Exclusive British spymasters are involved in a multimillion-pound wrangle with IBM over a secret intelligence network that was scrapped after years in development because of security fears and missed deadlines.

Phase Two of the SCOPE programme - designed to allow wider access and collaboration on intelligence across ten government organisations at home and abroad - was quietly halted last year.

The Cabinet Office said this week it had no progress to report on recovering the millions paid out for nothing.

The Register has confirmed IBM is the "main commercial supplier" whose "failure... to meet key contractual milestones" was blamed in July by minister Tessa Jowell for the missing capability and heavy loss to taxpayers. The total write-down was £24.4m.

IBM declined to offer any comment on its involvement in SCOPE Phase Two or say whether it will return the money.

The Cabinet Office said it was considering its legal options. It declined to comment on IBM specifically.

SCOPE Phase Two aimed to connect thousands - 1,500 in the MoD alone - of extra government staff at home and abroad to the SCOPE network.

Phase One was completed in October 2007, updating the UK Intelligence Messaging Network to speed secret information sharing across government. The organisations involved in SCOPE are MI5, MI6, GCHQ, SOCA, HMRC, the Cabinet Office, the Home Office, the Foreign Office, the MoD and Department for Business, Innovation and Skills (ex-DTI).

The Cabinet Office told The Register work has now begun on an unnamed replacement system planned to offer the same capabilities.

Phase One, for which IBM was also the main contractor, is in place but suffered years of setbacks and technical problems, including a "serious process failure" at the network's Service Operations Centre, at a secret location outside London.

Tessa Jowell sought to soften the blow of the failure of Phase Two by claiming in Parliament that "the first phase of the programme was delivered on time and within budget in 2007".

Her claim is repeatedly directly contradicted by the the Intelligence and Security Committee's (ISC) annual reports, however. In 2004/05 the cross party group of MPs wrote: "SCOPE will be delivered over three years later than originally envisaged."

In 2005/06 they wrote: "Roll-out of equipment to 12 locations (Phase One) is now planned for autumn 2006... this has slipped from its original date of April 2005."

In 2006/07: "Phase One... achieved full operational capability in October 2007 - over two years later than originally forecast (April 2005)."

A Cabinet Office spokesman said Jowell had referred to a new deadline set when SCOPE was "recalibrated" in 2003. He offered no explanation why in 2005/06 the ISC was told the deadline had slipped to autumn 2006.

In its most recent annual report the ISC, the main oversight body for the intelligence agencies, said it was "appalled" by SCOPE Phase Two and announced a separate inquiry set to report later this year.

The ISC's reports dominate the limited public record on SCOPE, although the Committee's views on it apparently contrast with those of the Cabinet Office mandarin who led the project. According to the February 2008 newsletter of the defence trade and professional body AFCEA, Dr Michael Taylor declared: "SCOPE is an extraordinary success story!"

He went on: "The impact of this tranche of capability [Phase One] has whetted the appetite for the further delivery to come." But it never came. ®