Deloitte contract scrapped after million pound payment

The Ministry of Defence terminated its Project SERAPH contract with Deloitte for convenience and moved to an alternative delivery model, in a decision that produced a fruitless payment of £1.354 million, according to answers given in Parliament.

Ben Obese-Jecty, the Conservative member for Huntingdon, asked why the contract was terminated, and separately what the scope of Project SERAPH had been.

Luke Pollard, the Minister of State for Defence, gave the same answer to both: “Project SERAPH was a concept, assessment and demonstrator project that evaluated options for establishing an enterprise-level solution at the tactical layer.

“Its scope encompassed a range of digital and cyber capabilities in support of key Defence programmes, alongside associated governance, assurance and engineering activities.

“Following a review of the programme, the supporting contract with Deloitte was terminated for convenience in accordance with its contractual provisions, and the Department transitioned to an alternative delivery model.”

A fruitless payment is the accounting term for money spent that produced nothing of use to the department, and the figure of £1.354 million came from an earlier answer on 6 October. Fruitless payments are reported in the department’s annual accounts and scrutinised by the Public Accounts Committee, and a termination for convenience is the clause that lets a customer walk away from a contract without the supplier being at fault.

Terminating for convenience is a legitimate commercial tool, used when a requirement changes or a better route appears, and the supplier is compensated for work done and costs committed. The money is not lost through misconduct on either side. It is lost because the department decided partway through that it no longer wanted what it had asked for.