Tag Archives: outsourcing

Cornwall Council rushes to sign BT outsourcing deal before elections

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.

Chief Procurement Officer quits for private sector

Tony Collins

John Collington has resigned as Government Chief Procurement Officer after little more than a year in the post.

Collington’s resignation is reported by Peter Smith of Spend Matters. Smith says that Collington is to become Chief Operating Officer of Alexander Mann Solutions, a leading “Recruitment Process Outsourcing” firm.

“We might have expected consultancy, or software, but Collington has been involved in shared services in recent months and has a track record in outsourcing from his time at Accenture and I believe even before that.

“He’s got strong operational skills which should play to the COO role …” says Smith.

“Francis Maude gave Collington a glowing testimonial, as we might expect…But then Cabinet Office have to spoil it by talking nonsense …”

The Cabinet Office said Collington has reduced overall spend on goods and services from £51bn to £45bn and spend with SMEs is estimated to have doubled to £6bn, along with a 73 per cent reduction in spend on consultancy and contingent labour.

“We accept he has helped to reduce spend but, given he has no budget of his own, it’s a bit much to say he ‘has reduced overall spend’…” says Smith.

“And as Cabinet Office themselves know very well, they have no clue whether spend with SMEs has doubled, given the robustness (or lack of) around the data …”

It appears that Collington was a believer in incremental reform. He was not a Chris Chant who spoke of the need for radical reform. Chant argued with force  that high costs, present ways of working and the dominance of a few major suppliers were unacceptable.

Collington reported to Ian Watmore who was Permanent Secretary at the Cabinet Office. Watmore has also resigned.

**

Nigel Smith, formerly head of the Office of Government Commerce [now subsumed into the Cabinet Office], was one the harshest critics of the way government bought goods and services.

Smith said in June 2010 that up to £220bn – nearly a third of everything government spent – was on procurement. But there were 44,000 buying organisations in the public sector which bought “roughly the same things, or similar things, in basic commodity categories” such as IT and office supplies. There were 42 professional buying organisations in public sector.

He said there was “massive duplication” of activity. We wonder how much has changed since then.

Spend Matters

Collington appointed Chief Procurement Officer

Timetable for HMRC’s work on Universal Credit is “challenging” says NAO

By Tony Collins

Today’s report of the National Audit Office on the accounts of HMRC is, perhaps diplomatically, silent on the performance of HMRC’s work so far on Universal Credit, other than to say the timetable for roll-out beginning in October next year is “challenging”.

There have been internal assessments of HMRC’s “Real Time Information” [RTI] project, on which the success of Universal Credit is dependent, but none has been published other than the “Starting Gate”.

Today’s NAO report on HMRC says the “timetable for implementation of RTI is challenging”. It adds:

“The Department for Work and Pension’s timetable to implement Universal Credit is driving the timetable to roll-out RTI. The Department for Work and Pensions requires real time PAYE information on employment and pension income to award and adjust Universal Credit.

“It is rolling out Universal Credit from October 2013 to 2017. All employers and pension providers need to be using RTI by October 2013 to meet this timetable.

“The Department met its milestone to start its RTI pilot in April 2012 with ten employers. By July 2012, it expects a further 310 employers will be using RTI. At 31 May 2012, 209 PAYE schemes covering 1.5 million individual records were using RTI.”

NAO report on HMRC’s 2011/12 accounts

HMRC still plagued by IT problems.

Time for truth on Universal Credit

HMRC “still plagued by IT problems”

By Tony Collins

HMRC has one of the biggest IT outsourcing contracts in central government, a deal worth about £8bn with Capgemini, which began in 2004. Before that, between 1994 and 2004, the main IT supplier was EDS, now HP. But HMRC has had pervasive IT-related challenges for more than a decade.

Today Margaret Hodge, Chair of the Committee of Public Accounts, commented   on a report by the National Audit Office on HM Revenue & Customs’ 2011-12 accounts.

“Sadly it is no surprise that the NAO has found substantial problems with the HMRC’s accounts. This year has seen a litany of tax errors and scandals come to light with mistakes made at the most senior level from the Permanent Secretary for Tax downwards.

“The sheer scale of waste and mismanagement at HMRC never ceases to shock me. Without even mentioning the tax gap, in 2011-12 the Department wrote off a staggering £5.2 billion of tax owed, overpaid nearly £2.5 billion in tax credits due to fraud and error and underpaid around £290 million.

“In some areas the Department is moving in the right direction and has made progress to implement improvement plans. But the Department is still plagued by IT problems; limiting, for example, its ability to link together the debts owed by tax payers across different tax streams.

“With its long history of large scale IT failures, the Department needs to get a grip before it introduces its new real time PAYE information systems and begins the high-risk move from tax credits to the Universal Credit.”

Timetable for HMRC’s work on Universal Credit is “challenging” says NAO.

NAO – HMRC’s 2011/12 accounts

Time for truth on Universal Credit.

Are SIAMs the new SIs?

In this guest blog, John Jones and John Pendlebury-Green, co-founders of strategic sales architects Landseer Partners, take a look at the development of a new generation of outsourcing in ICT and the creation of a new breed of integration and manageement specialists dubbed ‘SIAMs’. This article is also carried on Landseer Partners’ website.

We now live in an age of austerity where we have to live within our means and this includes the Government  which has just announced the need for Departments to find a further £16bn in savings. 

All Departments and Agencies are having to make real year-on-year cuts to their budgets – effectively having to do  the same for less money for some considerable time to come.  This is leading to new models for the delivery of services (third generation outsourcing) as Government becomes more about “policy and strategy” and leaves the delivery of public services to the private sector.

Industry has already played a major part in first and second generation of outsourcing including what is now more commonly called “outcome-based contracting”. 

The recent contract awards of new prison builds and operations similar to the likes of G4S and Interserve provide exemplars of outcome-based contracting. The Work Programme Initiative at the Department of Work and Pensions is another relatively recent example of second generation outsourcing with payment linked directly to outcomes.  Lessons learned are only now emerging as to the efficacy of these contracts.

What is interesting is that now we are starting to witness a new third-generation of outsourcing in ICT – Service Integration and Management (SIAM).  The consequences for the ICT Industry and the delivery of ICT within and to Government are likely to be profound. 

At Landseer Partners, we believe that the shape and players of the ICT market will change significantly in the next two to five years.  The net effect on the role of existing System Integrators (SI) is likely to be significant.

So what is SIAM all about and, importantly, what will make SIAM a success and its implications for the big SIs?

SIAMs are the ICT Managing Agent for the Customer

So, what are SIAMs – well, for starters, there is no agreed de facto industry definition of what a SIAM is. Rather, there are emerging trends in the private sector and in the current government procurements at the Ministry of Justice (MoJ) and the Foreign and Commonwealth Office (FCO) that identify key characteristics of what Service Integrators and Management Services may look like. 

For instance, the MoJ and FCO both plan to award contracts to SIAM providers that can successfully demonstrate the ability to integrate services and manage a number of Tower service providers that (typically) provide one or more commoditised services of: data hosting, LAN/WAN provision, Applications Management and Support and some Security related services.  Importantly, the SIAMs will be characterised by:

  • Taking the risks for “end to end” delivery of the services and their continuing operations
  • Creating new commercial constructs to balance risk versus delivery
  • Not necessarily holding direct contracts with the Tower service providers
  • Providing full 24/7 service desks to support national and global needs of the customer
  • Working hand-in-glove and be contract-managed by the retained Intelligent Client Function (or Informed Partner as they are sometimes known) of the Contracting Authority

In effect, the UK public sector is now requesting what has long happened in the construction industry; they are looking to award contracts to Managing Agents to help deliver and manage critical  ICT services back to Departments/Agencies.

Expected Benefits

So, with the advent of SIAMs  what are the expected benefits?  Reading the prospectuses of the government procurements we would expect the benefits to be large and varied and include:

  • Reduced cost of ICT services to the commissioning Department/Agency – this might come about by greater efficiencies in programme delivery; but significant cash savings are also expected as staff are transferred move to more cost-effective private sector pensions schemes
  • Better risk management with continuous incentives to improve service quality to users
  • Greater innovation by the SIAMs, possibly by the use of niche SMEs which will assist with more agile delivery and innovation methods

The Future

Given the real lack of experience and reliable data on the likely impact of the creation of SIAMs it is difficult to say at this particular time whether SIAMs will effective in the longer term]– will SIAMs be effective in the longer term?  Will they help to drive down cost of ICT services?  Will they help in the delivery of better public services?

Landseer Partners’s view is that, although it is early days, SIAMs are likely to be here to stay, at least in the foreseeable future. The status quo, keeping large in-house Intelligent Customer Functions and Service Desk provision, is  neither desirable nor efficient and future procurements will build on the lessons learned from the current MoJ and FCO procurements.

The key thing now is for System Integrators to recognise that change is in the air, that different business models are appearing and that, to be in the market, a change in attitude, behaviours and delivery will be needed in order to become Service Integrators and Managing Agents to Government.

The story behind India’s struggling Aakash IT project

By David Bicknell

The New York Times has carried a couple of excellent blog posts reporting on India’s struggling “Aakash” IT project.

The India Ink posts detail the story behind a plan to introduce a cheap computer built for Indian students. As the blog explains, last October, the Indian Ministry of Human Resources Development unveiled the new, $35 computer.

Now, more than six months later, with thousands of university students still waiting for the laptop, “the tale of the Aakash looks a bit like an Indian soap opera, complete with a convoluted storyline, multiple characters, and massive personality clashes.”

As India Ink says, the Aakash project, if successfully completed, could enable millions of students to connect with the larger digital world, and is being closely watched outside India as the national government tries to attract foreign investment in public-private partnerships for everything from infrastructure to vocational training.

“The original idea behind the Aakash seemed pleasantly simple. A cheap computer would benefit Indian university students by enabling them to watch lectures or get lecture notes and other class information online. In 2009, a team of government researchers developed the basic design for the low cost device.

“The job of putting the project out to bid fell to I.I.T. Rajasthan, which by spring of 2011 had received 477 million rupees — about $9.2 million — in government funds to pay for procuring and testing 100,000 low-cost tablets. In writing the tender, I.I.T. Rajasthan detailed the technical specifications for the tablet but did not specify the criteria for testing and approving the devices, according to a government source involved in the project. That omission was to prove disastrous.

Here is Part One of the tangled tale of the project, which involves issues with procurement, outsourcing, testing and governance.

And here is Part Two.

India’s $35 Aakash tablet comes apart
Aakash Tablet Problems: India’s $35 slate slammed by testers

How do you create successful software development teams? (Part 2: Outsourcing)

By David Bicknell

I recently reported on a roundtable organised by the Dutch software specialist Software Improvement Group (SIG) which set out to determine what makes successful teams in software development.

The roundtable featured two specialists in creating specialist teams: Andrew de la Haye, chief operating officer, at RIPE Network Co-ordination Centre (RIPE NCC), one of five Regional Internet Registries (RIRs) providing Internet resource allocations, registration services and coordination activities that support the operation of the Internet globally; and author and management expert Kevan Hall, chief executive of Global Integration.

In Part One of the discussion, which focused on creating excellent teams in software development, we examined teamwork, Agile empowerment, a commitment to quality, remote working and getting the right level of teamwork.

In this part of the discussion, we focused on managing multi-disciplinary teams, structure, reducing waste, and outsourcing.

Managing multi-disciplinary teams

Kevan Hall pointed out that when you’re working in a multi-disciplinary environment – for example, if you’re building a very complex piece of kit with tens of thousands of bits – there is a point at which you need to have some co-ordination.

But he added, “There is also a big part of the work where I’m an engineer off doing actual work or I’m somewhere writing code. And that’s not teamwork.  If we have this mentality that everything we do is a team, then we can’t make a decision until the next meeting. I distinguish between a team, which is kind of truly interdependent i.e. if you’ve got multi-disciplinary skills, R&D etc,  you really need to work collaboratively, tightly, and you can’t do it on your own, you need teamwork. But most work isn’t like that: most work is me doing my stuff.

“And therefore a simple hub and spoke group of organisations might be much simpler to do that. When you’re working globally, or virtually, that’s much, much easier because in a hub and spoke structure, if I want to talk to you, I just pick up the phone.  If I’m in a team, I have to go into all your Outlook diaries and hope that in the next month, you’ve got some time where we can at least all get on the phone.

“So hub and spoke is much simpler for virtual teams and for remoteness and those kind of things. So when we are  working collaboratively that’s when we really need to focus because it’s really expensive and quite hard to do.”

Waste reduction and communication

Andrew de la Haye from RIPE explained the need for what he describes as ‘waste reduction.’

“One of the things we do as standard culture in our software teams is every three to four months we do waste reduction sessions. So in the old methodology, you do retrospectives. You start a sprint – a sprint is two weeks – you deliver to the business, and after that, the team sits together and then they discuss what went well and what should be improved in the next sprint. And as a larger group in the whole department, we get them together once every four months for an hour or two at the most and we say, ‘OK. Where is waste? Where do we see waste?”

“And most of the time it is not coding or the real work they do, most of the time it is in the communications area.  And we try to get rid of it. So we changed the team from 2 x 6 to 3 x 4 people. It’s just part of our being to look at the waste we created after the last period and where can we improve. And they became  much more efficient and effective.”

According to Kevan Hall, one of the things you often see with teams is the ‘community decay curve’.

“When you have a team, virtual or not, you have a kick off and everyone’s very enthusiastic. And then you start doing the work, and it’s quite hard. And then you come to the end of something and you’ve succeeded and you have a celebration. Successful virtual teams create a rhythm. For our teams, it’s a year. You have a long old slog and there is a ‘periodicity’ of communication. A software team is perfect because you have a closure, a learning opportunity, a celebration and then you go and do it again. If it’s longer than that, then you have to think about other things that are going to have an impact, like a conference call or a coaching call.

“Even worse, if you’re managing a remote organisation or a remote supplier, the risk is that you only call them when you need something or you’ve got a problem. So they don’t really look forward to your next call. ‘Oh, no. Look who’s on the phone.’ You demotivate people just by your number coming up. It’s about keeping that rhythm. It’s a bit like an ECG. You’ve got to create those peaks to keep motivation high.

“Social media has a very powerful role to play in virtual teams, because it’s much easier to share the other things that I’m doing rather than just project updates. I also like Instant Messenger because if you have people in Asia you can see that they’re ‘on’ and to me it’s just like passing someone in the corridor. It’s the virtual coffee machine. Occasionally, people will see say, ‘If you’re there, can we have a quick call?’ And it’s another part of the rhythm for me – like keeping the heartbeat going.”

Outsourcing

“I used to sell a lot of outsourcing,” said Andrew de la Haye. “But I haven’t seen it really working (teamwise). One of the issues with outsourcing is the commitment bit, which is very important in my teams. My people are committed to me because they know me, and they know what the company stands for. If you outsource to somebody, who are they committed to? You hope that they are committed to the organisation they’re working for, but they’re certainly not committed to you. And they are probably more committed to themselves, especially in India because people move around like crazy.

“So one of the issues with outsourcing is the lack of commitment, I think. I don’t see a solution to that. There are two ways of outsourcing: outsourcing commodity items, where there is a new version of SAP and people need to upgrade. That kind of stuff. That’s good enough – it will work fine. But if you truly need to build applications and you need to work together with a company to create business value, and that’s what a lot of outsourcing is about as well, I haven’t seen it working.

“I tried it again last year, and I gave a company a chance. I had a really good relationship with this consulting firm and they told me that they had an excellent team in India, and ‘Let’s try this project just for a three-month trial.’ And it was more or less the only project in the last five years that went belly-up.”

As Kevan Hall pointed out, when you’re managing across distance, culture, time zones, working through technology, and commercial considerations, outsourcing is so much more complex.

“One of the things we see a lot with clients who have outsourced is what I call the balance of trust and control. Because I don’t know you and I don’t trust you, I tend to control you. And so we go out to India and we have these incredibly heavy processes which we beat you up to make sure you follow without any sense of initiative or change, and then you start complaining that the Indians don’t have any initiative and don’t innovate.

“Well, you’ve told them not to and they’ve very smart people, albeit with higher turnover, and then you’re finding that problem of ‘how do we build trust?’ So many organisations outsource processes and spend an enormous amount of time on process, but they don’t have the travel budget to even go and meet the people who are doing a service for them.

“So how are you ever going to build a relationship? You wouldn’t do it in your own business. So doing it in an even more complex environment…how’s that going to work?”

“You have to look at the type of activity being outsourced,” said Dr Joost Visser, SIG’s Head of Research . “There is a lot of success in outsourcing in all sort of activities. In software application development where you are trying to create business value and where people are being creative, like in the automotive industry, thinking of the next engine or concept car, I think that by basically taking the team you need and pulling it out over locations and over time zones, you’re creating a challenge for the teamwork you need for that activity.”

There is another factor: the customer, suggested Kevan Hall.

“If you decided that you’re going to bring your development team into one place and therefore take away one barrier to complexity, which is distance, which makes a lot of sense, then aren’t you just exporting that level of complexity to the customer? Because they still have to manage with the fact that they still have stakeholders spread around the world in different time zones and different cultures. And they’ve got complex needs. It’s OK for you now. But is that the right thing to do for the customer?

“Human Resources has done that. They’ve gone to specialist centres and business partners. And all that’s done is that the business partner has to manage all the complexity rather than the organisation.”

How do you create successful software development teams? (Part 1)

Rights to Provide plans focus on “potential offered by mutual models” to improve services

By David Bicknell

The Government has detailed how it is developing and implementing Rights to Provide to “empower front line staff across the public sector to take over the services they deliver,” possibly through the creation of new mutuals.

The Government said it has identified local authorities’ services, fire services, probation and adult social care as some of the areas for developing new mutuals. This it says, will be backed by enhanced support available to staff through the Mutuals Information Service and the Mutuals Support Programme.

In announcing an updated discussion paper David Cameron said increasing parental choice in schools, extending personal budgets so people can choose how they spend money on services and increasing the transparency of public service performance and user satisfaction are all part of the next steps to improve public services by opening them up.  The paper updates the Open Public Service (OPS) White Paper published last summer.

Launching the new paper, Cameron said: “Nearly two years on from coming into office, brick by brick, edifice by edifice, we are slowly dismantling the big-state structures we inherited from the last government. We are putting people in control, giving them the choices and chances that they get in almost every other area of life. There is still a way to go and this kind of change will not happen overnight. But no one should doubt my determination to make our public services better, by opening them up.”

Specifically on mutuals, the paper says:

“Alongside the focus on digital delivery, and as a core part of work to reform the Civil Service, Government Commercial Teams are working with individual departments to identify where new commercial models would accelerate reform and improve services. In some cases, this may involve high-quality in-house delivery; in other cases outsourcing may offer best value.

“We are particularly interested in the potential offered by mutual models, including mutual joint ventures, that give employees much greater say in the way their organisation is run, for example the model being considered for MyCSP.

“To ensure that the benefits of mutualisation are available across the wider public sector, we are giving public sector staff new Rights to Provide – empowering employees to form public service mutuals to bid or request to take over the services they deliver. This will empower millions of public sector staff to become their own boss,freeing up untapped entrepreneurial and innovative drive.

“Public service mutuals are now well established in community healthcare, with thousands of public servants working in new mutuals with contracts worth almost £1 billion. We have extended these rights to new areas, including adult social care and NHS trusts, and we are looking to go further, in areas such as youth services, probation services, children’s centres, and fire and rescue services.

“We have been actively working with fledgling mutuals on the ground, for example through the Mystery Shopper service and the Mutuals Information Service; and we are supporting some of the most promising and innovative mutuals to reach the point of investment readiness, through the Mutuals Support Programme – a fund of more than £10 million to contract for support in the form of business and professional services to groups of staff who want to form mutuals or existing mutual organisations in the public sector. A steady stream of applications is developing into a pipeline of projects.”

The Government said all its departments will put in place a Right to Provide to empower employees in public services for which they are responsible to s pin out to create new public service mutuals. Public sector workers who want to formmutuals or co-operatives to deliver public services will be given a Right to Provide.

The Government will look to reflect these commitments in departmental business plans where appropriate.

Information from the Mutuals Information Service will inform departmental policy development, the new paper says.  

It points out that “the Department of Health’s Right to Request is near completion, with 40 services now operating as independent social enterprises and further projects to go live by April 2012. The Right to Provide has generated interest across NHS trusts, foundation trusts and adult social care.

“The Department of Health is already exploring opportunities to support social enterprises and mutuals spinning out from the NHS, social care and adult social work. The status of other government departments is as follows:

Department for Business, Innovation and Skills (BIS) Further Education – now starting

Home Office – not yet started

Ministry of Justice – now starting; commitments will be reflected in the Department’s business plan 

Department for Work and Pensions – not yet started

Department for Education Youth Services, and Social Work – now starting

Department for Education Children’s Centres – not yet started.

Other Links

Cabinet Office news release

Part equity models for mutuals could revive outsourcing sector

By Robert Morgan

Few can be in any doubt of the coalition government commitment to worker inclusive mutuals and the potential for not only smaller government as a result but a revival of the outsourcing services industry.  This model acts as a template to appease European workers councils who have long held back the greater use of outsourcing in country like France and Germany.

Headline grabbers like ““Ministers are poised to launch one of the biggest experiments in public sector reform … a John Lewis-style mutual – the first to be created in central government”, and “… three or four more Mutuals THIS year …” and “…1,000,000 public sector workers in Mutuals by 2015” in the Financial Times this week has not been picked by the bulk of the popular press. But they and the continental press soon will.

Francis Maude, Mutualisation’s marketing guru has said of the MyCSP mutual ““I don’t … view this as the ultimate model … we have learnt … The next one should be easier to do”. The award of the MyCSP contract, rumoured to be ten years with a break clause at year seven, will administer 1.5m government pensions, transfer 500 DWP staff into the SPV, see CEO compensation capped at 8% above average employee salary, net profits shared with the supplier but only after 1% going to charity and 1% going to apprenticeships, and employees interests will be represented by an externally advertised director. So part of the model are clear – a new form of privatisation with Jon Lewis style employee participation and share ownership and a “caring” social charter.

But has government learnt from Labour’s disasters in PFI / PPP – you know the £120 to change a light bulb stories. Key questions need answers:

  • To what extent will the mutual be given freedom to operate?
  • At least in the short-term, a mutual remains tied to its public sector background and delivery and is therefore subject to the rigours and constraints of regulation, OJEU and accountability to the Auditor General. Will these restrictions be “officially loosened” any time soon?
  • Everyone agrees that the public sector will continue to shrink and by definition therefore, so will a dependent mutual’s service revenues, this throws up questions on it’s ability to survive – and to attract external revenues, and so …
  • … will the choice of partner be heavily dependent on their demonstrated ability or commitment to develop such services?
  • What penalties are there for NOT securing external business?
  • How might the Mutual formula vary and evolve between different circumstances?

More importantly for the outsourcing industry is, are more commercial models going to spring up and be accepted. The consensus of clients I have spoken to is “yes”, but this needs to be balanced with the fact that there was not a single tier one outsourcer (IBM, CSC, HP) in the short-list for MyCSP.  Demand says “yes” and Supply says “yawn”. 

Robert Morgan, formerly the founder of Morgan Chambers and now director of outsourcing advisory Burnt Oak Partners, is delivering a speech on Part Equity models for commerce on Wednesday 8th February 2012 at Berwin Leighton Paisner – the event is free and tickets can be coordinated via  shan,murad@blplaw.com  – yes it is a comma!

Robert also writes the influential Outsourcing Lex column at

http://www.burntoak-partners.com/viewpoint/outsourcings-lex-column/

HM Courts Service hides “Libra” IT’s new shortcomings

By Tony Collins

A report published today by the National Audit Office highlights how limitations in Libra, a case management IT system in use across magistrates’ courts, has contributed towards  HM Courts Service’s inability to provide basic financial information to support the accounts.

HM Courts Service claimed a success for the troubled Libra system in 2008 – but the failure of the system was more enduring and deep-rooted than thought. The problems were kept hidden until today’s NAO report because the present and past governments have kept “Gateway” progress reports on IT-based projects confidential.

In an unusual step, the head of the NAO, Amyas Morse, has “disclaimed” his audit opinion on the accounts of the HM Courts Service, largely because of a lack of financial information.

Disclaiming an audit opinion is more serious than qualifying the accounts of a government department or agency. Qualifying the accounts means that Morse has reservations on whether figures presented to the NAO are accurate. Disclaiming an audit opinion means that Morse lacks the basic information on which to give any opinion on the accounts.

MP Richard Bacon, a member of the Public Accounts Committee, says that disclaiming an audit opinion is the “auditor’s nuclear button”.

The NAO report today puts the focus on inadequacies in the “Libra” system which is supplied by Fujitsu and STL, with integration work by Accenture.

Fujitsu originally estimated the cost of Libra, a case management system for magistrates’ courts, at £146m. By March the estimated costs were £447m and were expected to rise further. The Libra project took 16 years to complete.

Problems and cost increases on the Libra system were well known in 2003 when the NAO criticised the management of the project. After that all went quiet until in 2008 when HM Courts Service declared Libra a success.

Now the NAO’s Morse says:

“Because of limitations in the underlying systems, HM Courts Service has not been able to provide me with proper accounting records relating to the collection of fines, confiscation orders and penalties. I have therefore disclaimed my audit opinion on its Trust Statement accounts.”

In a statement the NAO criticises the Libra system directly:

“Today’s report highlights how limitations in Libra, the case management IT system in use across magistrates’ courts, and similar systems have contributed towards  HM Courts Service’s inability to provide information at an individual transactions level to support the accounts.”

The NAO says that the Ministry of Justice plans to investigate further the functionality of Libra to determine whether it is possible to provide evidence to support accruals-based financial reporting.

Says the NAO:

“In particular, the Ministry and HMCTS [HM Courts and Tribunals Service] believe that it may be possible to obtain evidence over fines and confiscation orders if a suitable report is run shortly after the month end.

“ However, the Ministry and HMCTS have informed me that they may not be able to address these fundamental issues until Libra is significantly enhanced or replaced with a new case management and accounting system. The timing of this enhancement or replacement is currently uncertain. However, the Ministry have committed to ensuring that any replacement for Libra includes accounting functionality to enable financial reporting.”

MP Richard Bacon, who has followed the Libra project for many years, says:

“This is a disgraceful position for the Courts Service to have reached.  It is true that the Libra computer system is both expensive and useless but we have known this for many years (Cost of Courts’ IT system triples) and public bodies still have a duty to keep proper records.

“We are now looking at a possible £1.4 billion loss in uncollected fines and penalties partly because of the longstanding shambles that passes for record-keeping in the courts service.

“For centuries, people have kept accurate records and accounts using pen and paper. This could still be done now if needed and if there were sufficient will to do it.”

Margaret Hodge MP, Chair of the Committee of Public Accounts, said:

“It is really worrying that HM Courts and Tribunals Service can’t produce basic financial records.  HM Courts Service is responsible for collecting fines and penalties, but we can’t tell if this money is accounted for properly.

“The Comptroller and Auditor General has taken the rare step of disclaiming his audit opinion – the Committee will be looking for HM Courts and Tribunals Service to improve.”

Comment:

It is astonishing that HM Courts Service has been able to continue in operation without MPs having idea until today that the costly Libra computer system was unable to provide basic financial information.

Parliament was kept in the dark about Libra’s new shortcomings because “Gateway” review reports in IT-based projects and programmes are kept confidential. It is a pity for taxpayers and accountability on major projects that ministers are surrendering to the wishes of civil servants who want Gateway reports kept confidential.

NAO report on Courts Service.