'Deficient' IT system prompted £22m legal case against NCS Trust

The charity, which runs the government's National Citizen Service programme, is being sued by its largest contractor

A "deficient" government-funded IT system is at the centre of a £22m legal dispute between the charity that runs the National Citizen Service and its biggest contractor.

Third Sector reported last week that The Challenge, which has put 50,000 people through the scheme each year, is suing the National Citizen Service Trust, which runs the NCS, for £22m.

About £12m of the sum relates to the trust's customer relationships management IT system.

The Challenge claims that problems with the system prevented it from turning expressions of interest from 10,000 young people into "turn-ups", which means those who completed the first day.

It alleges this cost £12m in lost earnings and additional expenditure.

A High Court document filed by the law firm Farrer & Co on behalf of The Challenge, seen by Third Sector, claims the trust "failed to deliver the CRM system with reasonable skill and care".

It says: "The defendant failed to carry out basic steps which would be expected of a reasonable royal charter body.

"It is averred that the reason for the significantly reduced conversion rate was the deficiencies in and inefficiencies caused by the defendant's CRM system, due to the functionalities which were not delivered on time or at all, inadequate and/or not fit for purpose."

A trust spokeswoman said it rejected the allegations and "will robustly defend them".

She added: "There are no failures with the trust’s centralised CRM system.

"The Challenge has only asserted a concern over certain functionality, without evidence of materiality: none that any previous partners have raised and none that any new partners have identified.

"In fact our largest new partner was fully set up and running, and able to undertake all aspects of the work required by them on the trust’s system, within three months."

Oliver Lee, chief executive of The Challenge, told Third Sector he disputed the accuracy of the trust's statement.

The dispute threatens to be the latest high-profile row over costly government-funded IT systems.

The NCS was a key part of former Prime Minister David Cameron's big society initiative.

The government established the trust as a community interest company and in 2017 it became a royal charter body.

Its income, which was £185.7m in 2017/18, continues to come as a grant from the Department for Digital, Culture, Media & Sport.

The Challenge is the biggest provider of the programme in the current contracting period, which ends on 31 December, delivering seven of the 19 contracts.

It was obliged to adopt the trust's CRM system in October last year. According to the court document, it began experiencing problems in December.

The Challenge raised concerns with the trust and the DCMS about the CRM system.

In summer it was named preferred bidder for three of the nine NCS contracts, which begin at the start of next year. But its status was suddenly revoked at the end of August.

Most of its 400-plus staff now face redundancy.

Besides The Challenge's IT-related claim, it is also seeking £4.5m in unpaid core payments and £5.5m for denial of future contracts.

The Challenge has also told the trust that it intends to issue separate proceedings for defamation.

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