By Tony Collins
Last week’s highly critical National Audit Office report on Universal Credit was well publicised but a table in the last section that showed how the Department for Work and Pensions had, in essence, passed control of its cheque-book to its IT suppliers, was little noticed.
The NAO in 2009 reported that the Home Office had handed over £161m to IT suppliers without knowing where the money had gone.
Now something similar has happened again, on a much bigger scale, with Universal Credit. The National Audit Office said last week that the Department for Work and Pensions has handed over £303m to IT suppliers. The NAO found that the DWP was unclear on what the £303m was providing. Said the NAO
“The Department does not yet know to what extent its new IT systems will support national roll-out … The Department will have to scale back its original delivery ambition and is reassessing what it must do to roll-out Universal Credit to claimants.”
After paying £303m, the “current programme team is developing new plans for Universal Credit,” said the NAO.
More surprising, perhaps, are the findings by PWC on its investigations into the financial management of Universal Credit IT. I and others in the media little noticed the summary of PWC’s work when I first read the NAO report.
PWC’s findings in the NAO’s report are in figure 15 on page 36. The table summarises PWC’s work on Linking outcomes to supplier payments and financial management. This is some of what the NAO says
– Insufficient challenge of supplier-driven changes in costs and forecasts because the programme team did not fully understand the assumptions driving changes.
– Inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.
– Over-reliance on performance information that was provided by suppliers without Department validation.
– The Department did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account.
– Insufficient review of contractor performance before making payments – on average six project leads were given three days to check 1,500 individual timesheets, with payments only stopped if a challenge was raised.
– 94% of spending was approved by just four people but there is limited evidence that this was reviewed and challenged.
– Inadequate internal challenge of purchase decisions; ministers had insufficient information to assess the value for money of contracts before approving them.
– the presentation of financial management information risked being misleading and reducing accountability.
– Limited IT capability and ‘intelligent client’ function leading to a risk of supplier self-review.
– Charges were on the basis of time and materials, leaving the majority of risks with the Department.
How can civil servants knowingly, or through pressure of other work, effectively give their suppliers responsibility for the sums they are paid? This is a little like asking a builder to provide and install a platinum-lined roof, then giving it the authority to submit invoices up to the value of its needs, which you pay with little or no validation.
On BBC Newsnight this week, Michael Grade, a past chairman of the BBC Board of Governors, told Jeremy Paxman about the Corporation’s corporate culture.
“I think the BBC suffers more and more from a lack of understanding of the value of money. A cheque comes in every April – for £3.5bn – and if you don’t have to earn the money, and you have that quantity of money, it is very hard to keep to keep a grip on the reality of the value of money.
“If you run a business, if you own a business, you switch the lights out at 6 O’Clock. Everybody’s gone. You walk around yourself. You own the business. It’s your money. You have earned it the hard way. The culture of the BBC of late has been, definitely, a loss of the sense of the value of money.”
Does this help to explain why so many government IT-enabled change programmes fail to meet expectations? One can talk about poor and changing specifications, over-ambitious timescales, poor leadership and inadequate accountability as reasons that contribute to failures of public sector IT-enabled change programmes.
But, at bottom, is there simply too much public money available and too few people supervising payments to suppliers? Is it asking too much of senior civil servants and ministers to treat public money as their own? Is there a lack of the reality of the true value of money, as Michael Grade says when he refers to the BBC?
It is perhaps inconceivable that any private company would spend £303m and not be sure exactly what it is getting for the money.
It may also be inconceivable that a private company would accept supplier-driven changes in costs and forecasts without fully understanding the assumptions driving those changes.
And would a private company not control what is to be supplied, when it is to be delivered and at what cost? Would it not define what is to be delivered before contracts are signed?
Would a private company not check properly whether submitted invoices are fully justified before making payments?
Perhaps central government is congenitally ill-suited to huge IT-based projects and programmes and should avoid them – unless ministers and their officials are prepared to accept the likelihood of delays of many years and costs that are many times the amounts in the early business cases. They would also need to accept that success, even then, is not guaranteed, as we know from the NPfIT.