval of the Government Contracts Committee before embarking on a £25 million computer project. It also failed to adhere to EU procurement directives.
The Department accepts it breached Government regulations. "The rules changed, and it slipped by us," an official admitted last night. However, he maintained the contracts were exempted from having to adhere to EU directives.
Over the five years of the project, £3 million was paid to the technical consultants, Digital, and £5.8 million to Andersen Consulting.
The report is highly critical of the planning and execution of the Integrated Short term Schemes system, which began in 1992. The project, which was the largest ever undertaken by the Department, was set up to computerise the payment of over £14 million a week in unemployment and social welfare benefits.
However, the Department failed to carry out a cost benefit analysis of the project before starting, its planning was "inadequate and unrealistic" and coordination was lacking, the report says.
The committee set up to direct the project met only twice in five years, and the project board suffered frequent changes of personnel. The report says the Department "significantly under estimated" the costs of consultancy, and predicts that some of the projected benefits may never be realised.
In July 1994 the Department set up a centralised unemployment benefits section in Dublin, but disbanded it six months later when the Government decided to tax these payments. The cost of setting up the unused section was £1.08 million.
Because of a dispute with local dole offices, one quarter of unemployment assistance claims are still not processed with the new computer system.
