Delayed MP expenses IT system 25 percent over budget

The Department of Finance’s redevelopment of the federal government’s parliamentary expenses management system (PEMS) is 25 percent over budget and more than two years behind schedule, the national auditor has found.

The finding is contained in an otherwise positive audit [pdf] of the Independent Parliamentary Expenses Authority (IPEA), which was set up in the wake of the now infamous ‘Choppergate’ expenses scandal involving former speaker Bronwyn Bishop.

PEMS was originally funded with $38.1 million in the 2017 mid-year economic and fiscal outlook after a parliamentary review called for an urgent overhaul of existing expenses systems, described by then-Prime Minister Malcolm Turnbull as “absolutely antiquated”.

After initially approaching the market for a commercial-off-the-shelf system capable of supporting at least 3000 users in 2017, Finance decided to build and operate the system through its Service Delivery Office.

The office, which is leading the shared services reforms, was chosen by government as it said it would be able “deliver the initial operational stages of the system around six months earlier than a commercial provider”.

Parliamentarians and their staff have been able to submit travel claims through the system since an initial release went live in August 2018, with additional functionality expected to be progressively added by early 2020.

But the audit, released on Monday, reveals that users are still waiting on much of the promised functionality, with the overhaul now more than two years behind schedule and currently 25 percent over budget.

“As at December 2020, the Finance-managed PEMS project which is intended to improve efficiency, is delayed over two years and is 25 percent over budget,” the report said.

The report said that while “total project cost estimates were under review” at the time of the audit, Finance has already spent $47.3 million on the project, approximately $9 million more than was originally budgeted for.

Two increases to the budget were endorsed by the PEMS steering committee in February 2019 and May 2020, with $5 million appropriated from IPEA’s ‘administered’ funds on the condition it would only be used for PEMS.

“IPEA has funded $5 million of the increased costs, conditional that the funds were ‘specifically for the build and development of core functions within PEMS that provide client facing functionality that meet IPEA’s legislated functions’,” the report said.

“The $5 million was from IPEA’s annual ‘administered’ appropriation rather than from its ‘departmental’ appropriation.

“Notwithstanding the unusual nature of the transfer, IPEA did not seek legal advice on it nor did it document its discussions with Finance about any legal issues.”

The report said the system’s completion date was pushed back each time the committee endorsed an increase, first to mid-2020 and then July 2021. It is now not expected to be finished before July 2022.

“As at February 2021, the remaining travel claims processing and other IPEA-related aspects of PEMS will be further delayed until 2021-22, with the final competition expected in July 2022,” the report said.

The report also notes that the project has experienced “severe schedule pressure” since at least 2018, according to a gateway review, and that the “project might not be wide enough to address all current and emerging business needs and expectations”.

In replacing Finance’s custom-built entitlements management system developed in 1999 to process travel claims, as well as a separate Chris21 HR management system, PEMS was also expected to “produce savings through staff reductions”, which have not eventuated.

“The implementation of PEMS… is intended to reduce the volume of claims that are manually processed. This automation should in turn reduce the number of administrative errors and adjustments,” the report said.