Novopay to cost taxpayers over $100m

Delays in the implementation of the troubled teacher's payroll system mean it will cost much more than previously indicated

The Ministry of Education will end up spending more than $100 million on the troubled Novopay pay system for teachers.

A ministry contract register shows that the contract with Talent 2 for Novopay extends to September 2015 and is worth $80 million.

But in response to questions from Computerworld, the ministry says that the contract register doesn’t take account of the delay to the implementation of Novopay and the resulting contract variations.

“The contract value of $80 million covers the Talent 2 implementation costs and six years of operation from go live,” the ministry says.

According to the ministry the total Novopay costs are:

• Development and implementation - $29.4 million;

• Long-run cost - $12.5 million a year until 2018.

Following a subsequent enquiry by Computerworld, the ministry now confirms the total cost will be $105 million over eight years.

The original contract was signed in September 2008, but the project was delayed for two years while additional testing was done.

Talent 2 has also earned around $500,000 by providing a programme manager, systems administrator, and business analyst, according to the contract register.

Computerworld asked if, given the on-going issues, there were penalty provisions that come into play.

The ministry responded briefly: “The . . . contract with Talent 2 does include penalty clauses.”

This week, the Prime Minister, John Key, said the company was likely to face a financial penalty if errors weren’t resolved.

“The government had paid them a lot of money and they should have got that all right.”

Ministry chief executive Lesley Longstone has since confirmed that the ministry will be seeking penalties from Talent 2.

Assurity Consulting is listed in the contract register as having a contract as test lead for Novopay, valued at $350,000.

The Ministry says Assurity was engaged to do both pre and post go-live testing. A $350,000 payment was made to the consulting company for the first contract. Subsequent contracts have since been signed, and the total invoiced now stands at $842,000.

“Assurity delivered the services required under its contract, and there is no reason for the ministry to enact any penalty provisions.”

Computerworld asked if the ministry had identified the base causes of the on-going pay issues. The ministry responded:

“Most of the issues fall into three broad categories: leave entitlements, staff who use timesheets (such as relief teachers, and staff who are leaving or joining the payroll.

“During the first two pay periods in particular, many schools – frustrated by the problems with Novopay – reverted to using forms instead. This created a backlog of clost to 8000 transactions. This has now been reduced to under 1000.

“The ministry’s focus so far has been on avoiding and resolving errors that impact people’s actual pay. This had reduced the number of underpayments or non-payments from 5600 in the first Novopay period, to 221 in the most recent period.

“Now, particularly through the road shows, schools are giving us feedback on the next layer of issues to address, like making sure entitlements show correctly. While these errors don’t impact pay, they are causing stress and frustration for schools and are our next priority to fix.

“We have releases scheduled each fortnight from now until the end of the year to address the technical problems.”

The ministry says that, as the contracted service provider, Talent 2 is responsible for fixing the errors and providing the payroll service that meets the needs of all schools and staff. It says that Talent 2 has hired additional staff to make sure system performance and service levels improve.

Computerworld asked how many individual teachers’ pay issues had been identified.

“The last pay cycle identified 221 non-payments or underpayments. These are being addressed with the staff and schools,” the ministry replied. It pointed out that a third of New Zealand’s education workforce are support staff, so the answers applied to support staff as well as teachers.

Rebecca Elvy, group manager and Novopay business owner for the ministry, says Talent 2 is being held to account for delivering the service levels and performance the ministry and schools require.

“We are making good progress on getting through the backlog and developing fixes to the technical issues. Our strong focus now is on supporting schools and continuing to make improvements to ensure a successful end-of-year process,” she says.