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May 30, 1997updated 05 Sep 2016 1:07pm

ANDERSEN PAYS PENALTY FOR FLUFFED UK GOVERNMENT DEAL

By CBR Staff Writer

Worldwide management consultant firm Andersen Consulting has forked out 23m pounds to cover the costs involved with its fluffed UK government computer contract, according to the Daily Telegraph. The company has been warned that it could be liable for a further 100m pounds if the system doesn’t perform in the way it was agreed when the 45m pounds deal to replace the UK National Insurance recording system was struck in April 1995. The National Audit Office said in a report detailing the contract to develop and operate the system, which handles some 64m records, that it was 10 months late and has undergone major changes. Andersen apparently cut its bid by some 100m pounds and is said to have forked out an additional 3.1m pounds in compensation. The company has admitted that it will lose 8m pounds in revenue and will face possible costs of 8.5m pounds following its decision to phase the system in slowly instead of doing it in one go. Anderson apparently admitted that it had underestimated the size and complexity of the job, and the Government has said it will not hand over any money until the system is up and running in 1999.

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