Category Archives: private sector lessons for the public sector

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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Does a Mid Staffs culture still pervade the NHS?

Posted on March 6, 2013 | 1 Comment

By Tony Collins

The Francis report on Mid Staffordshire NHS Foundation Trust highlighted appalling record-keeping among other problems.

One of the case studies in the report was that of an insulin-dependent diabetic, Gillian Astbury,  who entered Cannock Hospital for a urinary tract infection, had a fall in the hospital, was discharged, and later admitted to Stafford Hospital on 1 April 2007 because of bones she damaged in the fall. She died ten days later, probably after not being given insulin.

Francis highlights the lack of records on her need for insulin. There was a “failure to keep nursing records adequately or at all … there was a failure to comply with professional guidelines on note taking …”

Astbury’s partner Ron Street told hospital staff that she was diabetic, a point which went into her medical notes – initially.  But, said Francis,  nursing records for Astbury were almost non-existent.

“There is no evidence of what care took place … during interview nursing staff admitted that they did not check or read the notes regularly (if at all) and there was no linkage with notes from other wards …” 

Francis’s recommendations included a call for trust staff and managers to be open and accountable when things that go wrong.

This isn’t happening.

Campaign4Change picked an NHS trust to test whether the pre-Francis culture still prevails: whether there is the same old secrecy and defensiveness over standards of record-keeping, and whether positive news suffocates real and potential problems in trust board reports.

North Bristol NHS Trust

North Bristol NHS Trust has a chronic problem with record-keeping. It installed the Cerner Millennium electronic patient record system in December 2011, prompting a “crisis”.

Later the trust’s PR officer said in response to an FOI request that there had been 16 clinical incidents in two months relating to the new electronic patient record system. “These were all clinical incidents where the new system was cited as a causal factor, such as wrong patient wrong notes, lack of notes, incorrect clinic list,” she said.

She added:  “However our robust safeguarding processes, as well as additional checks and balances in all departments, ensured that clinical safety was not compromised and no patients were put at risk. Our priority is always patient safety and there is no indication that this has been affected.”

Last year North Bristol asked PWC to review the Cerner implementation. In its report PWC claimed that the “Trust is now beginning to move out of the crisis and return to normal operations”. That was in July 2012.

The Trust has still not returned to normal operations. Last month the Department of Health singled out North Bristol as one of only two trusts in England that failed to submit to the DH “incomplete RTT” pathway data. Incomplete pathway data refers to patients still waiting for consultant-led treatment. RTT means referral to treatment.

In August and September 2012 North Bristol was the only trust in England that failed to submit to the DH “incomplete RTT” pathway data.

Trust’s “numerous difficulties”

With little explanation, a North Bristol trust board paper in January this year referred to numerous difficulties relating to IT systems. This was in the context of an increasing number of overdue responses to complaints from patients. Said the board paper:

“Difficulties with appointment bookings and notification letters are still numerous. These are all reported to IM&T.” Again with little explanation another North Bristol board report, in November 2012, referred to “ongoing pressure in Cerner recovery …”.

So what are the Cerner problems, why have they continued for more than a year and has the North Bristol Trust’s board of directors been properly informed about them?

To test North Bristol’s openness on its Cerner problems I asked the Trust’s press officer and its media relations manager whether they could send me any trust report on the problems with the Cerner implementation.

Two days later they said that “some patience would be appreciated” but declined to say when they would respond to my question, so I asked it under FOI. The Trust gave no acknowledgement.

Perhaps North Bristol is too busy to deal with external questions and challenges on its record keeping. But that was one of the big problems highlighted by Francis in his report on Mid Staffs: that the Trust did not respond to external questions and challenges.

Worryingly, North Bristol’s reporting culture seems to prefer the positive over the negative.  This was one of its replies to an FOI request in 2012:

“With respect to inpatients, during November (before the implementation of Cerner) 40 patients were cancelled on the same day as admission for non-clinical reasons. During December (after the implementation of Cerner) 33 patients were cancelled on the same day as admission for non-clinical reasons – 7 fewer than in November.”

This reply – and others  - gave the impression, without giving contextual evidence,  that things were better since the Cerner implementation than before.

Francis in his report on Mid Staffs said,

“… for all the fine words printed and spoken about candour, and willingness to remedy wrongs, there lurks within the system an institutional instinct which, under pressure, will prefer concealment, formulaic responses and avoidance of public criticism.”

This would, it seems, apply to North Bristol – and every one of the other NHS trusts that have had electronic patient record implementations go wrong.

Indeed it is unfair to pick on North Bristol. The positive tone of its board reports is standard practice for trust board reporting across the NHS in England.

Francis said the NHS needs to change. In his letter to Jeremy Hunt on his report, Francis referred to an “institutional culture which ascribed more weight to positive information about the service than to information capable of implying cause for concern”.

But can NHS boards change in the absence of compulsion?

Audits of trust board reports?

One thing Francis did not suggest was that trust boards should have their board reports audited independently for honesty and openness.  An audit would detect an overly buoyant tone that downplayed concerns.  “There were 5 serious falls in December an increase of 3 from November. There were 185 falls in December compared to 139 falls in November, which had the lowest number of falls in one month this year.”

This was from a North Bristol board report that gave no explanation of the five serious falls. But the report made the point that November (2012) had the lowest number of falls in one month this year. If you were among the five who’d had a serious fall in hospital – and in Gillian Astbury’s case a fall in Stafford Hospital led to her death – you would probably want the trust’s board to focus on an analysis of the five serious falls, rather than be told how good a month November was for falls.

Board reports are a window on the culture of a public sector organisation. In the NHS nobody in authority seems not to have noticed that an American corporate positivism pervades many NHS board reports.  It’s within this culture that needless deaths such as those at Mid Staffs went unnoticed.

Until NHS trust board reports become more business-like and deal with concerns and potentially serious problems as would a private sector board – instead of giving the impression that they are trying to celebrate so-called achievements – the Francis report may make little difference.

North Bristol’s apparent unwillingness to disclose any detail of its Cerner problems – perhaps to its own board – is to be expected; but that natural reluctance to disclose may be symptomatic of one of the NHS’s biggest problems. The unnecessary deaths at Mid Staffs will be for nothing if the NHS does not change in the light of the Francis report. Complacency, arrogance, a preoccupation with good news and a culture of downplaying or even trying to ignore bad news are the enemy. Unless a board approach of honesty and openness is independently audited and enforced, Francis’s recommendations may bring little lasting change.

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Posted in Campaign4Change, change, change management, culture, e-health, health records, NHS, openness and transparency, oversight, Politics, private sector lessons for the public sector

Big IT suppliers and their Whitehall “hostages”

Posted on January 30, 2013 | 4 Comments

By Tony Collins

thompsonmMark Thompson is a senior lecturer in information systems at Cambridge Judge Business School, ICT futures advisor to the Cabinet Office and strategy director at consultancy Methods.

Last month he said in a Guardian comment that central government departments are “increasingly being held hostage by a handful of huge, often overseas, suppliers of customised all-or-nothing IT systems”.

Some senior officials are happy to be held captive.

“Unfortunately, hostage and hostage taker have become closely aligned in Stockholm-syndrome fashion.

“Many people in the public sector now design, procure, manage and evaluate these IT systems and ignore the exploitative nature of the relationship,” said Thompson.

The Stockholm syndrome is a psychological phenomenon in which hostages bond with their captors, sometimes to the point of defending them.

This month the Foreign and Commonwealth Office issued  a pre-tender notice for Oracle ERP systems. Worth between £250m and £750m, the framework will be open to all central government departments, arms length bodies and agencies and will replace the current “Prism” contract with Capgemini.  

It’s an old-style centralised framework that, says Chris Chant, former Executive Director at the Cabinet Office who was its head of G-Cloud, will have Oracle popping champagne corks. 

“This is a 1993 answer to a 2013 problem,” he told Computer Weekly.

In the same vein, Georgina O’Toole at Techmarketview says that central departments are staying with big Oracle ERP systems.   

She said the framework “appears to support departments continuing to run Oracle or, indeed, choosing to move to Oracle”. This is “surprising as when the Shared Services strategy was published in December, the Cabinet Office continued to highlight the cost of running Oracle ERP…”

She said the framework sends a  message that the Cabinet Office has had to accept that some departments and agencies are not going to move away from Oracle or SAP.

“The best the Cabinet Office can do is ensure they are getting the best deal. There’s no doubt there will be plenty of SIs looking to protect their existing relationships by getting a place on the FCO framework.”

G-Cloud and open standards?

Is the FCO framework another sign that the Cabinet Office, in trying to cut the high costs of central government IT, cannot break the bond – the willing hostage-captive relationship –  between big suppliers and central departments?

The framework appears to bypass G-Cloud in which departments are not tied to a particular company. It also appears to cock a snook at the idea of replacing  proprietary with open systems.

Mark Thompson said in his Guardian comment: 

- Administrative IT systems, which cost 1% of GDP, have become a byword for complexity, opacity, expense and poor delivery.

- Departments can break free from the straitjackets of their existing systems and begin to procure technology in smaller, standardised building blocks, creating demand for standard components across government. This will provide opportunities for less expensive SMEs and stimulate the local economy.

- Open, interoperable platforms for government IT will help avoid the mass duplication of proprietary processes and systems across departments that currently waste billions.

-  A negative reaction to the government’s open standards policy from some monopolistic suppliers is not surprising.

Comment

It seems that Oracle and the FCO have convinced each other that the new framework represents change.  But, as Chris Chant says, it is more of the same.

If there is an exit door from captivity the big suppliers are ushering senior officials in departments towards it saying politely “you first” and the officials are equally deferential saying “no – you first”. In the end they agree to stay where they are.

Will Thompson’s comments make any difference?

Some top officials in central departments – highly respected individuals – will dismiss Thompson’s criticisms of government IT because they believe the civil service and its experienced suppliers are doing a good job: they are keeping systems of labyrinthine complexity running unnoticeably smoothly for the millions of people who rely on government IT.

Those officials don’t want to mess too much with existing systems and big IT contracts in case government systems start to become unreliable which, they argue, could badly affect millions of people.

These same officials will advocate reform of systems of lesser importance such as those involving government websites; and they will champion agile and IT-related reforms that don’t affect them or their big IT contracts.

In a sense they are right. But they ignore the fact that government IT costs much too much. They may also exaggerate the extent to which government IT works well. Indeed they are too quick to dismiss criticisms of government IT including those made by the National Audit Office.

In numerous reports the NAO has drawn attention to weaknesses such as the lack of reliable management information and unacceptable levels of fraud and internal error in the big departments. The NAO has qualified the accounts of the two biggest non-military IT spending departments, the DWP and HMRC.

Ostensible reformers are barriers to genuine change.  They need to be replaced with fresh-thinking civil servants who recognise the impossibility of living with mega IT contracts.

Mark Thompson’s Guardian article.

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Posted in Agile, Campaign4Change, Capgemini, change management, Cloud, Cloud Computing, cost avoidance, cost reduction, culture, DWP, G-Cloud, Government IT, HMRC, innovation, managing change, managing outsourced services, open source, open standards, operational issues, Oracle ERP, Politics, private sector lessons for the public sector, procurement, project management, reducing cost strategically, supplier relationships

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We spend more on IT per capita than any other government – Maude

Posted on November 8, 2012 | 1 Comment

By Tony Collins

Cabinet Office minister Francis Maude, in a speech at the FT Innovate Conference on 6 November 2012, said:

“In the last decade our IT costs have gone up – while our services remained patchy. According to some estimates, we spend more on IT per capita than any other government.” Estimated annual IT spend in the public sector is between £14bn and £20bn.

And is the spend worthwhile?

“The same people who do their shopping, banking and social networking online are still interacting with Government on the phone, in person or on paper at less convenience to them and more cost to us…

“Government provides more than 650 transactional services, used about 1 billion times every year – but presently there are only a handful where a large majority of people who could use the online option do so.

“Half don’t offer a digital option at all – and apart from a handful of services, if there is a digital option few people use it because it’s not a sufficiently fast or convenient option.

Car tax online - under-used

“In some cases users try online and then have to revert back to other channels – in 2011 around 150 million calls coming into government were self-reported as avoidable.

This leaves us with a situation where, for example, three-quarters of people use the internet for car insurance, but only half buy car tax online.

“This is simply not good enough …”

GOV.UK

He praised the agile-based GOV.UK government website as easier to use and faster than Directgov and Businesslink which it replaces.

Mosquitoes

The Cabinet Office is also reducing the “incomprehensibly large number of Government websites”  – down from 424 to 350 in the last year.

“We closed a site dedicated to British mosquitoes – no doubt mosquitoes is a serious issue. We just didn’t feel it warranted a whole website.”

£15,000 to change a line of web code

“Departments can be asked to pay £15,000 to change a single word on a website because they are locked into legacy contracts negotiated at a time when the digital capacity lay almost entirely outside government.

“This is changing. We are moving away from legacy IT and our reliance on a few large System integrators. And introducing smaller contracts; shorter terms; a more diverse supplier community that is welcoming to SMEs; open standards; open source; more use of commodity. These are the new parameters.”

Francis Maude’s speech in full.

 

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Posted in change, change management, cost reduction, Government IT, managing change, private sector lessons for the public sector

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A mega-outsourcing plan in Cornwall beset by naive fanaticism?

Posted on October 1, 2012 | 4 Comments

By Tony Collins

Comment and analysis

An inner circle of councillors at Cornwall council is rushing plans to sign a big outsourcing deal despite a council vote against it.  The aims of the deal include an IT-based transformation of services,  the creation of “up to” 500 new jobs and tens of millions of pounds in savings – all too good to be true? 

The warning signs are there. The council’s remarkable naivety,  a hurried enthusiasm for signing a deal, and a confident waving aside of internal and external concerns,  may be early indications of a possible disaster.  An internal report warns of a potential “catastrophe” over service delivery.

 If all turns sour could accusations of maladministration follow? Is there still time for the full council to stop the inner circle from pressing ahead with a contract signing?

Major IT suppliers have some exceptional salespeople. They don’t merely sell hardware, software and services. They inspire. They rouse to action. Their promises are believable because they believe them with a conviction that can be contagious.

Joe Galloway might have been a one-off.  He was managing director of a part of one of the world’s largest IT companies EDS (now HP).  He helped to strike a CRM [Customer Relationship Management] deal with BSkyB in 2000. The contract ended in a £709m legal dispute in which Galloway was a main witness for HP. The judge in the case of BSkyB v HP found that some of Galloway’s evidence was untrue.

He demonstrated an “astounding ability to be dishonest, making up a whole story about being in St John [part of the Virgin Islands], working there and studying at Concordia College. EDS properly distance themselves from his evidence and realistically accept that his evidence should be treated with caution,” said the judge.

The judge also said

“I am driven to the conclusion that he proffered timescales (on the CRM project) which he thought were those which Sky desired, without having a reasonable basis for doing so and knowing that to be the position… I consider that he acted deliberately in putting forward the timescales knowing that he had no proper basis for those timescales. At the very least he was reckless, not caring whether what he said was right or wrong.”

During the High Court hearing, when HP discovered Galloway’s dishonesty, it sacked him.

He had held a senior position at EDS and the company’s customer BSkyB believed what he had said.  The case cost HP £318m plus tens of millions of pounds in legal fees – and the dispute lasted more than seven years. HP, it could be said, became a victim of some of the statements made by one of its executives.

The point about mentioning the case is that supplier promises, even if made with the best of intentions, may in the end come to nothing – or worse, a costly and prolonged legal dispute. Good intentions were behind the setting up of a joint venture between IBM and Somerset County Council – Southwest One – in 2007. The two sides are now immersed in a legal dispute that looks like going to court. Other councils have gone into joint ventures with major IT suppliers only to be disappointed.

So why do councils still want to sign mega outsourcing deals?

Councils keen to enter a large outsourcing deal become convinced that failures of such ventures elsewhere do not apply to them because their plans are unique. Indeed Cornwall council says on its website:

“Our strategic partnership is unlike any that has happened before, and as such, we cannot compare our programme accurately to others.”

But how do potential suppliers explain failing contracts?

In talks with potential customers IT companies correct or clarify reports in the media about outsourcing deals that have failed or are failing. It is customary during the bidding process for salespeople to take potential clients to reference sites where the representatives will agree that the media reports of a failing partnership were inaccurate or hyperbolic.

[Councils that have signed failing outsourcing deals will sometimes be reluctant to publicise the fact – and may put on a brave face in which they align themselves with the supplier; until a council changes hands, as at Somerset County Council, when a new administration is happy to publicise the mistakes of the last, and the full extent of the problems begins to emerge publicly.]

Cornwall council says on its website that it has received responses from its two shortlisted suppliers BT and CSC to specific negative press articles. The Council is now untroubled by any of the articles.

Says Cornwall

 “The feedback we received from the references contacted were balanced and gave us no significant causes for concern… We do need to reflect that these are press stories and we know only too well from our own experience that you can find negative reports on most major companies if you look for them.

“As global companies, it is to be expected that you will find a whole range of perspectives on each; it is important we take a balanced and independent view.  Please be assured that we will continue to work with both companies to deal with any issues that may arise throughout the procurement process and beyond…”

Articles BT and CSC were not asked to respond to included one in the Financial Times which said of NHS IT contracts:

“There are big doubts as to whether the government can fire BT and CSC, its two main suppliers, without paying huge sums in compensation.”

Cornwall says it continues to monitor press coverage, with the help of BT and CSC. It suggests that articles not yet written may be biased.

“… We actively monitor the press, and both companies [BT and CSC] make sure that they let us know if a negative or positive story is going to break, making sure that we understand the background. It is important to note that these articles do not always present an unbiased view,” says Cornwall.

Does setting up a “critical friend” group give a false assurance?

On the face of it Cornwall deserves praise for setting up an independent panel of “critical friends” to scrutinise the council’s outsourcing plans. It is called the “Support Services Single Issue Panel” which comprises mostly Cornwall councillors. It had help from, among others, council officers, and BT and CSC. The Panel also visited some customers of BT and CSC that the suppliers chose.

But when the Panel later expressed serious concerns about Cornwall’s outsourcing plans the council’s inner circle simply replied that it did not accept those concerns. This may strike some as a naive response to real risks.

This was part of the council’s response to the Panel:

“We do not accept the magnitude of some of the risks raised in the SIP [Single Issue Panel]. This includes the risk of service delivery failure and the risk of losing senior officers to the partner. Nor do we think there is a significant conflict between profitable trading and a public service commitment. We do not think our timescales are risking service delivery but will advocate delaying those timescales if this is judged necessary to protect the Council’s interests and/or to achieve greater contractual benefit…”

Is there a danger the council will use the setting up of the critical friend group to say that it has considered all the risks – even if it has considered then dismissed the most serious of them?

A poor supplier would be in breach of contract – but then what?

To the Panel’s concerns that the joint venture may fail to deliver, or costs escalate, Cornwall responds that if its suppliers do not deliver they will be in breach of contract.

But then what?

Said the council:

“The contract obliges the strategic partner to deliver. Any initial failure to deliver would be dealt with through a service credit arrangement. Persistent failures would represent a breach of contractual conditions which would lead to breach of contract where the Cornwall Partners would exit the contract.

“The cost for this would be picked up by the strategic partner. Financial difficulty is covered by a guarantee that the parent company would step in and continue delivery. Costs are largely within our control…”

Is it straightforward to exit a contract after an alleged breach of contract? The Department of Health was in dispute with CSC over alleged breaches of contract on the National Programme for IT, NPfIT. CSC made it clear in its statements to US regulators that the DH was unable to exit the NPfIT contracts without large payments. CSC and the Department ended up accusing each other of breaches of contract which made negotiations for a settlement long and costly.

Heading for claims of maladministration?

Is Cornwall being naive when it says simply that after any breach of contract the council “would exit the contract”? In the past this has been the legal cycle of events in some major legal disputes on IT contracts

- Customer alleges breach of contract

- Supplier makes counter-claim

- Customer withholds money

- Supplier instigates legal action

- Customer wishes to exit contract but cannot because of potential costs, counter-claims and need for supplier’s cooperation to maintain existing services.

- Long and costly settlement negotiations – which is good for lawyers – while service delivery remains in the “hold” position, unresponsive to changes that may need to be made or remedial action that may need to be taken.

International IT companies are experts in the legal side of contracts and dealing with disputes. Do Cornwall’s ruling councillors believe that the council’s expertise and legal advice would trump the supplier’s in the event of an alleged breach of contract?

When Cornwall says that in a breach of contract it would exit the contract and “the cost for this would be picked up by the strategic partner”, do the council’s ruling councillors trust that the supplier would say to the council in any dispute, “Let us know your costs of exiting the contract and we’ll settle up.”

There is another worrying sign of Cornwall’s apparent naivety. The council says “The costs would only escalate if the Cornwall Partners make changes to the services required.”

Unforeseen change is endemic in the public sector: governments change, policies change, legislation changes, organisations change, particularly the NHS which is a potential party to Cornwall’s outsourcing plans.

Is any public authority that signs up to a large and complex outsourcing deal on the basis of ‘no unforeseen change’ leaving itself open to accusations of maladministration?

Has Cornwall’s democratic process broken down?

The most extraordinary single thing about Cornwall’s outsourcing plans is that, at a full council meeting on 4 September, a majority of councillors voted against a deal but the inner circle is going ahead anyway.

Says the council’s website: “A motion calling on Cornwall Council to change its decision to enter into a partnership with the private sector to deliver a range of support services was supported by a majority of 17 Members following a three hour debate at County Hall on 04 September.”

[The motion was put and seconded by two councillors, Andrew Wallis and Andrew Long, who are not members of the major political parties.]

In dismissing the vote of the council, a spokesman for Cornwall’s pro-outsourcing group said

“All the concerns which have been raised today have already been considered by the Cabinet… This is a very complex proposal and unfortunately the decision by Members not to move into private session meant that we were unable to share the detailed confidential information they needed to make an informed decision”.

Should the Council rush to sign a deal?

Somerset County Council’s joint venture was characterised by a rush to sign, which culminated in the signing at 2am at the weekend. The failed NHS IT plan was also notable among potential suppliers for the haste before the signing of contracts, as was the failed Firecontrol contract. Is Cornwall’s deal being rushed? Cornwall’s Support Services Single Issue Panel said

“The timetable restrictions placed on the SIP [Single Issue Panel] has condensed the available time such that this report has had to be compiled within one working day. Had the timetable slipped by just that one day it is certain that no report would have been submitted.”

The Panel also said

“The risk is that this timescale is far too short for detailed evaluation and due diligence to be carried out. This is a significant value contract. The estimated value of the contract in the Prospectus for Cornwall …was £210m to £800m. The current estimated value is not known to the Panel…”

The council’s inner circle concedes that its timescales are “tight but achievable”.

Conclusion

When outsourcing plans have taken up much time and money there is always a danger a contract will have to be signed to justify the effort.  But would the signing of a mega deal at Cornwall be a triumph of ideology over objective reasoning?

One has to wonder how a mega outsourcing deal can improve services, provide a good profit margin for an international IT company, save the council money and create hundreds of jobs. Doesn’t something have to give? Is there so much inefficiency, and so much money floating around the council and its potential NHS partners, that a major supplier can cut tens of millions of pounds, spend to transform services, and make money?

In evidence to MPs last year SOCITM, which represents ICT professionals in councils, said of outsourcing ICT that it “carries many risks for local authorities and can come at a heavy price”.

Some praise for Cornwall’s approach

Cornwall’s ruling councillors should be applauded for two things:

- There is every sign that the inner circle’s plans are motivated are by the best of intentions: to save money, improve services, protect existing jobs and create more.

- Although some criticise the council’s lack of openness, the inner circle is not hiding all of its papers and discussions in a blanket of secrecy. It has published the report of the “critical friend” Panel and the council’s responses. There is much information – and links - on the planned deal on the council’s website. This doesn’t always happen in the run-up to a large public sector outsourcing contract.

But good intentions do not make up for naivety and a wish for outsourcing that may border on fanaticism – the pursuit of a Cause whatever the dangers.

If a majority of councillors at a full council meeting cannot stop the signing of a mega-deal can anyone?

It appears that a tiny group within the council will make the final decision – although it is arguably the most momentous decision in the council’s history.

Says the council: “The final approval of, and the date for, the issuing of the said invitations to submit final tenders be determined by the Chief Executive in consultation with the Leader of the Council and the Portfolio Holders for Environment, Waste Management Policy and Shared Services, Health and Wellbeing and Human Resources and Corporate Resources.”

The final decision is due next month. If Cornwall enters a deal in which it relies on the contract to protect services and the council’s reputation is it being naive? Could it end up facing accusations of maladministration, particularly after side-lining a council vote against the deal?

**

Thank you to Dave Orr and a journalist in Cornwall for your emails on Cornwall’s outsourcing plans.

Council says its joint venture is failing – BBC

Some papers on Cornwall’s outsourcing plans

Local MP’s website on Southwest One.

An ill-judged outsourcing?

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Posted in BT, BT Health, Campaign4Change, CSC, legal disputes, local government, managing outsourced services, outsourcing, oversight, Politics, private sector lessons for the public sector, public sector, public-private partnerships, risk, supplier relationships

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Government Digital Service sets an example on cloud

Posted on September 18, 2012 | Leave a comment

By Tony Collins

The Government Digital Service is putting its money where its mouth is. A leading public sector advocate of the cloud, GDS says that the first cloud hosting provider it is working with is Skyscape.

Mark O’Neill, Head of Service Delivery and Innovation at GDS, which is a team of innovators based at the Cabinet Office, writes that GDS is building GOV.UK, currently in beta at http://www.gov.uk.

“In the past, we might have looked at dedicated servers or possibly even our own rack in a datacentre somewhere. We would then have had to decide if we wanted to own the servers or if we should rent them some time to break out amortisation tables and spreadsheets.

“We would have to make sure that we were not locked in if we needed to move servers, so it would be necessary to negotiate break clauses in contracts; we would need to arrange access to server rooms for security accreditation; we would need to… well, the list goes on and on.

“The cloud has transformed all of this. Through the G-Cloud framework we are able to simply and rapidly buy highly reliable, highly cost-effective hosting services.

“Colleagues in GDS put together a statement of our requirements based on the experience we had gained during the alpha and the ongoing beta releases of GOV.UK and experience from the delivery of other major online services, both public and private sector.

“We then tested that statement of requirements against the list of suppliers on the G-Cloud framework. This allowed us to sift the number of potential providers down to four who met the statement of requirements.

“We then invited each of the suppliers in and used a consistent set of questions to explore their ability to meet our needs, their approach to operational service delivery and how they could provide flexible, scalable services through the cloud.

“To meet the needs of GOV.UK, we are planning to work with a number of different Infrastructure as a Service providers. We are happy to announce that the first cloud hosting provider we are working with is Skyscape.

“We have used G-Cloud previously for a number of small projects covering services like hosting and operations. We were very happy to discover that letting a major service contract for our flagship platform, GOV.UK, was equally straightforward and quick.

“Whilst the GOV.UK contract is the largest we have let so far, it is one of an increasing number we are letting through G-Cloud, which is now our standard way of procuring infrastructure services… If you have not used G-Cloud before then take a look, you will be pleasantly surprised. In the words of a song of my youth, ‘It was easy. It was cheap. Go and do it!’”

Introducing a new supplier – Skyscape

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Posted in Campaign4Change, Cloud, cost reduction, efficiency savings, Government IT, IT projects, private sector lessons for the public sector, procurement, public sector, public services, reducing cost strategically

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Fujitsu on blacklist? Cabinet Office issues statement

Posted on September 14, 2012 | Leave a comment

By Tony Collins

The Cabinet Office has denied it is operating a blacklist of poorly-performing suppliers – but says that suppliers deemed high risk may find it “more difficult to secure new work with HMG”.

In its statements to Kable’s Government Computing, the Cabinet Office also made it clear that suppliers deemed high risk can redeem themselves.

“Mechanisms exist to remove suppliers from the High Risk classification when performance improves dramatically.”

This suggests that Fujitsu would no longer be deemed high risk if it settled its dispute with the government over the NPfIT. Fujitsu has been seeking £700m after the failure of its NPfIT contract. A settlement has proved elusive and the case may go to court.

The FT said on Tuesday that Fujitsu has “in essence” been blacklisted. Neither Fujitsu nor the Cabinet Office are denying that Fujitsu has been put in the high-risk classification.

A Cabinet Office spokesman told Government Computing:

“We cannot comment on the status of individual suppliers, but we are absolutely clear that this Government will not tolerate poor supplier performance.

“We want to strengthen our contract management by reporting on suppliers’ performance against criteria and sharing the information across Government. This means that information on a supplier’s performance will be available and taken into consideration at the start of and during the procurement process (pre-contract). Suppliers with poor performance may therefore find it more difficult to secure new work with HMG.

“This policy will include the identification of any high-risk suppliers so that performance issues are properly taken into account before any new contracts are given.

“High-risk classification is based on material performance concerns. Suppliers deemed high risk will be subject to particularly close scrutiny when awarding new work.

“Overall, this is simply good commercial practice and in line with how we are improving the way government does business and emulating the best of the private sector.”

The spokesman said that contract extensions are within scope of the poor-performance policy but will be tackled in a proportional way – depending on the overall cost of the contract, the relative cost of extending it, and how critical the extension is.

The high-risk classification “applies to strategic suppliers who do business across Government, and is not limited to any specific sector”. Frameworks are also included.

“Our performance policy will apply to central government departments, where we have direct control of spending,” said the spokesman. But it is still unclear what direct control the Cabinet Office has of departmental spending.

That said, the Cabinet Office announced in June spending controls on central government that “allow government to act strategically in a way it never could before”. It added that there were “strict controls on ICT expenditure”.

That means that large ICT contracts to be awarded by departments must go to the Cabinet Office for approval; and the Cabinet Office has introduced a single point of contact for major suppliers, which means that the performance of strategic suppliers will be viewed in the round.

In the past suppliers have been able to tell departments that were about to award contracts that rumours of alleged poor performance in other departments were incorrect.

Comment

While not a blacklist the high-risk classification seems a good idea. Francis Maude, the Cabinet Office minister, is sending a message to suppliers that if they take legal action against a department it could stop them getting business across Whitehall.

But he’s also saying in effect: settle and we’ll remove you from the high-risk list.

Is there a danger that the power could swing too much in the government’s favour, allowing departments to poorly manage contracts with impunity? Probably not. Suppliers will have to take the high-risk list into account when signing deals.

They know that, in the insurance industry for example, if they mess up one contract word will soon get around.

Poorly-performing suppliers risk being frozen out of Government business – Government Computing

Fujitsu banned from goovernment contracts?

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Posted in Campaign4Change, cost reduction, Fujitsu, Government IT, innovation, legal disputes, Major Projects Authority, operational issues, private sector lessons for the public sector, procurement, supplier relationships

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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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Fujitsu banned from Whitehall contracts?

Posted on September 11, 2012 | 5 Comments

By Tony Collins

The FT reports today that Fujitsu has been deemed for the time being too high risk to take on new public sector deals, along with another unnamed IT services contractor.

The newspaper quotes “people close to the situation”.

It’s likely the article is correct in naming Fujitsu as a supplier that is deemed by the Cabinet Office to be high risk. It is unclear, though, whether being categorised as “high risk” by the Cabinet Office amounts to a ban for the time being on future government contracts.

The FT says that Fujitsu has “in essence” been blacklisted.  “The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted,” says the FT.

It is also unclear whether the Cabinet Office could exclude a supplier from shortlists even if it wanted to. The Cabinet Office awards few large IT contracts of its own; contracts are awarded by departments, and the Cabinet Office has no unambiguous power to exclude particular suppliers from shortlists drawn up by autonomous departments that take their own decisions on which companies to award contracts to.

Mega-contracts to be awarded by central departments must, however, must go to the Cabinet Office’s Major Projects Authority for approval.  The Authority could in theory require that Fujitsu be excluded from a shortlist before it gives approval.  This blacklisting would require Francis Maude, the Cabinet Office minister, and the minister signing the mega-contract to be in agreement.

If a departmental minister refused to exclude  a supplier from a bid or shortlist because of its past performance what could the Cabinet Office do, especially if the minister argued that the supplier’s continued work , in the form of a renewed contract, was not just desirable but essential?

The FT says that the latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture.

He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. He is quoted in the FT as saying that his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Comment

The idea of a blacklist is a good one; indeed it would be the most important innovation in government IT since the general election. For decades MPs and others have said that under-performing suppliers should not be awarded new contracts. Now at last that may be happening.

After Fujitsu sued the Department for Health for about £700m over the NPfIT a settlement has been elusive, despite the intervention of the Cabinet Office. It is likely that Fujitsu UK’s hands will have been controlled by its parent in Japan.

Fujitsu’s performance on the “Libra” contract for IT in magistrates’ courts was strongly criticised by MPs and the National Audit Office which exposed repeated threats by the supplier to withdraw from the contract unless its terms were met.

Fujitsu could circumvent any blacklisting by becoming a subcontractor on a mega-contract, as it is at HMRC on the “ASPIRE” contract and at the DWP where its hardware runs benefit systems. Or a department could ignore the Cabinet Office and award non mega-contracts to Fujitsu.

We hope the Cabinet Office finds a way to make its blacklist – if that is what it is – stick. A  private sector company would not award a new contract to a supplier that had bitten in the past. Why would the public sector?

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Posted in EU procurement, Fujitsu, Government IT, IT-related failures, legal disputes, Major Projects Authority, private sector lessons for the public sector, procurement, project management, public sector, supplier relationships

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More agile-thinkers like Roo Reynolds please

Posted on August 15, 2012 | Leave a comment

By Tony Collins

There’s a useful “keep-it-simple” article on agile software development principles by Roo Reynolds who a product manager at the Government Digital Service.

Reynolds quotes Marissa Mayer, former Google product manager, now Yahoo CEO, who said that there are two types of developer: those who seek perfection and those who seek something working today that they can improve on tomorrow.

“You probably want to work with the second sort of developer as much as possible,” says Reynolds. He quotes Voltaire as saying ‘the best is the enemy of the good’.  From Reynolds’ article:

“We start with a Minimum Viable Product, asking ourselves, what’s the simplest thing that could possibly work? We aim to have a working product, albeit a limited one, within a week or two.

“Having something you can point at and get feedback on as soon as possible is definitely better than attempting to polish something to perfection without anyone being able to tell you whether what you’re making is actually what they need.”

He warns against using made-up data, such as Lorem Ipsum text, because:

- it causes existing assumptions to be reinforced rather than challenged

- it lazily misses an opportunity to iron out any difficulties in getting hold of the real data

He concludes that “nothing beats feedback from real users”.

“Testing products with real users is vital. We always start with user needs (generally captured as user stories) and in meeting those needs I’ve learned not to get too comfortable with any implementation until we’ve tried it with a range of real people. Best of all, it’s ok to be wrong. The best way of getting closer to being right is to test real ideas with real people.”

Comment

If these principles had been applied to the NPfIT it might never have been started.  The NPfIT launched with the principle: what’s the most complicated thing that could possibly work?

Too often assumptions were made on the basis of unrepresentative data such as patient records that were up-to-date, accurate and not duplicated. The NPfIT was tested on real users – but then the bad news was all but ignored.

If Reynolds had been advising on the NPfIT, and Tony Blair hadn’t been so gung-ho when he chaired a discussion on NHS IT at a meeting in Downing Street on 18 February 2002, perhaps billions would not have been wasted on the programme.

More like Roo Reynolds in government please.

@rooreynolds

Reynolds’ article, Government Digital Service.

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Posted in Agile, Campaign4Change, change management, cost reduction, e-health, Government IT, health records, IT-related failures, npfit, private sector lessons for the public sector, reducing cost strategically

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