Ernst & Young (EY) and the Boston Consulting Group (BCG) are both assisting the Department of Human Services (DHS) in the development of the business case to replace the Income Security Integrated System (ISIS).
DHS was allocated $16.2 million over two years from 1 July 2013 for DHS in the 2013-14 Budget to develop a business case by 2015 outlining options to replace or upgrade ISIS.
According to a spokesperson from DHS, EY’s main role is to “provide independent advice in the development of the ICT components of the business case, consistent with government requirements.”
The agreement between the DHS and EY spans two contracts that are together worth $2.4 million. The first contract, worth $2.07 million, covers the period from January 2014 to March 2015 whilst the second contract, worth $0.34 million, covers the period of February 2014 to April 2014.
In the past two years, EY has supplied DHS with $5.1 million worth of other IT Services over eight separate contracts.
According to a spokesperson from DHS, BCG has also been engaged to “provide independent business advisory services to assist the department to develop the ISIS business case.”
It is highly likely that the agreement between DHS and BCG is a contract notice titled ‘Business Support Services’ worth $2.01 million and covers the period of January 2014 to June 2014.
BCG has previously been contracted to supply DHS with ICT strategic planning services in 2011 for its Service Delivery Reform Program and Telecommunications Procurement Services in 2012.
Commission of Audit Recommends ISIS Outsourcing
The National Commission of Audit, released in May 2014, was scathing of ISIS describing it as “a significant risk to a core function of government”.
“The Income Security Integrated System was developed to calculate and administer social welfare payments nearly 30 years ago”, states the report.
“It is written on now defunct information technology codes, is inflexible and expensive. The system adds significant costs for processing payments, maintaining the ICT system, producing letters and responding to appeals and review, and it increases the need for debt recovery.”
According to the Commission of Audit, ISIS’s complexity and cost derives from the fact that the DHS is required to constantly alter the system to address the “multitude of policy decisions about the structure and goals of the welfare system and ad hoc changes to payments”. At present, ISIS manages 34 payments and 38 add-on payments worth $144.9 billion annually.
Treasurer Joe Hockey was also not short of criticism for ISIS.
In an interview with 3AW’s Neil Mitchell, the Treasurer described the system as being “in bad shape”, conceding that replacing the system was a necessity.
The Commission of Audit recommended that the Government consider some level of outsourcing for the ISIS redevelopment.
“The commission recognises outsourcing of the payments system arrangements would be a substantial and potentially high risk undertaking…This would include a judgement on whether the assessment of entitlements is an appropriate activity for outsourcing; whether outsourcing should be confined to the development and maintenance of the replacement for the Income Security Integrated System, or whether the payment mechanism only should be outsourced.”
The Commission of Audit estimates that the cost of replacing ISIS is in the range of $1.2 billion to $1.5 billion.