Bank's struggle to replace Atos threw system back to dark ages

Costly project to switch supplier likely to continue into 2025, says watchdog

A report on UK government debt reveals that a public sector bank relied on "people and paper" to process transactions during the pandemic as it struggled to replace outgoing service provider Atos.

In May last year, National Savings & Investment (NS&I) extended its contract with French IT services and outsourcing provider Atos as the state-owned bank had difficulties finding a replacement.

Although it began the procurement process in 2021, the bank missed deadlines to replace its single supplier model and move to multiple providers. It extended the contract with the French supplier from March 2024 until March 2025 to allow for the delay.

The Public Accounts Committee (PAC), a Parliamentary spending watchdog, now says NS&I should prepare to extend the contract again; show how it will find the budget; and what it would do should Atos refuse.

In its report on government borrowing, the PAC points out there has already been significant delays in the project to replace Atos and improve digital performance, dubbed the Rainbow Programme.

Initial bidders for one of the contracts did not meet NS&I's requirements, the report says. "The Atos contract, due to expire in 2024, has been extended to March 2025 as a result."

The PAC says that after a "lesson-learned exercise," NS&I redesigned the procurement process and received a successful bid in December 2023.

IBM won the competition for the "Digital Experience and Digital Enablement" component, striking an agreement worth £99.8 million (c $116 million). Big Blue had already secured the contract for "Digital integration and ServiceOps" worth £34.2 million (c $41.2 million).

French outsourcer Sopra Steria won the work for "Customer Contact Centre and Operations" in a £276 million (c $322 million) deal announced in December. It had already won a contract for "Business to Business Outsourced Services" worth £200 million ($254 million), announced in July 2023.

A spokesperson for NS&I confirmed incumbent Atos was the preferred bidder for the core banking system, which could be worth up to £480.3 million (c $611 million), according to an earlier procurement notice.

However, since the three winning bidders had developed their plans in isolation, they "now need to be integrated." NS&I told the PAC it could extend the Atos contract for an additional 12 months, "which may not be enough contingency should NS&I experience further delays," the report says.

The MPs asked NS&I to set out the costs of extending the Atos contract beyond March 2025 and to make clear its contingency plans should Atos decline.

During the pandemic, the UK Treasury required NS&I to raise £35 billion ($44.5 billion) from retail savers, tripling the previous year's requirement. Although it raised a record £23.8 billion ($30.28 billion), the bank fell short.

"One of the challenges NS&I faced during the pandemic was its inability to scale up its customer facing operations owing to its reliance on a single service provider, Atos," the report says.

The PAC's missive adds that during the pandemic, it received large inflows of deposits from savers, "which created 'pinch points' as the old, single provider model was dependent on 'people, paper and physical locations'," the report reveals.

The Register has asked NS&I to comment.

In May last year, customers bombarded the bank with complaints over failing online security and authentication features that locked them out of their accounts. A spokesperson later apologized.

NS&I is not the only UK public sector institution having trouble with outsourcing arrangements. In February last year, the National Employment Savings Trust (Nest), an occupational pensions scheme, ended its £1.5 billion ($1.91 billion) contract with Atos just two years into its potential 18-year term. It said it would continue with existing supplier TCS, which it later reappointed in a project also worth £1.5 billion ($1.91 billion). ®

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