Category Archives: CSC

Don’t fire staff before going live – lessons from a SAP project failure

By Tony Collins

When an NHS chief executive spoke at a conference in Birmingham about how he’d ordered staff cuts in various departments in advance of a patient administration system going live – to help pay for the new system – it rang alarm bells.  

This is because more staff are usually needed to cope with extra workloads and unexpected problems during and after go-live. That’s a lesson BT and CSC gradually learned from Cerner and Lorenzo go-lives under the National Programme for IT. It’s also a lesson from some of the case studies in “Crash”.

The trust chief executive who was making the speech was managing his go-live outside of the NPfIT. He didn’t seem to realise that you shouldn’t implement savings in advance of a go-live, that the go-live is likely to cost much more than expected, and that, as a chief executive, he shouldn’t over-market the benefits of the new system internally. Instead he should be honest about life with the new system. Some things will take longer. Some processes will be more laborious.

Bull-headed

If the chief executive is bull-headedly positive and optimistic about the new IT his board directors and other colleagues will be reluctant to challenge him. Why would they tell him the whole story about the new system if he’d think less of them for it? They would pretend to be as optimistic and gung-ho as he was. And then his project could fail.

Much of this I said when I approached the trust chief executive after his speech. It wasn’t any of my business and he’d have been justified in saying so. But he listened and, as far as I know, delayed the go-live and applied the lessons.

Disaster

Now a SAP project disaster in the US has proved a reminder of the need to have many extra people on hand during and after go-live – and that go-live may be costlier and more problem-laden than expected.

The Post-Standard reported last month that a $365m [£233m] system that was intended to replace a range of legacy National Grid’s payroll and finance IT has led to thousands of employees receiving incorrect payments and delayed payments to suppliers. Some employees were not paid at all and the company ended up issuing emergency cheques.

Two unions issued writs on behalf of unpaid workers, and the Massachusetts attorney general fined National Grid $270,000 [£172,500] for failing to comply with wage laws. New York’s attorney general subpoenaed company records to investigate.

Hundreds assigned to cope with go-live aftermath

National Grid spokesman Patrick Stella said the company has assigned hundreds of employees, including outside contractors, to deal with problems spawned by the new system. Many of them have been packed into the company’s offices in Syracuse in the state of New York. Others are dispersed to work at “payroll clinics,” helping employees in crew barns or other remote locations.

For more than a year National Grid worked to develop a new system to consolidate a patchwork of human resource, supply chain and finance programs it inherited from the handful of U.S. utilities it has acquired. The system, based on SAP, cost an estimated $365m, according to National Grid regulatory filings.

Stella said the glitches to be expected when a complex new system goes live were exacerbated in the wake of Sandy, when thousands of employees worked unusual hours at unusual locations. “It would have been challenging without Hurricane Sandy,” Stella said.

SAP software woes continue to plague National Grid.

Payroll blunder.

National Grid struggles to fix payroll problems.

Cornwall Council votes for more time to consider outsourcing plans

By Tony Collins

Councillors in Cornwall voted unanimously today (23 October 2012) for a joint venture with BT to be considered more carefully, and for other options to be investigated, without any pressure to finalise a deal by the end of next month, which was the original intention.

The motion passed by the council was that the “current proposals for shared services shall not progress to the ‘invitation to submit final tenders’ stage until they have been debated and unless approved by a meeting of full council”.

The motion called on the Chief Executive [Kevin Lavery] to “investigate fully and as a matter of urgency all reasonable methods of delivering council services covered by the proposals for the strategic partnership which addresses the need to make efficiency savings and generate income”.

Councillors expect Lavery to investigate a “thin” joint venture in which the council and a partner share ownership of a new company.  There would be no early, large scale transfer of Cornwall Council staff into the company.  Cornwall Council would continue to receive its shared services internally. As the joint venture company won new work  – if it did – staff would transfer into it.

Councillors also want Lavery to investigate an in-house option and forming a mutual, which would win the support of central government.

BT, meanwhile, has said it will keep its offer to the council open until the end of its financial year in March.  Jim Currie, Cornwall’s leader, has taken over responsibility for leading the shared services discussions. He says he wants more and better information on the proposals. Most of the information has so far come from BT which has “guaranteed” to save the council money, increase investment, transform services and add at least 500 jobs. In BT’s small print it points out that its commitments to the council are “draft” or, at this stage, “non-binding”.

At the full council meeting this morning one councillor called for an investigation into whether proceeding with one supplier BT – CSC having withdrawn from the bidding in part because of a “confused” political situation in Cornwall – would meet EC tendering rules.

Councillors have set no deadline on when they will come to a decision on the BT proposals or on other options.

CSC withdraws from Cornwall bid

By Tony Collins

Updated

CSC has withdrawn from an outsourcing/joint venture bid at Cornwall council after the leader of the authority was ousted yesterday in a vote of no confidence.

The vote of the full council removed Conservative leader Alec Robertson who was a strong advocate of outsourcing a range of council services including IT to BT or CSC.

Originally the council’s cabinet – without recourse to the full council – planned to sign a contract worth between £210m and £800m in November. After a public petition of more than 5,000 signatures against the deal, the matter will now be put to the full council next week for a decision.

Conservative Jim Currie, who resigned from the cabinet in opposition to the deal, has taken Robertson’s place as leader of the council. But in an interview with regional BBC TV he did not rule out outsourcing and said he would be looking at the facts.

Indeed he told thisiscornwall.co.uk that the bid was not dead in the water.  “Never say never,” he said. “It might be an option of last resort.” He added: “We are not galloping forward with it at any great haste.”

It’s expensive for BT and CSC to maintain bid teams if they think no deal will be signed. But it is highly unlikely they would have any claim on the council for their legal and other costs should the tender be withdrawn.

Speaking on BBC Radio Cornwall, Neil Burden, Currie’s deputy, said: “One of the bidders no longer wants to engage with Cornwall Council because of what happened yesterday.”

To that Currie, said: “I can’t tell you anything at all about that. That is part of negotiations that are going on. I am sure things will emerge today, and all will be revealed later.”

Councillor Andrew Wallis has now reported on his website that at a briefing on the outsourcing bids he learned that CSC has withdrawn following the ousting of the leader Alec Robertson yesterday.

BT,  it appears, is putting a renewed effort into the bid, as if nothing had happened at the full council meeting yesterday.

Cornwall says in a statement on its website:

“The Council is disappointed that CSC has made the decision to withdraw from the procurement for a Strategic Partnership for Support Services. The Council would like to thank CSC for their involvement in the programme over the last year and their interest in working with Cornwall Council.

“The Council is continuing discussions with BT and the debate on the Strategic Partnership is still due to go ahead as part of the Full Council meeting on the 23 October 2012.

 Outsourcing costs in Cornwall escalate – and no deal signed yet

A mega-outsourcing plan beset by naive fanaticism?

Outsourcing costs in Cornwall escalate – and no deal signed yet

By Tony Collins

The estimated procurement costs of a mega-outsourcing project in Cornwall have risen sharply, not necessarily under the full control of the county council’s cabinet, and before any deal with BT or CSC is signed.

Meanwhile councillors are due to be told, in confidential briefings, that BT and CSC may claim back their costs so far, and are prepared to legally enforce that claim,  if no outsourcing deal is signed.

Such a legal claim, of potential suppliers suing a potential client, would be highly unusual perhaps unprecedented. 

Is Cornwall’s  cabinet using FUD – fear, uncertainty and doubt – to make councillors fearful of not  agreeing a deal with CSC or BT at a full council vote next week?

Papers published by Cornwall County Council show that a mega-outsourcing deal proposed by the authority’s ruling cabinet will be worth between £210m and £800m.

The full  council will vote on whether to proceed with a contract with BT or CSC on 23 October.

Before that vote the cabinet is expected to give confidential briefings to individual councillors. The briefings will focus on the promised benefits of signing a deal,  and the disadvantages of not going ahead.

The cabinet may tell councillors approximately how much money BT and CSC will claim, and if necessary take legal action to recover, if a deal is not signed, according to an interview the council leader Alec Robertson gave to thisiscornwall.co.uk

“The two bidding companies have spent a lot of money over the past couple of years and they will have a legal claim against the council for changing direction,” Robertson is quoted as saying.

“Councillors need to know the consequences. There is a lot of commercial confidentiality, but we wouldn’t be talking about small amounts of money.”

The council’s own budget for the outsourcing project so far has escalated. An independent panel set up as a “critical friend” to scrutinise the council’s plans for outsourcing has learned that the costs to Cornwall’s taxpayers of planning for the scheme were £375,000 in July 2011.

In March this year the “Single Issue Panel” members were told that the costs for the project would need to be increased from £650,000 to £800,000.

“The current estimate of the cost of the procurement process at the time of writing this report is £1.8m,” says the panel in its July 2012 report.

The £1.8m will be met from existing budget, says the cabinet in council documents.

On top of this, potential NHS partners in the deal have their legal costs.

The cabinet says in its written reply to the panel that the increase in costs is due in part to a “significant  increase in external support drawn in to support the procurement”, including specialist legal support and costs for consultancy KPMG, which has advised on the finance and client side support.

There has also been an “extension of scope” due to the proposed inclusion of telehealth/telecare. In addition there have been “project delays”.

Comment:

With the outsourcing-related costs to Cornwall’s taxpayers escalating before any deal with CSC or BT is signed, what will happen after the council is contractually committed to a long-term deal with one of the companies?

One reason there is no clear answer to this question is that so much of the council’s plans are based on assumptions that BT or CSC will commit contractually to providing up to 500 new jobs, saving money and achieving an IT-led transformation of services (while making a profit from the deal and recovering bid costs).

Cornwall’s cabinet seems confident that BT or CSC will enshrine all its promises in a contract free of caveats and ambiguities, and that the sort of legal dispute that has broken out in Somerset over the IBM/Somerset County Council joint venture Southwest One is unlikely to happen in Cornwall.

But isn’t Cornwall repeating Somerset’s mistake of not seeing that, behind the promises, assumptions, hopes and so-called contractual commitments,  the reality of withheld payments for poor service and the subsequent threat of legal action by the supplier is always there.

If Cornwall’s cabinet is already concerned about possible legal action from the bidders to recover their costs,  will the council be more confident about avoiding a legal action once the chosen suppliers’ lawyers have agreed a long and very carefully-worded outsourcing contract – a contract that may be different from the council’s proposed draft contract?

The Cabinet Office’s Major Projects Authority, under the enlightened David Pitchford, has a guiding principle that sets the coalition apart from previous administrations when it comes to avoiding disasters. That principle is to stop a deeply-flawed project cheaply before much more is spent and at risk of being wasted.  Ian Watmore, when permanent secretary at the Cabinet Office, put it well: “Fail early, fail cheaply.”

Will council leader be asked to stand down?

Cornwall outsourcing/partnership debate.

Cornwall council’s deputy leader resigns over “inevitable” outsourcing plans

By Tony Collins

Jim Currie, the Conservative deputy leader of Conservative-controlled Cornwall County Council, has resigned in objection to the authority’s outsourcing plans.

“It’s an inevitability at this stage. I have done everything I can to try to influence the process and exhausted that,” he said in an email to the County Council’s leader Alec Robertson.

“The sensible thing is to step back if you’re out of step with the rest of the Cabinet.”

Parts of Currie’s email were published by Thisiscornwall.co.uk.

Some in the media suggest that Cornwall may make a u-turn over its plan to outsource support services to either BT or CSC. But Currie’s email suggests the opposite. He told Robertson “I know you will never let go.”

A small group of Cabinet councillors had expected to take the final decision to sign a deal with BT or CSC in November – a deal worth hundreds of millions of pounds – but they must now put the decision to a vote of the full council, which is expected to happen later this month.

The full council will be able to vote on the deal because independent councillor Andrew Wallis organised a petition which has collected 5,800 signatures. Any petition that collects a minimum of 5,000 signatures must go to the full council for debate and a vote.

The petition said: “We the undersigned call on Cornwall Council to reverse its decision to proceed with a Strategic Partnership for Shared Services until such time the majority of the elected members of Cornwall Council have voted to support the proposals.”

The petition is expected to be debated at a full council meeting on 23 October. Robertson has said he will abide by the decision of the full vote.

Extracts from Currie’s email to Robertson:

“I feel I have pushed the cause of retaining council control over the joint ventures as far as I can with the Cabinet.

“The financial risks involved with the rush into the new joint venture proposals are unacceptable. The JV [joint venture] is basically too large to control.

“We have wasted £42m+ on the unitary [authority], £42m+ on the incinerator and we are now proposing to risk a great deal more on the joint venture.

“I welcome your somewhat ambiguous offer to respect full council decisions on the 23rd October but I know you will never let go.

“I could not leave local government with billions of pounds of Cornish taxpayers’ money at risk and on my conscience… Alec, this matter has never been personal.”

Currie told Thisiscornwall  “Honestly, I have done everything I can do. I have been out on a limb for a very long time and will just have to let the thing take its course and it’s down to the membership and that’s what the council is supposed to be about.

“It’s absolutely the courage of my convictions and nothing else. The amazing thing is how many other people on the council think the same way across all parties. It’s tremendously non-political.”

Jeremy Rowe, leader of Cornwall’s Liberal Democrat group, told the BBC,

“We’re in a situation where Cornwall Council is becoming a laughing stock. There’s an administration there now which has this bunker mentality. It’s completely out of touch.”

Comment:

Will the inner circle of pro-outsourcing Cabinet members win a vote of the full council on 23 October, which would enable them to go ahead and sign a deal with BT or CSC?

The pro-outsourcing group may hope that most Conservative councillors and a few from the other groups will vote for a deal, perhaps knowing or caring little about it.

When the outsourcing was last debated by the full council, in September, many of Cornwall’s 123 councillors were either away or abstained. A majority of those who were there voted against the deal – but the Cabinet has ignored that vote.

The next time the deal is debated the pro-outsourcing Cabinet councillors may win the vote if most councillors turn up and vote to support the Cabinet whether or not they know much of the proposals.

The council comprises 47 Conservative councillors, 37 liberal democrats, 31 independents, six Mebyon Kernow, one Labour and one vacant seat.

Campaign4Change has argued that the pro-outsourcing Cabinet has, in defending the deal, quoted the arguments of the bidders, which shows signs of naivity.

Currie is right to say that the deal, as  proposed, is extraordinarily risky – and he is right to resign, if only to make a point to those councillors who are undecided on whether the council should outsource.

A mega-outsourcing plan beset by naive fanaticism?

Council deputy leader resigns over £300m outsourcing deal

Cornwall Council – our [shared services] journey

Cornwall Council’s extraordinary attack on outsourcing critic

By Tony Collins

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

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

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

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

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

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

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

Comment:

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

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

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

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

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

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

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

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

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

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

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

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?

CSC signs NHS agreement with UK government – finally

By Tony Collins

Four-year deal to deliver Lorenzo and other healthcare products

CSC announced today that it entered into an agreement with the NHS on August 31, 2012 to amend the existing contract under which CSC has developed and is deploying an integrated electronic patient records system using CSC’s Lorenzo Regional Care software products.

CSC says the agreement has received the approval of all required UK Government officials and is effective immediately. It offers “substantial flexibility to NHS trusts in their choice of electronic care records solutions while affording CSC the opportunity to expand and accelerate its marketing of the Lorenzo solution to NHS trusts across England”.

The term of the agreement extends through July 2016. It includes full mutual releases of all claims between the parties through the date of the agreement.

Under the deal the NHS will not be subject to minimum volume commitments which were part of the original NPfIT local service provider contracts. These controversial clauses had committed the Department of Health to a minimum spend with CSC, and could have led to the DH paying for deployments of Lorenzo that did not actually happen.

In return for this concession CSC has agreed to non-exclusive deployment rights in its designated regions. Trusts will receive ongoing managed services from CSC for a period of five years from the date of Lorenzo deployment by a trust, provided deployment is complete or substantially complete by July 2016.

“This agreement is a significant milestone in our relationship with the National Health Service and represents a renewed commitment by the NHS and CSC to a long-term partnership as well as CSC’s healthcare solutions,” said Mike Lawrie, CSC’s president and chief executive officer.

“Under this agreement CSC will continue to have the opportunity to support the NHS Information and Communications Technology infrastructure through deployment of our groundbreaking Lorenzo base product solutions, now rigorously tested and approved for wide-scale deployment across NHS.

“We are already seeing strong demand from NHS trusts that are confident our solutions will bring the safety and efficiency gains required by a modern NHS.”

Under the agreement the parties have redefined the scope of the Lorenzo products and have established deployment and ongoing service pricing.

CSC will deliver additional Lorenzo implementations “based on demand from individual NHS trusts”. The supplier says that a flexible arrangement has been established for these trusts to combine additional clinical modules with the core care management functionality of the Lorenzo solution to meet their specific requirements.

CSC and the NHS have also agreed to a streamlined approach for trusts which wish to take the Lorenzo products within the NHS-designated North, Midlands and East regions of England to obtain central funding from the DH for implementation of the Lorenzo products.

CSC may offer the Lorenzo solutions throughout the rest of England where trusts select CSC’s solutions through a separate competitive process.

It will offer a range of other solutions and services to the NHS, including general practitioner, ambulance and community systems, digital imaging and other related services.

CSC has told the US regulator the SEC that the new agreement “forms the basis on which the parties will subsequently finalize a full restatement of the contract”.

CSC gets £68m settlement up to 31 August 2012

The DH will pay CSC £68m, which represents what CSC says is “payment for value delivered to date, a net settlement amount for mutual claims of the parties and removal of exclusivity to provide a flexible market driven approach”.

But what the costs will be of continuing the NPfIT contracts, albeit modified, are not stated.

Comment

On the face of it the deal seems a reasonable one, though no figures are given. The big concession from CSC is the release of the NPfIT minimum volume commitments. It means the DH is not tied to minimum payments to CSC, whatever is deployed.

One question remaining though is whether trusts that have indicated they will take Lorenzo will be contractually committed to taking it. There’s a big difference between an intention to deploy and signing a contract to deploy it. Has the government made a promise to CSC to deploy Lorenzo at those trusts that have indicated a willingness to deploy it?

The DH says the new deal with CSC will save £1bn. CSC’s NPfIT contracts were worth £2.9bn. Much of that was unspent by August 2012. Does this new deal mean that CSC’s NPfIT contracts could still be worth about £1.9bn over 10 years, to 2015/16?

Open government requires that the DH release the terms of the deal, especially given the NPfIT’s disastrous history. But will that happen? Is the NPfIT being “dismantled” as the DH said it would be – or does this new deal with CSC keep it alive?

Is NPfIT being dismantled – brick by brick?

CSC gets £68m settlement

DH statement

The DH says that savings of over £1bn will be reinvested into the NHS following its “legally binding agreement with CSC”.

The DH press release says that the agreement will give local hospitals and NHS organisations the power to make their own decisions about which IT systems they use.

“The money saved will go back into the NHS and would be enough to pay for half a million extra knee and hip operations, and almost 15,000 extra doctors”.

The DH says it is committed to dismantling the National Programme for IT.

“The Department of Health, the local NHS and Cabinet Office have been in negotiations with CSC to ensure the existing Electronic Patient Record system, known as Lorenzo, is fit for purpose and focuses on the NHS’s current needs as well as providing value for money.

“Under the new agreement, CSC’s exclusive rights to be the only provider of clinical IT systems in the North, Midlands and East of England have been removed.

“The Government has been renegotiating its major contracts to not only ensure  wasteful spending is eradicated but that major suppliers are offering the best value for money.”

Health Minister, Simon Burns said  “We’ve removed the restrictive, top-down, centralised approach and given the local NHS the power to make their own decisions about which IT systems they use.

“The modern NHS still needs healthcare IT systems to exchange information securely and meet the needs of their patients. By re-shaping this contract, delays will be avoided in delivering much needed IT systems to the NHS, and will ensure the investment made to date is not wasted.

“This agreement marks a step in the right direction and a move to a new way of working which will allow the NHS to secure value for money and tailor its IT systems to meet the needs of its local patients.”

Minister for the Cabinet Office Francis Maude said

“Since May 2010 we have been building a strong operations centre at the heart of Whitehall to ensure that Government runs more like the best businesses.  As part of this we have been negotiating with our major suppliers, acting as a true ‘single client’, and generating savings of £806m and £437m respectively in the first two years of this Parliament alone.

“As I emphasised when I met with 20 of our top suppliers just last month, ours is not a Government that will tolerate poor performance – and today’s announcement will leave suppliers in no doubt that we will act to strip out waste from contracts where they offer poor value for the taxpayer.”

The Dh says that local NHS organisations “will no longer be committed to using Lorenzo, and will have the freedom to decide what IT systems are most suitable for their needs”.

CSC will retain responsibility for rolling out Lorenzo which is being used by 10 NHS organisations in the North, Midlands and East of England.

The DH says that if eligible local NHS organisations wish to use Lorenzo they will be able to access centralised support and funding but will first need to develop a robust business case and demonstrate value for money in order to gain approval to do so.

Could CSC use 200 jobs as lever in NPfIT talks?

By Tony Collins

In a blog post on ComputerworldUK.com I have asked whether CSC could use 200 UK jobs as a lever in its talks with the Department of Health and the Cabinet Office on a new NPfIT deal (towards end of the blog post).

Will coalition sign a new NPfIT deal with CSC?

By Tony Collins

CSC has told investors that its discussions with the UK government on an interim agreement for deploying Lorenzo to the NHS are “continuing positively”.

CSC says that an agreement could commit a certain number of NHS trusts to take Lorenzo. Some of those trusts would be named in the interim agreement and the remainder within six months. CSC refers to them as “committed named trusts”.

[Such a legal commitment for named NHS trusts to take Lorenzo may run counter to the post-NPfIT coalition philosophy of giving trusts the freedom to buy what they want, when they want, and from whom they want. The named trusts might have indicated on a  DH questionnaire a wish to take Lorenzo but an agreement between the government and CSC would commit the trusts irrevocably, or the DH could have to pay CSC compensation for non-deployment.]

CSC says the deployed product would be categorized as “base product” or “additional product” for pricing purposes. The DH would commit money to the base product. Other funds would be available centrally available for “additional products,  supplemental trust activity and local configuration”.

The DH would give CSC a structured set of payments following certain product deliveries, as well as additional payments to cover various deployments for the named trusts and payments for work already performed.

If the government does not sign a new deal, and allows CSC’s existing contracts to run down until they expire formally in 2015, this could keep further NPfIT-related costs to the taxpayer to a minimum.  But it risks legal action from CSC, which says the NHS contract is enforceable and that the NHS has no existing right to terminate the contract, unless for convenience (which is unlikely).

If the government had terminated CSC’s contracts for its convenience (as opposed to alleged breach of contract) it would have had to pay CSC a termination fee capped at £329m as of 29 June 2012. CSC would also have been entitled to compensation for the profit it would have earned for the 12 months after the contract was terminated.

If the contract is not terminated, a new deal not signed, and no legal action is taken by either side, the amounts the UK government would have to pay CSC are likely to be minimised.  It is in CSC’s interests to maintain and enhance Lorenzo for those NHS sites that have deployed it.

So will the government sign a new deal with CSC at least to reduce the risks of CSC legal action? Or could the government hold out not signing any agreement until expiry of the contracts in 2015 on the basis that CSC has not delivered all it promised?

If a new deal is signed – and CSC indicates that an agreement is likely – the government may face accusations that it has broken its undertaking to dismantle the NPfIT.

David Camerson intervened personally to have the Cabinet Office’s Major Projects Authority look closely at NPfIT commitments.  His “efficiency” minister Francis Maude is likely to resist the signing of any new agreement

But will CSC accept the government’s refusal to sign a new deal, when such a deal could enable CSC to recover at least some of the $1.485bn (£0.95bn) it recorded as an NPfIT contract charge in the third quarter of 2012?