By Tony Collins
The lead item on BBC R4’s World at One on Friday was about Government IT contracts.
On the programme were the government’s Chief Procurement Officer Bill Crothers, Cabinet Office minister Francis Maude, the chairman of the Public Accounts Committee Margaret Hodge, the UK IT Association, and me.
Some of the points made:
– Bill Crothers gave an example of what he called “abuse” by some big IT suppliers. He said a young man who works for him lost his power cable. The supplier quoted £65 for a replacement. The price should have been £5 or £6. When Crothers queried it, the supplier justified its price on grounds of security. Crothers could not believe that a power lead had security implications so he questioned the price again and received several pages of explanation from the supplier, which he did not read. Eventually the supplier “was good enough to reduce the price to £37”.
– HMRC was charged £30,000 for changing some text on its website.
– Francis Maude said a DWP team and a further 12 people from the Cabinet Office’s Government Digital Service had built – in only three months – a prototype of a digital solution to support the introduction of Universal Credit. The system cost just over £1m, he said. [Separately big IT suppliers at DWP have been paid £303m up to March 2013 for Universal Credit work.] Maude declined to predict the outcome of the “twin-track” work on the UC project.
– Some big legacy systems may soon need replacing – those that pay about £60bn a year in state pensions and collect nearly £100bn a year in VAT. “Those are going to be big projects,” said Margaret Hodge. “I don’t think we have seen the end of big projects, or the end of disasters.”
World at One in detail
Presenter Shaun Ley and BBC political correspondent Ross Hawkins focused on government IT because of an announcement by the Cabinet Office that it is drawing the line on “bloated and wasteful IT contracts”. The Cabinet Office was pitching its announcement as marking a “massive change,” said Hawkins.
Ley said Francis Maude announced the safeguards in an attempt to ensure that IT contracts don’t become multi-billion pound failures. He said that the abandoned NPfIT had cost close to £10bn.
Hawkins quoted the UK IT Association as saying that government did not know how to do deals with smaller suppliers. On the government’s relationship with big suppliers UKITA said the government was like a “battered wife or husband who doesn’t seem to know how to leave.”
Hawkins said Crothers has the air of a man going to war. Crothers’ conclusion on the way things are at the moment:
“This is about the oligopoly, the cluster of big suppliers that have had it took good for too long. It’s reflective of monopolistic or oligopolistic behaviour. It is not acting as if they are in hungry and in a competitive market. That’s appalling.”
Hawkins asked Francis Maude how confident he was that what was being put in place on Universal Credit would work.
“I hope it will work,” said Maude. “The digital solution was created by a team within DWP with a dozen or so GDS [Government Digital Service] staff assisting.
“They created a working prototype for a digital solution within 3 months at a cost of only a bit over £1m. That certainly can be basis of a successful long-term solution.”
Hawkins [to Maude] “I asked you whether you were confident the approach with DWP would work and you said you hoped it would. That suggests to me that maybe you are not (confident).”
Maude: “N0-one knows with these things. Anyone who says you are certain everything is going to succeed … the way we do things now is build something quickly, test it, prove it, test it with users, and so you can’t have certainty about any of these outcomes.”
Hawkins said “We have had story after embarrassing story about outsourcing failures [such as the] government being charged for tagging dead people … now ministers have an interest in coming out on the front foot and just for once being on the attack and having a whack at the IT companies.
“You don’t need to be a political genius to work out why they would like to do that rather than be endlessly explaining themselves after embarrassing stories in the papers.”
Ley (to me): “Is this the best way to deal with the problems government has experienced? The journalist Tony Collins has written widely about project failures in IT in both the public and private sectors.”
I replied that big companies have sometimes charged a lot to make small software changes. The Cabinet Office’s “red lines” were a good idea though they were a formalising of restrictions that had been in place some time.
The Cabinet Office doesn’t have the power to make changes happen because departments are accountable to Parliament for their spend and so don’t want much interference from the Cabinet Office. But the Cabinet Office is right to try and reduce the amounts spent on big projects.
Ley: “What will be the effect of breaking up contracts?”
I said I hoped the Cabinet Office’s restrictions would bring about a change in culture in departments against the assumption that big is beautiful. Big projects should be split into components which would give SMEs a greater involvement and could reduce the risks of projects failing.
More project disasters?
Hodge gave her reaction to the Cabinet Office’s restrictions in the context of the Universal Credit project.
“Francis Maude and Cabinet Office have been trying really hard to get some sense into the way that project has developed. But sadly the news we have had lately suggests to me that they have failed. It is about £400m so far on IT.
“What went wrong there was that the department [DWP] thought it [UC] was a big IT project instead of thinking: we are going to be changing our business; we are going to get 6 benefits rolled into one. They [the DWP] have not written off that money [£303m] which is what my committee thinks they should have done, because they want to save face. Down the line I think we’ll see some disasters there.
“There are a lot of projects around government, what are called legacy projects, where old systems need to be replaced . They are big projects – pensions in DWP where £60bn is given out a year; VAT receipts in HMRC where nearly £100bn is collected. Those are going to be big projects. I don’t think we have seen the end of big projects, or the end of disasters.”
Ley: “What about breaking them up into smaller projects? Won’t that reduce potential risks?”
Hodge: “The important thing is what Tony Collins was saying to you. What we find is that the skills don’t exist within departments, either to commission the IT properly or to manage the suppliers once they have the IT in place.
“We are about to examine the army recruitment contract – I think that is what we’ll find. The MoD hasn’t got the skills to manage it.
Ley: “Do you welcome the ending of automatic contract extensions?”
“I warmly welcome that. This is a small step in the right direction. Having an expert as we have in Bill Crothers in the Cabinet Office is really important. What we haven’t got are skills in the departments. It is not like a business. If it was, Bill Crothers would probably run IT across the whole of government. Our departments run in silos. They haven’t got the skills. They have this demand for big, big programmes in the future and I don’t think we have seen, sadly, the end of IT disasters.”
Thank you to Dave Orr for drawing my attention to an excellent piece on the World at One item by procurement expert Peter Smith who concludes:
“… There is a big issue – large suppliers have not covered themselves in glory, but small suppliers just can’t develop huge systems for DWP or MOD.
“The large suppliers must have a role, but we have to manage these contracts better. And the answer can’t just be a small hit squad in Cabinet Office. This needs real capability development across government, which we haven’t really seen as yet in a coordinated fashion.”
BBC World at One – Government IT contracts
Bill Crothers on BBC Radio 4 – suppliers get another good kicking
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David Chassels (like the maths) makes a good point in respect of time spent and open source (again with the focus on technology and method – justification of existence?).
However Peter Smith is just wrong in his assertion “..but small suppliers just can’t develop huge systems for DWP or MOD” and in so many ways I can’t go into here, and why “must the large suppliers have a role”?
The key to this entire Conundrum and why BIG GOV IT fails was alluded to by Mrs Hodge when she identified that UC was not just another IT project. That and the lack of knowledge and experience in the departments commissioning such projects.
Let’s look at the elephant in the room, where the elephant, in this case, is UC. The elephant represents the project in its entirety. It includes the political, social, cultural, economic and technological changes that all need to happen in concert for the elephant to come to life. What happens in the real world is that factions representing each of the aspects that need to change, view the elephant through a narrow tube, only seeing the bit they point their tube at. This leads to a disconnect between the parts and a consequent lack of meaningful, transparent communication. This lack of meaningful communication is not deliberate; it is a by-product of no one person or faction having a deep enough understanding of what an elephant is. Focus is placed on the detail rendered by the tube in a ‘bottom up’ manner, with no regular reference to the ‘top down’ vision of what the elephant should look and behave like. This IMO is why such projects fail.
Placing an arbitrary £100M limit on any one project only guarantees that the most the tax payer will loose is £100M. Ok, that’s better than multiple 100s or billions but it’s still a shed load of taxpayers money.
Let’s also not forget that the organisations which form the oligopoly exist to make profits and selling something which should cost £5ish for £65 is a hell of a way to do it.
Let me suggest an alternative approach rather than the arbitrary cap. A project like UC was designed to make the calculation and dismemberment of benefit payments simpler, fairer and more efficient. This efficiency saving can/ could be calculated, therefore would it not make more sense for the DWP to contract on the basis of an engagement fee plus a royalty payment made as a percentage of quantifiable savings. This royalty payment could be made for a number of years with the percentage diminishing over an agreed period. Now, before going for a contract the supplier would make damn sure all their ducks were in a row and that they really understood what was being asked of them. The risk would be with them and not the taxpayer. Were I still running my small software company I would have their arm off for such a deal.
12 GDS people 3 months for a working prototype of UC c750 man days. What were they doing? Coding no doubt in open source which is expensive! – could have had it in 100 man days using a good modern BPM Platform tool and it would have been the first cut of the final solution?
What are GDS doing? Soon find out – got a couple of FOIs in process. They do not understand “Digital” without the end to end capability to deliver the service is “shallow”. They need all business logic including orchestrating legacy and they just do not get it! They have a fixation about open source and do they understand what technology capabilities are now available – maybe they want to do it themselves and build a business? See this very interesting commentary http://linkis.com/informationweek.com/lTx8 Saying “Open-source isn’t much different” Well worth a read.
Oops…correct link for above here:
Spend Matters also covered this: