Category Archives: IBM

Somerset County Council settles IBM dispute – who wins?

Posted on March 28, 2013 | 5 Comments

By Tony Collins

Somerset County Council has settled a High Court legal dispute with IBM-led Southwest One. It will bring some services back in-house.

The Conservative leader of Somerset council John Osman said, “This agreement will save Somerset residents millions of pounds and will make the contract fit for the future.”

Osman added that the agreement involves settlement of Southwest One fees, which the council had been withholding, for a mutually- agreed sum.

“Most importantly the cancelling of the gainshare agreement will save Somerset County Council residents millions of pounds in the future as those sums can now be kept by the Council,” said Osman.

But as the deal includes payment of an undisclosed sum by the council to Southwest One it is unclear which side is the beneficiary in the dispute. [See Dave Orr comment on this post.]

The council says the settlement will bring benefits for the council including securing “greater strategic control and capacity back with SCC  in terms of Procurement, Property and ICT”.

The agreement also “removes some barriers to ensure successful delivery of our Change Programme – with greater alignment to the operating model, commissioning capacity, service reviews, and technology enablers.”

And the settlement allows officers to focus on improving services rather than on a series of disputes.

Southwest One had issued a writ against the council – what the authority calls a “substantial claim” – and a date for a High Court hearing was set provisionally for November 2013.  Yesterday [March 27 2013] the council agreed to settle the High Court claim, and an unspecified number of other disputes.   

IBM, Somerset County Council, Taunton Deane Borough Council, and Avon and Somerset Police set up Southwest One as a joint venture company in 2007.  IBM  owns 75% of the company.

Somerset’s officers said in a report yesterday:

“Following a series of discussions between the Council and Southwest One we are now in a position to settle the disputes and the Procurement legal proceedings against SCC will cease.

“The agreement includes a settlement payment to SWO which is substantially lower than the claim against SCC and releases payments to SWO that were held by SCC as part of the dispute.”

Somerset County Council will take back several services and about 100 people who had been seconded to Southwest One. The council says that taking back staff and services will “reduce the potential for further disputes and align those services much closer to the operating model the Council has adopted”.

Services returning to SCC include:

• Strategic and Operational Procurement
• Property Services
• Estates Management
• ICT Strategic Management including some web management posts
• Some business support posts for the above functions

The council says there will be little change in day to day activities and no changes to locations of staff. Somerset’s staff will have their secondments terminated and revert to the council’s terms and conditions.

The High Court action was because of a disagreement  about the quality of Southwest One’s procurement service and what payments Southwest One was entitled to as a result of savings made through the joint venture.

Secrecy

Whereas a High Court hearing would have been open to the public, the sum paid by Somerset to IBM as part of the settlement,  and the risks of bringing staff and services back in-house, are being kept confidential because of what the council calls “commercial sensitivity”.

Risks

Some of the settlement’s main risks for the council are listed in yesterday’s report:

• The confidential nature of the discussions held to secure an agreement has
meant that full consultation with a wide range of officers and partners has not
been possible.
• The transfers of staff and functions will take place during the new financial
year. The proposed transfers create some risk due to SAP changes required.
• There will be some risks in the hand-over of programmes of work.
• Despite all efforts to mitigate risks to services, it is possible that some
disruption may occur. Transition workshops are planned to identify and preempt such instances, which significantly reduces the risk.
• Implications for partners have also been estimated. It is possible that partners
may take a different view of the implications for them.

Blame

Osman blamed the previous Liberal Democrat administration for the problems which he said were owing to the way the contract was worded, the actions of the previous Lib Dem administration transferring services to Southwest One that should never have transferred and the failure to clarify the savings sharing element of the agreement. Osman said this was the “equivalent of the Lib Dems writing a blank cheque”.

The 10-year joint venture, which started in 2007, will continue. 

Comment:

As the terms of the settlement and the risks associated with transferring staff and services back in-house are being kept secret nobody outside an inner circle of the council can know how bad the joint venture and the dispute have been for Somerset council’s taxpayers.

If anything is clear it is that IBM held the dominant legal hand all along. It issued a High Court claim, and now it has received a payment from the council.

It seems to be a feature of big council outsourcing deals and joint ventures that councillors are easily swayed by promises of enormous savings, often upfront savings, and are not too concerned about the risk of things going wrong because they won’t be in office when or if any mud hits the fan.

Yesterday Cornwall Council’s Interim CEO, along with the Chairman of Cornwall Partnership Foundation Trust and the Director of Finance at Peninsula Community Health signed a contract for a joint venture with BT.

As Andrew Wallis, an independent councillor in Cornwall, says

“Lets hope the Council does not regret this day.”

The Southwest One joint venture was flawed joint venture from the time a rushed contract riddled with literals was signed in the early hours of a Saturday morning in 2007.  For years afterwards, Somerset Council has been trying to dig itself out of a hole. It is now near the surface – except that yesterday’s council report says there is a potential for further disputes. 

Will other councils learn from Somerset’s experiences? Cornwall’s deal shows that any learning will be very limited.

And the secrecy that tends to go with big outsourcing deals and joint ventures means that a small group of councillors can sign joint ventures and outsourcing contracts without proper accountability  - and can settle any legal disputes later without accountability, and indeed with impunity.

Whenever a  major supplier offers a council large upfront savings from an outsourcing deal or a joint venture why would the authority’s inner circle of councillors say no?

Thank you to campaigning Somerset resident and former county council employee Dave Orr who provided the links and information that made this post possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, law, legal disputes, local government, managing change, managing outsourced services, outsourcing, public-private partnerships, SAP, supplier relationships

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Another Universal Credit leader stands down

Posted on March 11, 2013 | Leave a comment

By Tony Collins

Universal Credit’s Programme Director, Hilary Reynolds, has stood down after only four months in post. The Department for Work and Pensions says she has been replaced by the interim head of Universal Credit David Pitchford.

Last month the DWP said Pitchford was temporarily leading Universal Credit following the death of Philip Langsdale at Christmas. In November 2012 the DWP confirmed that the then Programme Director for UC, Malcolm Whitehouse, was stepping down – to be replaced by Hilary Reynolds. Steve Dover,  the DWP’s Corporate Director, Universal Credit Programme Business, has also been replaced.

A DWP spokesman said today (11 March 2013),

“David Pitchford’s role as Chief Executive for Universal Credit effectively combines the Senior Responsible Officer and Programme Director roles.  As a result, Hilary Reynolds will now move onto other work.” She will no longer work on UC but will stay at the DWP, said the spokesman.

Raised in New Zealand, Reynolds is straight-talking. When she wrote to local authority chief executives in December 2012, introducing herself as the new Director for the Universal Credit Programme, her letter was free of the sort of jargon and vague management-speak that often characterises civil service communications.  It is a pity she is standing down.

Some believe that Universal Credit will be launched in such a small way it could be managed manually. The bulk of the roll-out will be after the next general election, which means the plan would be subject to change. Each limited phase will have to prove itself before the next roll-out starts.

Reynolds’ letter to local authorities suggests that the roll-out of UC will, initially, be limited.  She said in her letter,

“For the majority of local authorities, the impact of UC during the financial year 2013/14 will be limited. .. Initially, UC will replace new claims from single jobseekers of working age in certain defined postcode areas.

“From October 2013 we plan to extend the service to include jobseekers with children, couples and owner-occupiers, gradually expanding the service to locations across Great Britain and making it available to the full range of eligible working age claimants …by the end of 2017.”

Some IT work halted? 

Accenture, Atos Origin, Oracle, Red Hat, CACI and IBM UK have all been asked to stop work on UC, according to shadow minister Liam Byrne MP, as reported on consultant Brian Wernham’s blog.

Wernham says that Minister Mark Hoban did not rebut Byrne’s statement but said that HP was committed to carrying on with the project. HP is responsible for deployment of a solution, not development, says Wernham’s agile government blog.

Comment

The DWP says that Pitchford has taken over from Reynolds – but separately the DWP had confirmed that Pitchford was leading UC temporarily and that Reynolds had a permanent job on the programme. Pitchford’s usual job is running the Major Projects Authority in the Cabinet Office.

All the changes at the DWP, and the reported halting of work by IT contractors, imply that the UC project is proving more involved, and moving more slowly,  than initially thought. It’s also a reason for the DWP to continue to refuse FOI requests for internal reports that assess the project’s progress.

Perhaps the DWP doesn’t want people to know that the project is on track for such a limited roll-out in October that it could be managed, in the main, by hand. With the bulk of the roll-out planned for after the next general election Labour may be denied the use of UC as an effective electoral weapon against the Conservatives. In other words, the riskiest stage of UC is being put off until 2016/17.

 Francis Maude, who is worried that UC will prove an IT and electoral disaster, has his own man, David Pitchford, leading the project, if only temporarily. Meanwhile UC project leaders from the DWP continue to last an extraordinarily short time. Reynolds had been UC programme director for only four months when she stood down. Pitchford is in a temporary role as the programme’s head, and Andy Nelson has recently become the DWP’s Chief Information Officer.

So much for UC’s continuity of leadership.

The truth about the project hasn’t been told. Isn’t it time someone told Iain Duncan Smith what’s really happening – Francis Maude perhaps?

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Posted in Accenture, Agile, Atos, DWP, FOI, Government IT, IBM, local government, openness and transparency, Oracle, outsourcing, Politics, Universal Credit

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Cornwall Council rushes to sign BT outsourcing deal before elections

Posted on March 8, 2013 | 2 Comments

By Tony Collins

Cornwall council logoCornwall Council was a model of local democracy in the way it challenged and then rejected a large-scale outsourcing plan. Now it has gone to the other extreme.

Amid extraordinary secrecy the Council’s cabinet is rushing through plans to sign a smaller outsourcing contract with BT – a deal that will include IT – before the May council elections.

Councillors who have been given details are not allowed to discuss them. No figures are being given on the costs to the council, or the possible savings. The Council’s cabinet is not releasing information on the risks.

Councillors are being treated like children, says ThisisCornwall. Documents with details of the BT outsourcing plans have to be handed back by councillors, and cabinet papers are being printed individually with members’ names as a watermark, on every page, to guard against copying and to help identify any whistleblowers.

The council’s Single Issue Panel has a timetable for the IT outsourcing plan.

- Recommendation to Cabinet to approve release of ITT – 27 February 2013

- Evaluation of bid – March 2013

- If contract awarded, commencement of implementation work – April 2013

- Staff transfer date – July 2013

The SIP report emphasises that the timetable for signing a deal is tight. “Evidence received is that there is little room for slippage in the timetable, but that potential award of contract is achievable by the end of March 2013… It is expected that a contract could be ready to be issued as part of the ITT [invitation to tender] pack by early in the week commencing 4 March 2013.”

The SIP report concedes that the plan is “fast moving”.

In the past, the SIP group of councillors has been open and challenging in its reports on the council’s plans with BT (and CSC before the company withdrew from negotiations). Now the SIP’s latest report is vague and unchallenging. The risks are referred to in the report as a tick-box exercise. Entire paragraphs in the SIP report appear to have little meaning.

“Risk log and programme timelines are reviewed and updated on a regular basis… 

“The Council and health partners have been working on and have reached agreement on their positions in relation to commercial aspects in the contract and their expectations have been part of the dialogue with BT.”

“Previous concerns of the Panel relating to the area of new jobs have been addressed with BT in contract discussions and contract clauses have been revised to reflect this…”

It is also unclear from the SIP report why the council is outsourcing at all, only perhaps a hint that the deal will be value for money.

“The contract will be fully evaluated by the Head of Finance and her team to ensure value for money once the final bid is received. No savings have been assumed for 2013/14 budgetary purposes, although there are assumptions of savings for the indicative figures for future years,” says the SIP report.

Comment

It is a pity that Cornwall Council’s cabinet is rushing to sign a deal for which it won’t be accountable if things go wrong. In a few weeks a new council will be voted in and, if the outsourcing deal with BT ends up in a dispute or litigation, the new council will simply blame the old, as happened when Somerset County Council’s joint venture deal with IBM, Southwest One, went into dispute.

In essence, with the local elections only two months away, Cornwall Council’s cabinet has a freedom to make whatever decision it likes with impunity; and it appears to be taking that freedom to an extreme, almost to the point of sounding, in the latest SIP report, as if the council is an arms-length marketing agent of BT.

Cornwall Council’s cabinet has a mandate from the full council to move to a contract with BT. The full council has voted to “support” a deal. But that vote was a mandate to negotiate, not to sign anything BT wants to sign.

Openness has gone out of the window and BT, it seems, is no longer being rigorously  challenged – by Cornwall’s cabinet, the full council, the public or the media.

How exactly can BT guarantee jobs and make savings? We don’t know. The Cabinet isn’t saying, and its members are doing all they can to stop councillors saying.

Are BT’s promises reliant on the fact that IT is subject to constant and sometimes costly change – often unforeseen change – and that is bound to continue, at least in the form of supporting changing legislation and reorganisations?

Unforeseen changes could add unforeseen costs which the council may have to pay because IT is at the heart of business continuity.  In any dispute with the council  – and BT knows its way around the world of contested contracts – the company would have the upper hand because of its experience with litigation and the fact that the council would need undisrupted IT at a time of change and could not afford, without risk, to take the service back in-house.

We have seen how normality broke down at Mid Staffs NHS Foundation Trust amid a lack of openness and excessive defensiveness;  and we have seen, in Somerset County Council’s joint venture with IBM, Southwest One, what can happen when a contract signing is rushed.

Cornwall Council’s cabinet is doing both. It is rushing to sign a contract; and it is rushing to sign it amid excessive secrecy.

Surely Cornwall Council can do better than slip into the shadows to sign a deal with BT before the council elections in May?  If it is such a good deal, the new council will want to sign it. A new council should have the chance to do so.

For Cornwall Council to outsource now what is arguably its single most important internal resource – IT – is bad for local democracy: it is snub to anyone who holds true the idea that local councillors are accountable to local people.

Thank you to campaigner Dave Orr who drew my attention to information that made this post possible.

* Cornwall Council, by the way, has one of the best local authority websites I have seen.  If the website is a reflection of the imagination and efficiency of its IT department, Cornwall Council should be selling its IT skills to BT for a small fortune – not giving staff away.

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Posted in BT, Campaign4Change, change management, excessive secrecy, IBM, IT-related failures, legal disputes, local democracy, local government, managing outsourced services, openness and transparency, operational issues, private sector lessons for the public sector, procurement, project management, public sector, public services, public-private partnerships

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Barnet’s inner circle ratifies Capita deal – now the challenge begins

Posted on December 7, 2012 | Leave a comment

By Tony Collins

Conservative-led Barnet Borough Council’s inner circle of “cabinet” members  agreed  unanimously last night to confirm Capita as the supplier for a 10-year £320m back-office services contract, subject to financial reports.

The deal was agreed despite widespread opposition, without a vote of the full council, and without a political consensus.  A report published by Cornwall Council’s Support Services Single Issue Panel has said that a political consensus is critical to the success of partnership deals.

Capita promises to save £120m over the 10 years, and make an £8m investment in new technology. Up to 200 jobs could go. Capita will run:

  • Estates
  • Finance and Payroll
  • Human Resources
  • IT Infrastructure and Support
  • Corporate Procurement
  • Revenues and Benefits
  • Commercial Services.

About 100 people gathered outside the Town Hall in The Burroughs, Hendon, to voice their opposition to the contract.

Standing on chairs and holding banners, members of Barnet Alliance for Public Services called on the cabinet members to listen to residents’ concerns.

Councillors vacated the room and continued their meeting next door. Speaking at the meeting, Labour councillor Alison Moore said: “This is an end to democracy as we know it… There is no such thing as guaranteed savings.”

Council leader Richard Cornelius said:

“I look forward to getting the savings we desperately need. This is not a gamble. This is not a quick fix – we have been talking about this for a long time. If we were to reject these proposals we would have to find savings elsewhere, which would be very unpleasant.”

Cornelius said the combination of a saving to the taxpayer of a million pounds a month and an £8m investment in technology by Capita made it a “very, very good deal for the Barnet taxpayer”.

The council will set up a monitoring committee in the next couple of months to scrutinise the contract.

Capita’s New Support and Customer Services Organisation deal will be the first of two major contracts awarded under the Barnet council’s One Barnet outsourcing programme. Capita’s contract is due to start in April 2013.

Comment:

Barnet’s cabinet has made an important and controversial decision about the council’s future without a vote of the full council, which is a snub to local democracy.

Somerset County Council’s joint venture with IBM has failed in part because the staff were opposed to it,  the promises were over-optimistic, the finances were on fragile foundations, and the political leadership changed.

In Barnet the opposition to the deal with Capita is more pronounced than at Somerset, particularly among staff. Can the contract survive so much animus, and will opposition to Barnet’s cabinet grow now that local democracy has been flouted in such a macho way?

Cornwall is putting its joint venture decision to a vote of the full council, on 11 December. Whatever the outcome one thing is clear. Cornwall Council’s approach to local democracy puts Barnet to shame.

Barnet approves outsourcing plan

Political consensus key to success in outsourcing

Capita contract approved despite protests

Resident seeks judicial review 

Barnet’s fire-sale

A day Capita will rue?

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Posted in Campaign4Change, Capita, change management, cost reduction, IBM, local democracy, local government, managing outsourced services, outsourcing, public-private partnerships

Somerset’s dispute with IBM is “escalating”.

Posted on October 22, 2012 | 3 Comments

By Tony Collins

Somerset County Council says in a paper due to be discussed next week that its dispute with the IBM-led Southwest One joint venture is “escalating” and that there is a need to “restore a deteriorating relationship with a supplier”.

The poor relationship is in contrast to the mutually content position in 2008, one year after Somerset signed its unique, ground-breaking deal with IBM. At that time Somerset refused a request by Unison for a copy of the business case for Southwest One saying, “We can record, however, that all our cost and performance criteria within the business case were met or exceeded”.

Now Southwest One and the council are in a legal dispute on several fronts. The council’s paper for its cabinet meeting next week says:

“The history of Southwest One [SWo] poor performance is continuing; during 2012 the Client Team have been holding SWo to account; resulting in the serving of 8 contractual notices to SWo.

“Over the past 3 weeks SWo have commenced disputes on several other matters, issuing further financial claims and disputing Somerset County Council’s warning notices.

“With a number of escalating disputes, we need to take action to:

• Conduct proceedings

• Respond to these disputes and restore a deteriorating relationship with a strategic supplier.

• Seek to improve value for money and service performance and ensure it is fit for purpose.

• Continue to assertively manage Southwest One to ensure it meets its contractual obligations.

• Maintain Partner relationships

Somerset’s officers recommend to the cabinet that:

“The Leader of the Council authorises the Chief Executive, Deputy County Solicitor, Director of Finance & Performance and other relevant SCC officers to serve and proceed with the defence and any counterclaim, to carry out all subsequent steps in the litigation process and any engagement in connection with the disputes.”

The paper  adds:

“It is also recommended that the Leader of the Council and the Chairman of Scrutiny Committee agree urgency in respect of the above recommendation…

“The Deputy County Solicitor is authorised to institute defend or settle any legal proceedings and to lodge an appeal. This report seeks authorisation to be given to SCC officers to serve and proceed with the Defence and any Counterclaim, to carry out all subsequent steps in the litigation process and any engagement and commit to financial considerations (such as legal costs) in connection with the disputes…

“Due to the contractually binding timetable for resolving disputes SCC officers need a mandate. Risks will be reported and managed through SCC’s governance arrangements.”

A budget exists to support the council’s approach.

The report says that the council is in disagreement with Southwest One over the quality of the procurement service and what payments it is entitled to as a result of savings made by getting better deals through the joint venture. “We had hoped we would be able to settle this through negotiations, but unfortunately that has not been the case.”

Comment:

In mid-2007, about two months before Somerset signed its deal to set up Southwest One with IBM, an external consultancy report on the proposals by consultants “Maana” praised the “immense amount of research and thinking” that went into the IBM bid.

It said that the “whole of the procurement process, from market investigation to preferred bidder selection has been well planned and executed”. Maana added:

“The evaluation process has been more extensive, well thought through and executed than any we have seen before.”

And look what happened to the best laid plans. Many saw at the time that the joint venture was too complicated and put too much responsibility IBM’s way, but the council pushed aside their concerns.

Who now is responsible for the failure of Southwest One? Nobody.

Thank you to Dave Orr whose information made this article possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, legal disputes, local government, managing change, outsourcing, oversight, Politics, procurement, public services, risk, shared services

Cornwall Council’s extraordinary attack on outsourcing critic

Posted on October 10, 2012 | Leave a comment

By Tony Collins

A “Cabinet” councillor in Cornwall has launched an extraordinary attack on a former IT strategy analyst Dave Orr who emailed members of the county council with his analysis of its outsourcing plans.

Orr is concerned that the council may sign a deal similar to the Southwest One joint venture contract between IBM and Somerset County Council which has been branded a failure.

His email to Cornwall’s members included links to articles, board papers and a BBC regional TV item on Southwest One’s problems. The email provided evidence on the dangers of succumbing to over-optimistic promises.  He sent it as a Somerset resident and local taxpayer.

In response, a Cabinet councillor in Cornwall sent a lengthy email to all members which defended the outsourcing proposals but also attacked Orr’s credibility.

Said the Cabinet councillor: “I understand that David Orr was employed by Somerset County Council within ICT before being seconded into SouthWestOne.  I also understand that he was a Unison representative and that he no longer works for either company. He has submitted 92 FOI requests between 5 April 2011 and 24 September 2012 to Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police .

“Whilst he is clearly a ‘Somerset resident and local taxpayer’, we do feel he is potentially misrepresenting himself by not making his previous employment with Somerset County Council and SouthWestOne explicit.

“We do not dispute the information Mr Orr has provided about SouthWestOne, although it should be noted that he was not in the contract management team and much of his information appears to have been gleaned from FOI requests and media reporting. However, Mr Orr is clearly not well placed to comment on the proposed Cornwall deal …”

Comment:

The personalised attack on Orr suggests that Cornwall’s Cabinet councillors might have lost sight of the need for independence and objectivity, particularly when close to signing a deal with BT or CSC that could be worth £300m or more.

In the response to Orr’s legitimate concerns, Cornwall’s Cabinet – the councillor uses “we” in his email – appears to have played the man as well as the ball.

Orr has nothing to gain by criticising Cornwall’s outsourcing plans;  and his FOI requests about the Southwest One deal have helped to make Somerset County Council much more open than it was.

He is right to warn on the basis of experiences in Somerset that optimistic statements by Cornwall council and the bidders could come to little or nothing. Neither CSC nor BT is infallible. Both companies were notified by the Department of Health of a breach of contract over deals they had signed as part of the National Programme for IT [NPfIT], the UK government’s largest civil IT programme.

Cornwall has had a genuinely independent assessment of its outsourcing plans by a panel it set up. But the ruling councillors dismissed the panel’s biggest concerns.

Pro-outsourcing enthusiasts on the council negotiating with optimistic potential suppliers doesn’t sound like a recipe for a successful deal.

Three centuries ago Jonathan Swift warned of the dangers of over-optimism. “The most positive men are the most credulous,” he said.

Cornwall’s ruling councillors are entitled to defend their outsourcing proposals – and they have made it clear they will continue to argue their case vigorously. But objectivity is all-important especially as an outsourcing deal on the scale proposed could be the most momentous decision in the council’s history.

A meeting of the full council will vote on the outsourcing plan later this month.

At that meeting the council’s cabinet members will argue that, without a deal, council jobs will be at risk. But has the council looked seriously at other options for saving money?  By its own admission it hasn’t. So is it really ready to sign a mega-contract with CSC or BT?

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Posted in BT, Campaign4Change, CSC, decision-making, IBM, local government, managing outsourced services, npfit

Universal Credit – a chance to do things differently.

Posted on September 13, 2012 | 2 Comments

By Tony Collins

Comment

In his comment on the article “Is Univeral Credit really on track – the DWP hides the facts”  Nik Silver asks in essence: why shouldn’t progress reports by IBM and McKinsey on Universal Credit be kept between the parties and not made public?

He says that criticism is usually helpful if the two parties can speak frankly without external interference.

It’s a reasonable point – if you are judging the public sector by the private sector’s standards. A private company would not make public consultancy reports it has commissioned on the progress or otherwise of a particularly costly project. Why should it?

Private v public sector approaches on big projects

But if the project goes wrong the private sector board will be accountable for the loss of money, or opportunity, or both. A private company’s board cares about a failed project because it cares about the bottom line.  If there is cogent criticism in a consultancy report, it will ignore that criticism at its peril.

Those standards don’t always apply in the public sector. There is no bottom line to worry about, no individual responsibility. What matters is reputation. We have seen too many public sector failed projects where the desire to maintain face, politically and internally, distorts the truth on projects.

Several ministers were proclaiming the £11bn NHS IT plan, the NPfIT, to be a success while it was going disastrously wrong. On the Rural Payment Agency’s IT-based Single Payment Scheme Parliament discovered that bad news was covered up. Ministers Lord Bach and Lord Whitty said they were misled by their officials.

When the truth financially came out it was too late to turn around the project cheaply and easily. The Environment, Food and Rural Affairs Committee said that if such a failure had happened at a major plc, the board would have faced dismissal.

Cover up when a project goes wrong also happens in the private sector. But case studies indicate that when a private sector board finds out it has been lied to, it does its utmost to put things right. The bottom line is the motivation.

In the public sector it sometimes happens that nothing is done to put serious problems right because there is no acceptance there are any serious problems. Nobody is allowed to accept internally that things are going wrong. A state of unreality exists. Some know the project is doomed.  Some at the top think it’s on track. The truth in the consultancy reports remains hidden, even internally. [The DWP couldn’t find the IBM and McKinsey reports when we first asked for them.]

Like Nik Silver, we would like Universal Credit to succeed. We are not sure it will, because the truth is not coming out. Unless serious problems are admitted they cannot be tackled.

Public sector

In the public sector a disaster does not usually become apparent until things are so bad the seriousness of the problems cannot be denied. It may be that Universal Credit will be a success if it is delayed or changed substantially in scope. That won’t be possible without reports such as IBM’s and McKinsey’s being published.  In the meantime Iain Duncan Smith, the Work and Pensions Secretary, will  continue to be given papers showing that all is well.  If the IBM and McKinsey reports are published now, and they contain some serious high-level criticisms, perhaps impinging on policy and excessive complexity, the ills may be cured or at least tackled. If these and other progress reports are made public now the corrigible criticisms could create a political climate to address those ills.

At present Universal Credit looks like so many IT-based change programmes of the past.  One side says the project is becoming a disaster and the other side says all is well.  The truth I am sure is that some things look good and some things bad. The bad probably won’t be addressed unless Parliament, together with all those who have a professional interest in the project – and the public – know about it.

The way of the past is to keep everything hushed up until it’s too late. Now there’s a chance to do things differently.

Is Universal Credit really on track? – The DWP hides the facts.

Nik Silver’s website

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Posted in Agile, Campaign4Change, change management, Government IT, IBM, IT projects, npfit, openness and transparency, operational issues, private sector lessons for the public sector, project management, public sector, public services, Universal Credit

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Is Universal Credit really on track? The DWP hides the facts.

Posted on September 11, 2012 | 6 Comments

By Tony Collins

The Department for Work and Pensions has told Campaign4Change that consultancy reports it commissioned on Universal Credit would, if disclosed under FOI, cause “inappropriate concern”.

Who’s to say the concern would be inappropriate?

At the weekend a spokesman for the Department for Work and Pensions told the BBC: “Liam Byrne (Shadow Work and Pensions Secretary) is quite simply wrong. Universal Credit is on track and on budget. To suggest anything else is incorrect.”

But the DWP has decided not to disclose reports by consultants IBM and McKinsey that could throw light on whether the department is telling the truth. Though the reports cost taxpayers nearly £400,000, the public has no right to see them.

The DWP told us: “Disclosure [under FOI] would … give the general public an unbalanced understanding of the [Universal Credit] Programme and potentially undermine policy outcomes, cause inappropriate concern (which in turn would need to be managed) and damage progress to the detriment of the Government’s key welfare reform and the wider UK economy.”

Comment

In refusing to publish the costly reports from IBM and McKinsey the Department for Work and Pensions makes the  assumption that the Universal Credit IT programme will be better off without disclosure. But does the  DWP know what is best for the Universal Credit project?  Is the DWP’s own record on project delivery exemplary? Some possible answers:

-  The DWP has a history of big IT project failures, some of which pre-date the “Operational Strategy” project in the 1980s to computerise benefit systems. MPs were told the Operational Strategy, as it was called, would cost about £70om; it cost at least £2.6bn.  Today, decades later, the DWP still has separate benefit systems and relies on “VME” mainframe software that dates back decades.

- NAO reports regularly criticise the DWP’s management of projects, programmes or  suppliers. One of the latest NAO reports on the DWP was about its poor management of a contract with Atos , which does fit-to-work medical assessments.

- The DWP hasn’t broken with tradition on the awarding of megadeals to the same familiar names. Though Universal Credit is said to be based, in part, on agile principles, Accenture and IBM are largely in control of the scheme and the department continues to award big contracts to a small number of large companies. HP, Accenture, IBM and Capgemini are safe in the DWP’s hands.

-  The NAO has qualified the accounts of the DWP for 23 years in a row because of “material” levels of fraud and error.

So is the DWP in an authoritative position to say that the taxpayer and the Universal Credit IT project are better off without disclosure of consultancy reports when the DWP has never done it differently; in other words it has never disclosed its consultancy reports?

Can we trust what DWP says?

Without those reports being put in the public domain can we trust what the DWP says on the success so far of the Universal Credit programme?

Unfortunately departments cannot always be trusted to tell the truth to the media, or Parliament, on the state of major projects.

In 2006 the then health minister Liam Byrne praised the progress of the NHS National Programme for IT, NPfIT. He told the House of Commons that the NPfIT had delivered new systems to thousands of locations in the NHS. “Progress is within budget, ahead of schedule in some areas and, in the context of a 10-year programme, broadly on track in others.”

That was incorrect. But it was what the Department of Health wanted to tell Parliament.

Now it is the DWP that is praising Universal Credit and it is Liam Byrne criticising the programme. This time Byrne may have a point. The problem is we don’t know; the DWP may or may not be telling the truth – even to its Work and Pensions Secretary Iain Duncan Smith.

It would not be the first time ministers were kept in the dark about the real state of big IT projects: ministers were among the last to know when the Rural Payment Agency’s Single Payment Scheme went awry.

And while the NPfIT was going disastrously wrong, progress on the programme was being praised by ministers who included Caroline Flint, Lord Hunt, Lord Warner, John Reid, Andy Burnham, Ivan Lewis and several others. Even a current minister, Simon Burns, gave Parliament a positive story on the NPfIT while the programme was dying.

So while DWP spokespeople and Iain Duncan Smith praise the Universal Credit IT programme can anyone trust what they say? Though Duncan Smith sits on an important DWP steering group on Universal Credit, does he know enough to know whether he is telling the truth when he says the programme is on track and on budget?

At arm’s length to ministers, officialdom owns and controls the facts on the state of all of the government’s biggest projects – and the facts on Universal Credit’s IT programme will continue to stay in locked cupboards unless the Information Commissioner rules otherwise, and even then the DWP will doubtless put up a fight against disclosure.

The IBM and McKinsey reports were so well hidden by the DWP that, for a time, it didn’t know it had them.

The DWP gave the reasons below for rejecting our appeal against the decision not to publish. The DWP’s arguments against publishing the reports on Universal Credit are the same ones that, hundreds of years ago, were used to ban the publication of Parliamentary proceedings: that reporting would affect the candour of what needed to be said. That proved to be nonsense.

By hiding the reports the DWP gives the impression it doesn’t want the truth about Universal Credit to come out – leaving the department and Iain Duncan Smith free to continue saying that the scheme is on track. Indeed Duncan Smith said yesterday that he “has nothing to hide here”. That is evidently not true.

The reports we’d requested were:

- Universal Credit end-to-end technical review” (IBM – cost £49240).
- Universal Credit delivery model assessment phases one and two. ( McKinsey and Partners – cost £350,000).

DWP’s letter to us:

7 September 2012
Dear Mr Collins,

…You asked for a copy of the Universal Credit Delivery Model Assessment Phase 1 and 2, and the Universal Credit End to End Technical Review.

I am writing to advise you that the Department has decided not to disclose the information you requested.

The department has conducted an internal review and the information you requested is being withheld as it falls under the exemptions at section 35(1)(a) and (formulation of Government policy) and Section 36 (2) (b) and (c) (prejudice to the effective conduct of public affairs) of the Freedom of Information Act. These exemptions require the public interest for and against disclosure to be balanced.

These reports from external consultants discuss the merits or drawbacks of the UC delivery model and an assessment of whether the IT architecture is fit for purpose. This must be candid otherwise; the Department and the taxpayer will not secure value for money. Such reports can therefore be negative by nature in their outlook.

The Department considers that premature disclosure of these reports could lead to future consultants’ reports being less frank. In addition, there is a risk that this may lead to an absence of a recorded audit trail of the more candid elements. This is not in the public interest. Similarly, key staff selected to be interviewed by consultants are likely to be inhibited if they think their candour is likely to be recorded and released.

It is vital that the Department’s ability effectively to identify, assess and manage its key risks to delivery is not compromised. The willingness of senior managers to fully engage in a timely manner and support consultants assessment and assurance of key IT projects in an unrestrained, frank and candid way is vital to the effectiveness of the process.

Disclosure would also give the general public an unbalanced understanding of the Programme and potentially undermine policy outcomes, cause inappropriate concern (which in turn would need to be managed) and damage progress to the detriment of the Government’s key welfare reform and the wider UK economy.

While we recognise that the publication of the information requested could provide an independent assessment of the key issues and risks, we have to balance this against the fact that these reports includes details of ongoing policy formulation and sensitive information the publication of which would be likely to prejudice the effective conduct of public affairs.

The Department periodically publishes information about the introduction of Universal Credit, and this can be found on the Departments website here http://www.dwp.gov.uk/policy/welfare-reform/universal-credit/

Yours sincerely
Ethna Harnett

We have appealed the DWP’s refusal so the matter is now before the Information Commissioner’s Office.

Universal  Credit programme on course for disaster – Frank Field

Has the DWP lost £400,000 of reports it commissioned on Universal Credit?

Millions of pounds of secret DWP reports

NAO criticises Atos benefits contract

DWP scraps £141m IT project three months after assurance to MPs

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Posted in Agile, Campaign4Change, change, change management, DWP, excessive secrecy, Freedom of Information, Government IT, HMRC, IBM, IT projects, managing outsourced services, npfit, outsourcing, Universal Credit

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IBM sues its council “partner”

Posted on September 6, 2012 | 3 Comments

By Tony Collins

Earlier this week we reported IBM’s disclosure that it is in dispute with Somerset County Council, its lead partner on a joint venture Southwest One.

In  its annual statement on Southwest One, a joint venture owned by IBM in which Somerset County Council is the lead partner, the company said that a dispute with its partners had gone to mediation which had failed.

Now it turns out that the dispute has escalated: IBM, in the form of Southwest One, is suing Somerset County Council according to BBC online.

On its website Southwest One says how “collaboration and cooperation can help to deliver procurement savings”.  But it is largely over the level of procurement savings that Southwest One is going to court.

Southwest One’s statement

Southwest One said it had taken court action because an agreement could not be made with Somerset Country Council.

“Southwest One complies with its contractual obligations, providing a robust service to all partners which includes the identification of substantial procurement savings.

“Throughout the course of the contract, Southwest One has secured procurement savings that amount to £22 million which have been approved by all partners, with contracts in place to deliver a further £71 million of savings.

“Southwest One has also successfully achieved external recognition from the Cabinet Office for Customer Service Excellence and operates an award-winning Customer Contact Centre.”

Somerset’s statement

Somerset County Council said

“We are in disagreement with Southwest One about the quality of the procurement service and what payments Southwest One is entitled to as a result of savings made by getting better deals through the joint venture.

“As set out in the terms of the contract, we had hoped we would be able to settle this issue through mediation and negotiation.

“It is now apparent that this will not be possible and it is disappointing that we are in the position of going to court.

“It is paramount that we look after the best interests of tax payers and take action when standards of performance and quality are not being met.

“We will therefore robustly defend our position and make counter-claims where we believe we have suffered losses.

“Somerset County Council will not be commenting any further on this issue at this stage.”

Thank you to Dave Orr for drawing my attention to IBM’s legal action.

Comment

As procurement expert Peter Smith asks: what is a procurement saving? Amid a complexity of transactions the phrase “procurement saving” can mean almost anything.

Southwest One was supposed to be a partnership between IBM and three public authorities: Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police.

Now the primary beneficiaries will be lawyers … And so we plough along, as the fly said to the ox.

Links

Southwest One sues Somerset County Council

Procurement savings disputes are not unusual

IBM in dispute with partners on £585m contract

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Posted in IBM, IT-related failures, legal disputes, local government, managing change, managing outsourced services, procurement, public-private partnerships, SAP, shared services

IBM in dispute with its joint venture partners on £585m contract

Posted on August 31, 2012 | 1 Comment

By Tony Collins

IBM says it is currently in dispute with the joint venture partners on a number of contractual matters relating to South West One, a joint venture between IBM and three public authorities. IBM owns the joint venture company.

South West One’s annual report says that a mediation was held on 4 and 5 July 2012 between IBM and Somerset County Council, which is the main public authority partner, on a confidential basis.

“No settlement has been reached and accordingly the board [of South West One] will be reviewing which of the remaining options in the contractual procedure should now be pursued,” says SW1′s annual report.

South West One’s report doesn’t give any detail on the “contractual matters” in dispute.

Possible matters under discussion might have included a withholding of money (the councils are expected to pay IBM about £585m over 10 years, from 2007),  contention over KPIs (IBM did not meet all of its key performance indicators and indeed met fewer of Somerset’s KPIs in 2011 than in 2010), changes to the contract which is being re-negotiated, a lack of remedial action over accounting problems in Somerset’s finance department following a major SAP implementation , a shortfall in expected savings, and the council’s extra costs of working around SAP-related problems .

It is known that a contract renegotiation has been underway for some time.

The contract was subjected to review after the Conservatives took control of Somerset County Council from the Liberal Democrats in May 2009.

The review in June 2010 found that some aspects of the contract had been successful but “figures provided do, however, tend to indicate that the anticipated procurement savings are currently falling short of projections”.

On service delivery the review said there had been “major and minor system problems and difficulties in implementation have been experienced which have often involved Somerset County Council staff in additional time and effort in working around these issues”.

It said that a “significant area of difficulty has been in relation to financial and processing components of SAP which have also had a serious effect on others outside Somerset County Council.

“As a result, there appears to have been substantial but unquantified additional direct and indirect costs incurred by the County Council and others in resolving the various difficulties encountered.

“Southwest One has also provided intensive additional resources at its own expense, notably in addressing the issues that arose in relation to the SAP phase one roll out where lessons have clearly been learned and applied to the more successful phase two implementation. More work is, however, still required as a priority in some key areas where concerns remain around the efficiency and effectiveness of service delivery and financial systems.”

South West One is dependent on the financial support of IBM to continue trading, says  company’s annual report. It adds that the “difficult political and economic environments in which the company has been operating have not shown any signs of easing”. Somerset has taken back from South West One finance, an HR advisory service, design and print.

“The difficult environment for business, both public and private, will continue to place strains upon opportunities for South West One,” said the annual report.

“There will be specific challenges in the forthcoming year due to the implementation of Universal Credit, the requirements of the Winsor report and changes in regard to the move from Police Authorities to Police Crime Commissioners.”

South West One made a loss in 2011 of £6.8m (a loss of £22.7m in 2010) and has accumulated net liabilities of £43.2m. The company can continue trading, in part because it has the support of IBM UK’s parent:  International Business Machines Corporation based at Armonk New York.

IBM owns 75% of the shares in South West One. Somerset owns 11.75%, Avon and Somerset Police Authority 8.25%, and Taunton Deane Borough Council 5%.

This article owes much to Dave Orr who has campaigned tenaciously for the facts of the South West One deal to be made known.  

Comment

The unsettled dispute suggests that the “partnership” aspect of the contract between IBM and the three public authorities – Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police Authority –  is at an end. A partnership normally implies a harmonious relationship between the parties.

Is it any surprise that things have come to this?

The South West One contract was signed in 2007, in the early hours, at a weekend, amid great haste and secrecy.  The deal was driven by a senior official at Somerset who wanted to take the council “beyond excellence”. But the joint venture had little support from many of the council staff who were seconded to South West One. Most councillors took little interest in the setting up of South West One.

IBM has found to its cost that signing a major contract with just an inner circle of enthusiasts is not enough to make such a deal work. Though some have changed many of Somerset’s councillors remain. It could be said that they deserve the deal they have got, given that so few of them took any interest in the negotiations in 2007.

Besides, it is unlikely that any joint venture which doesn’t have the support of most staff will work, which makes mutuals a potentially better shared-services option.

IBM struggles with SAP two years on – a shared services warning?

IBM-led model partnership based on SAP makes loss

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Posted in Campaign4Change, change, change management, cost reduction, culture, IBM, IT-related failures, legal disputes, local government, managing outsourced services, mutuals, openness and transparency, operational issues, outsourcing, Politics, procurement, public-private partnerships, SAP, shared services, Universal Credit

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