NS&I digital overhaul is £1.3B over budget and 4 years late • The Register
The UK’s state-owned savings bank has blown past its budget by £1.3 billion on a digital transformation program beset by delays, according to the National Audit Office.
National Savings & Investments (NS&I), which brings in government funding through the retail savings market, has pushed the project back by four years after running into procurement snags and technical complexity, the public spending watchdog’s report said.
In 2020, NS&I began a business transformation program called Project Rainbow which aimed to reduce the bank’s running costs, make NS&I a self-service digital business, and replace its 20-year outsourcing deal with Atos by splitting the work into five separate contracts.
In 2014, the bank, which handles £240 billion in customer investments, awarded Atos a new contract to run until 2021, and then extended it until 2024 and again until 2028 without competition, handing the French outsourcer another £474.4 million.
The total cost of the program is expected to hit £3.0 billion until 2030-31, including its contract with Atos and other running costs. The total cost increase is set for £1.3 billion compared to the 2020 business case.
“NS&I set itself an overly optimistic timetable for the program,” the NAO report said. “Decoupling a highly integrated operation, splitting it into smaller parts and then integrating these systems together is highly complex. NS&I had limited experience of delivering a program of this scale and complexity, but it set an ambitious scope and timetable. The timetable did not factor in contingency for delays, allow time for understanding the technical infrastructure and testing solutions, or define how it would resolve interdependencies and manage systems integration.”
As well as underestimating the technical complexity, NS&I also lacked the commercial skills to manage such an ambitious tech procurement plan, the watchdog said.
“NS&I encountered significant problems in procuring and awarding the new contracts,” the NAO found. “NS&I awarded two contracts as intended; one procurement was initially unsuccessful but subsequently re-run and a contract awarded; one procurement resulted in an award, but NS&I subsequently terminated the contract; and one procurement was abandoned because NS&I and the preferred bidder could not agree terms.”
“NS&I had a weak understanding of the complexity and interdependencies of the highly integrated system it was seeking to replace, leading to the problems in delivery and delayed timescales,” the report said. “It lacked a systems integrator function to improve this understanding.”
It also found NS&I did not have an integrated plan or end-to-end solution, making it difficult to track performance, spending, and risk.
“NS&I had no prior experience of undertaking such programs, and for much of the program it has had insufficient digital, commercial and program management expertise,” the report said.
The bank began a program reset in July 2024 and commissioned a “Recovery Plan” from PA Consulting. Program resets can involve a fundamental change to a program’s output, timing, and approach, or a significant revision of cost and time estimates.
Other suppliers involved in the program include Capgemini, EY, PA Consulting, Actica, IBM, and Sopra Steria. ®
