DXC paid 50% more than original contract for Oracle project • The Register

Systems integrator DXC accrued over 50 percent more than its original contract value for completing less than half the scheduled contract term during a disastrous project to move a UK government body off an ageing SAP ERP system and onto Oracle Fusion.

Earlier this month, an independent audit of West Sussex County Council (WSCC) revealed its ERP transformation project — which has seen cost escalations of 15 times the initial estimates to reach £40 million ($50 million) — lacked both adequate assurance of replacement business management and a contractual delivery partner during the 2023/24 financial year.

The Council did not have sufficient arrangements during 2023/24 to provide assurance that either the replacement business management system itself, or the “contractual arrangements with the delivery partner to manage the transition were delivering the expected benefits,” the report from Ernst & Young [PDF] states.

From November 2022 through to the end of March 2024, the council’s Performance and Finance Scrutiny Committee did not have the project on its agenda despite delays and shortcomings, it adds.

DXC began working with the council on the project under a five-year, £4 million ($5 million) contract, which began in May 2020, the details of which were not published until February 2021.

According to EY, in September 2021 the Council’s internal audit performed an initial review of the project — dubbed SmartCore at the time — highlighting “a number of weaknesses regarding budgeting, governance and risk management.”

“An additional review by an independent consultant and further review by Internal Audit during 2022/23 continued to identify weaknesses in governance and issues with delivery of the project, many of which were similar to those already included in the original 2021/22 Internal Audit Report,” it says.

In July 2023, the council found “in addition to further difficulties in the relationship between the Council and the delivery partner,” there was no real prospect of a deliverable plan being agreed. It terminated the agreement with the DXC on 1 September 2023.

But by then, DXC had already won a lucrative variation of contract.

Although details of the arrangement were kept from the public, the council’s Performance and Finance Scrutiny Committee heard in July 2022 that the uplift might be as much as 400 percent for DXC.

“Why have these variations [just] come to light? Obviously, one is used to small variations, but the price has gone up 400 percent from the original contract price, so there is quite a big variation. It seems to be a staggering lack of foresight,” said Liberal Democrat leader councilor James Walsh at the time.

Katharine Eberhart, finance and support services director at the time, declined to respond in public.

Regardless of the agreed contract variation with DXC, published data detailing council spending show throughout its period working with the council on the project, DXC was paid around £6.6 million ($8.3 million), more than 50 percent above the original contract price.

At the same time, shortly after it agreed to vary DXC’s contract, the council put the project on “pause.”

An Ernst & Young report [PDF] published in November 2024 said that an independent consultant report had, in July 2022, confirmed weaknesses in the program management already known to the council.

“Following this, the relationship between the Council and DXC continued to deteriorate as the year progressed. As a result it was agreed that the project would be paused in November 2022. In March 2023 a Suspension Agreement was approved by both WSCC and DXC so that a rectification plan could be put in place following the significant deviation from the original project timeline. This led to further and more intense work by the Council with DXC to test whether the program could be brought back on track in terms of timing and budget,” the report said.

But here is where the council’s version of events differs. A report by director of law and assurance Tony Kershaw published in April 2024 [PDF] said the program was paused in the autumn of 2023 “to enable a comprehensive review of options for its future delivery.”

It raises the question of which version of events is correct and how much DXC was paid while the project was on hold. The council has been asked to respond, as has DXC.

In November last year, the council inked a deal with systems integrator Infosys worth £5.8 million ($7.3 million) which is set to last for two years and complete the project.

The original plan imagined a “go-live” date for the software in March 2021. In August 2022, that was pushed back to April 2023. The council now says it expects to go live with different elements of the new ERP system in December 2025 and April 2026. ®