Category Archives: IT-related failures

More IT-based megaprojects derail amid claims all is well

Posted on 30/10/2013 | 2 comments

By Tony Collins

If one thing unites all failing IT-based megaprojects in the public sector it is the defensive shield of denial that suppliers and their clients hold up when confronted by bad news.

It has happened in the US and UK this week. On the Universal Credit  project, the minister in charge of the scheme, Lord Freud, accepted none of the criticisms in a National Audit Office report “Universal Credit: early progress”.   In a debate in the House of Lords Lord Freud quoted from two tiny parts of the NAO report that could be interpreted as positive comments.

“Spending so far is a small proportion of the total budget … and it is still entirely feasible that [universal credit] goes on to achieve considerable benefits for society,” said Lord Freud, quoting the NAO report.

But he mentioned none of the criticisms in the 55-page NAO report which concluded:

“At this early stage of the Universal Credit programme the Department has not achieved value for money. The Department has delayed rolling out Universal Credit to claimants, has had weak control of the programme, and has been unable to assess the value of the systems it spent over £300 million to develop.

“These problems represent a significant setback to Universal Credit and raise wider concerns about the Department’s ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”

And a shield of denial went up in the US this week where newspapers on the east and west coast published stories on failing public sector IT-based megaprojects.  The LA [Los Angeles] Times said:

As many as 300,000 jobless affected by state software snags

“California lawmakers want to know why Deloitte’s unemployment benefits system arrived with major bugs and at almost double the cost estimate. The firm says the system is working.”

The LA Times continued:

“Problems are growing worse for the state’s Employment Development Department after a new computer system backfired, leaving some Californians without much-needed benefit cheques for weeks.”

The Department said the problems affected 80,000 claims but the LA Times obtained internal emails that showed the software glitches stopped payment to as many as 300,000 claimants.

Now lawmakers are setting up a hearing to determine what went wrong with a system that cost taxpayers $110m, almost double the original estimate.

Some blame the Department’s slow response to the problems. Others point the finger at a Deloitte Consulting.

The LA Times says that Deloitte has a “history of delivering projects over budget and with problematic results”. Deloitte also has been blamed, in part, for similar troubles with upgrades to unemployment software in Massachusetts, Pennsylvania and Florida, says the paper.

“We keep hiring the same company, and they keep having the same issues,” said Senator Anthony Cannella.  “At some point, it’s on us for hiring the same company. It’s faulty logic, and we’ve got to get better.”

In 2003 California planned to spend $58m upgrading its 30-year-old unemployment benefits system. By the time the state awarded Deloitte the contract in 2010  the cost estimate had grown by more than $30m.

The Department handed out $6.6bn to about 1 million unemployed Californians in 2012. The software was expected to ease the agency’s ability to verify who was eligible to receive benefits.

Problems began when the Department transferred old unemployment data to the new system. The software flagged claims for review — requiring state workers to manually process them.

The LA Times says that officials thought initially the workload would be manageable, but internal emails showed the agency was quickly overwhelmed. Phone lines were jammed. For weeks, the Department’s employees have been working overtime to clear the backlog.

A poor contract?

In a contract amendment signed two months ago California agreed to pay Deloitte $3.5m for five months of maintenance and operations costs. Those costs should have been anticipated in the contract said Michael Krigsman, a software consultant who is an expert on why big IT-based contracts go awry. He told the LA Times:

“It’s a striking oversight that maintenance was not anticipated at the beginning of the contract when the state was at a much stronger negotiation position.”

By the time the middle of a project is reached, the state has no choice but to stick with Deloitte to work out bugs that arise when the system goes live, he said.

System works

Loree Levy, a spokeswoman for the Department, said the system is working, processing 80% of claims on time. As for the troubles, she said, “There is a period of transition or adjustment with any large infrastructure upgrade like this one.”

Deloitte spokeswoman Courtney Flaherty said the new California system is working and that problems are not the result of a “breakdown or flaw in the software Deloitte developed”.

System not working?

While there seems to be no project disaster in the eyes of the Department and Deloitte Consulting, some of the unemployed see things differently. One wrote:

“I am a contract worker who had to fight for my unemployment benefits. I won my case and yet they still cannot pay me… It’s been more than 3 weeks since I won my appeal and as of this moment, I am owed 13 weeks of back payments. To add insult to injury, they cannot send me current weeks to certify and they refuse to even try to help me to get back into the online system.

“I blame Deloitte, but it is California that carries the heaviest burden of fault… We’re nearing November and they still haven’t fixed an issue that began over Labor Day? Nonsense!

“This is untenable for everyone affected …We are owed reparations as well as our money at this point. It’s a funny word, affected. That means families and individuals are going hungry but can’t get food stamps or welfare. It means evictions and repossessed cars. It means destroyed credit, late fees, years of turmoil and shame for people already dealing with unemployment. Shame on you California.”

Another wrote:

“ … Not communicating is NOT an answer. Unemployed individuals caught up in the nightmare were told to be patient.  Rents and other expenses were still accumulating.  But [when you] add on additional fees: late fees, restoral fees, interest fees, etc…….you get the picture.

“Dear Governor Brown,

“Please reimburse me for all additional fees I’ve had to absorb to survive this fiasco.  You are going to make me payback any overpayments, but ignore the cost to the unemployed taxpayer.  This is  appears to unfair.  Perhaps Deloitte should pay us back from their contracted funds before they receive their final payment.  I am saving all of my receipts to deduct from my 2013 tax return.

“BTW Gov Brown – I am still waiting on additional payments as of today and DMV registration for my vehicle was due on 10/20/13.  Are you going to waive the penalty for late payment? Am I the only one with this question?”

Scrutiny

California’s state Assembly has set a date of 6 November 2013 for a hearing into the Department’s system upgrade.

“We’re going to look at EDD, the contractors and others to see how the system broke down so we can avoid this in the future,” said Henry Perea, chair of the Assembly’s Insurance Committee, which has oversight over the jobless benefits program.

On its website Deloitte says:

“Deloitte continues to help EDD [Employment Development Department] transform the level of service it provides to unemployed workers and improve the quality of information collected by EDD. The next time unemployment spikes, California should be ready to meet the increased demand for services.”

Massachutsetts IT disaster?

On the opposite coast the Boston Globe reported on an entirely separate debacle (which also involved Deloitte):

          None admit fault on troubled jobless benefits system

“… even with the possibility that unemployed workers could face months more of difficulties and delays in getting benefits, officials from the Labor Department and contractor, Deloitte Consulting of New York, testified before the Senate Committee on Post Audit that the rollout of the computer system was largely a success.

“‘I am happy with the launch,’ said Joanne F. Goldstein, secretary of Labour and Workforce Development, noting that she would have liked some aspects to have gone better.

“Mark Price, a Deloitte principal in charge of the firm’s Massachusetts business, acknowledged that software has faced challenges during the rollout, but insisted, ‘We have a successful working system today. ‘’’

NPfIT shield

A shield of denial was up for years at the Department of Health whose CIOs and other spokespeople repeatedly claimed that the NPfIT was a success.

Comment

If you didn’t know that Universal Credit IT wasn’t working, or that thousands of people on the east and west coasts of the US hadn’t been paid unemployment benefits because of IT-related problems, and you had to rely on only the public comments of the IT suppliers and government spokespeople, you would have every reason to believe that Universal Credit and the jobless systems in Massachusetts and California were working well.

Why is it that after every failed IT-based megaproject those in charge can simply blow the truth gently away like soap bubbles?

When confronted by bad news, suppliers and their customers tend to join hands behind their defensive shields. On the other side are politicians, members of the public affected by the megaprojects and the press who have all, according to suppliers and officials, got it wrong.

Is this why lessons from public sector IT-based project disasters are not always learned? Because, in the eyes of suppliers and their clients, the disasters don’t really exist?

None admit fault on troubled jobless benefit system

State fired Deloitte

Complaints continue despite claims system is under control

As many as 300,000 affected by California’s software problems

California’s predictable fiasco?

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Posted in Campaign4Change, change management, CIO, consultants, contractors, culture, Deloitte, ERP, Government IT, IT projects, IT-related failures, managing outsourced services, npfit, openness and transparency, operational issues, outsourcing, oversight, private sector lessons for the public sector, public sector, public-private partnerships, supplier relationships, Universal Credit

Who polices police IT reports?

Posted on 24/10/2013 | 5 comments

By Tony Collins

The police, and civil and public servants in central government, the NHS and local authorities criticise journalists for biased reporting – taking selected facts out of context.

They’re sometimes right.  Journalists working for national newspapers can draft an article that is diligently balanced only to find, by the time it’s published, it leaves out facts which would have complicated, blunted, or contradicted the main points.

It’s one thing for this to happen in the world of journalism. You don’t expect public bodies to report on their own affairs with a partiality that rivals out-of-context reporting by some newspapers.

But it appears to be happening so regularly that one-sided self-reporting on organisational performance may be becoming the norm in the public sector.

In the NHS subjective, positive reporting in board papers – where managers tell directors what they think they want to hear – could help to explain why Cerner patient record implementations have, for years, gone badly wrong for the same reasons.

In recent months reports without balance have been published on the performance of Avon and Somerset Police’s IT outsourcing contract with IBM. 

Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police  are minority shareholders in a private company, Southwest One,  which is owned by IBM.

Confusingly, Taunton Deane Borough Council issued positive reports about its successful partnership with Southwest One – and then it decided to take some services back in-house.

Now it has emerged – only as a result of FOI requests by Somerset resident and campaigner Dave Orr – that two independent organisations, the National Audit Office, and HM Inspectorate of Constabulary, have commented positively on Avon and Somerset Constabulary’s partnership with Southwest One, based entirely on the unaudited opinions of the police force itself.

SAP

From his FOI requests Orr learned that the Avon and Somerset’s outsourcing deal with Southwest One has not gone entirely as expected. The National Audit Office’s FOI team has released notes of a joint visit by the NAO and HM Inspectorate of Constabulary to Avon and Somerset police in December 2012.  The visit was to find out about how well Southwest One was delivering services to the police force.  

The NAO’s notes are positive in parts. They say that performance has improved considerably since the implementation of the contract.

“Implementation of SAP improving the accounts close-down process, initial issues being resolved and a good quality of service being provided regularly.”

But there is another side to the story that is not reflected in the published accounts of Avon and Somerset’s relationship with Southwest One. The NAO’s [unpublished] field notes say:

“Fewer than expected benefits have been realised from IT due to the considerably different security requirements of the Police compared to the Councils.

“It also took a long time for SAP to be implemented. There has yet to be a duty management system implemented by SWOne which is part of the contract… SAP would have benefited from some pre-launch testing or piloting.”

A letter to Orr from the Home Office appears to confirm that Avon and Somerset Police’s participation in Southwest One is an unequivocal success.

“The private sector can help to deliver police support services better and at lower cost. Every pound saved means more money for the front line, putting officers on the streets…

“In its report “Policing in Austerity: rising to the challenge [2013] Her Majesty’s Inspectorate of Constabulary identified the Southwest One partnership as being a key element in achieving savings for Avon and Somerset Constabulary while ensuring better procurement, streamlining business support processes, and ensuring better use of police officer time.

“The report also noted that the Southwest One collaboration was the first of its kind for policing in England and Wales and that to date, no other force has delivered this level of partnership with local authorities.”

A little of the other side of the story comes in the last sentence of the Home Office letter to Orr which says: “We understand that Avon and Somerset Constabulary continues to work closely with IBM to resolve any technical difficulties and improve the services provided by Southwest One.”

Indeed a table on page 155 of HMIC ‘s 2013 report Policing in austerity: rising to the challenge indicates that Avon and Somerset Constabulary has one of the worst records of any police force when it comes to savings delivered between 2010/11 and 2012/13. [Table: Key indicators of the challenge – quartile analysis.]

Southwest One began a 10-year contract providing services to Avon and Somerset Police in 2008. The services included enquiry offices, district HR, estates, financial services, site administration, facilities, corporate human resources, information services, purchasing and supply, and reprographics. The contract involves 554 seconded staff.

Comment

Police forces, councils, the NHS and central government departments need  a few Richard Feymans to report on their organisation’s performance. Feynman was a gifted scientist, MIT graduate and noble prize winner who was chosen as a commissioner to report on the cause , or causes, of the Challenger Space Shuttle “O” rings accident on 28 January 1986.

He reported with such independence of mind and diligence that his hard-hitting findings were not considered acceptable to be included in the main report of the Presidential Commission of inquiry into the accident.  Feynman had to be content with having his findings published as an appendix to the Commission’s report – and an edited appendix at that.  

He suggested in his book “What do you care what other people think?” that his appendix was the only genuinely balanced part of the official inquiry report. 

“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled,” said Feynman.

One of his questions was whether “organisation weaknesses that contributed to the [Shuttle] accident [was] confined to the solid rocket booster sector, or were they a more general characteristic of NASA.”

One of Feynman’s conclusions:

“It would appear that, for whatever purpose – be it for internal or external consumption – the management of NASA exaggerates the reliability of its product to the point of fantasy.”

If such exaggeration happens at NASA it can happen in UK police force IT reports, and in board papers on the performance of councils and NHS trusts.

When journalists get it wrong it’s usually to their eternal regret. In the public sector positive unbalanced reporting is so “normal” that hardly anyone involved realises it’s a deviant practice. The US author Diane Vaughan coined a phrase for such corporate behaviour.  She called it the normalisation of deviance.  

It’s surely time for public bodies to move away from the norm and start reporting on their performance, and the performance of their outsourcing other private sector contracts, with balance, objectivity and independence of mind.   

If managers knew that reports on the progress of their contracts would be audited for impartiality and competence over organisational self-interest, perhaps they would have a greater incentive to avoid badly thought through outsourcing deals and IT implementations.

Is this why some council and NHS scandals stay hidden for years?

NAO report “Private sector partnering in the police service”

Dave Orr’s HMIC FOI requests and answers

NAO’s FOI responses on Avon and Somerset Police

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Posted in Campaign4Change, Government IT, IT-related failures, local government, NHS, openness and transparency, operational issues, outsourcing, oversight, private sector lessons for the public sector, project management, public sector, public services, public-private partnerships, SAP, supplier relationships

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Are Whitehall IT business cases largely fictional?

Posted on 09/10/2013 | Leave a comment

By Tony Collins

Today’s report on the e-Borders programme by John Vine, the Chief Inspector of Borders and Immigration, is a reminder that central government business cases for major IT-based projects can be largely fictional.

Says the Vine report:

“The failure to identify these risks in the 2007 business plan meant that the original data collection targets, set out in the e-Borders delivery plan, were unrealistic and were always likely to be missed.”

It adds:

“The e-Borders programme business case indicated that e-Borders would allow foreign national passengers to be counted in and counted out of the UK, providing more reliable data for the purposes of migration and population statistics, and in planning the provision of public services. However, we found that the data set collected by e-Borders was not extensive enough for these purposes.”

And:

“Management information shows that between January and September 2012, 2,200 arrests took place as a direct result of the identification of wanted persons. This was less than the original estimate provided in the 2007 business case, which had anticipated 8,200 arrests per year based on the Semaphore pilot.”

One Whitehall insider said that experts are employed to write business cases to a template.  But do any of the promises in the business cases have to be fulfilled? It seems not.  Do business cases have to be realistic? The history of IT-based projects and programmes in central government shows that they don’t have to be.  

Business cases make promises on targets, any savings and costs.  When the targets in the business prove unachievable a new business case is written, and when the revised targets also prove unachievable another is written and so forth.

By the time assumptions in the business case have been properly tested the writers of the business cases are likely to have moved to other departments. Nobody is ever held responsible for writing a business case that proves to have been fictional. And why should they be? The writers of the business cases are in no way responsible for delivering the results.

The National Programme for IT in the NHS – NPfIT –had so many revised business cases nobody counted them.  Perhaps officials at the Department of Health knew they were largely fictional or, to put it more politely, aspirational. But the Treasury requires tick-box business cases to be written to justify money allocated to a project. Is there any point in a business case that’s not realistic? Perhaps. It allows money to be spent on a project that, based on realistic assumptions, would probably not be approved.

Below are the results of the e-Borders business case of 2007. Most of the promises haven’t been fulfilled.

The e-Borders system was based on Project Semaphore which was delivered by IBM in 2004 and it’s clear from the Vine report that the system  has been a success. Project Semaphore is still used because its replacement, which was commissioned in 2007, has been a standard government IT-based disaster with suppliers claiming that government kept changing its mind and the requirements, and the government saying milestones were not met.  In July 2010 the e-borders contract with “Trusted Borders” was terminated.

Vine’s report today,  Exporting the border’? An inspection of e-Borders October 2012 – March 2013, has a table (figure 18) that shows how much the Border Force has been able to meet the promises in the 2007 business case for the e-borders programme:  

1. Improved security by supporting the security and intelligence agencies to track and analyse the activities of terrorists and other national security targets across the border. Delivered? Partially.

2. Increased ability to identify and arrest those of interest to the police. Delivered? Yes.

3. Improved effectiveness and efficiency of border control activity by providing a risk assessment of passengers, facilitating expedited processing of passengers at the border and providing a platform for automated clearance services. Delivered? No.

4. Benefits will accrue from process cost savings as a result of the phasing
out of landing cards and the ability to access electronic movement
records when determining applications for extensions of stay. Delivered? No.

5. Enable the identification of those involved in excise duty avoidance and
impact on the market penetration of smuggled goods. Delivered? Partially.

6. Enable HMRC and DWP to establish the length of time spent in the
UK by an individual permitting easy identification of benefit claimants
living outside the UK and those falsely claiming non domicile status for
income tax purposes. Delivered? No.

7. Benefits to ports and carriers such as:
• reductions in removal and detention costs of those refused entry
(subject to implementation of an authority to carry scheme);
• more effective use of detention space at ports, provided free of
rent to control agencies; and
• remove requirement to procure and administer landing cards.

Delivered? No.

8. The ability to count all foreign national passengers into and out of the
UK enabling the provision of accurate statistical data to support the
provision of services. Delivered? No.

**

The Home Office is now writing a further business case for a new e-Borders programme, and will appoint a new IT supplier. Are its business case  authors expecting their work to be published under fiction or non-fiction? History, it seems, will provide the answer.

[The Home Office said its e-Borders technology was the most advanced in Europe – which says much for the 2004 IBM Semaphore system.]

John Vine’s report.

JohnVine “surprised” by findings

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Posted in Accenture, Campaign4Change, Capgemini, change management, Government IT, IBM, IT-related failures, legal disputes, npfit, project management

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Glasgow’s “major” health IT problem – a welcome openness

Posted on 02/10/2013 | Leave a comment

By Tony Collins

On its website this morning NHS Glasgow and Clyde, Scotland’s largest health board, has published an update about IT problems that technical staff have been unable to resolve. It says:

“Despite the best efforts of our IT technical staff who have worked throughout the night we have as yet been unable to resolve the problem. We have however been able to put in place a fix which we believe will ensure that chemotherapy patients are not affected by the continued IT issue.

“Unfortunately however there will still be some patients whose planned appointments today will be affected and we are currently in the process of assessing which patients this will impact upon. As soon as this has been identified we will contact the patients direct. Emergency care services are unaffected.

“We are continuing to work to get the system back on line as soon as possible and would like to apologise again to those patients who have been inconvenienced. A further update will be issued later this morning.”

The board issued its first bulletin yesterday evening.

“NHS Greater Glasgow and Clyde experienced a major IT problem this morning. Our technical staff are working flat out resolve this. However as a result, we have had to postpone a number of operations, chemotherapy sessions and outpatient appointments.

“There was also some delay in calls to our switchboard being answered. The problem relates to our networks and the way staff can connect to some of our clinical and administrative systems.

“We can reassure patients affected that their care will be rescheduled at the earliest opportunity. We are extremely sorry for the inconvenience that this has caused and we are doing everything possible to return services to normal as quickly as possible.”

The board issued statistics on those affected.

“In total we have postponed: 288 outpatient appointments, four planned inpatient procedures, 23 day cases and 40 chemotherapy treatments.”

The board told the BBC that the problems might have affected up to 10 major hospitals.

Comment

NHS Glasgow and Clyde’s timely statements over its problems would suggest that Scotland is much more open about IT-related difficulties than any trust in England where web bulletins, when there are any after IT problems, are usually about patients who have not been affected.

Scottish Conservative health spokesman Jackson Carlaw is right to say that NHS Greater Glasgow and Clyde “has been quick to admit to a serious problem”.

Trusts in England could learn something from NHS Glasgow and Clyde about openness and sound crisis management.

Croydon trust plans Cerner go-live in secret

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Posted in Campaign4Change, health, health records, IT-related failures, managing change, openness and transparency, operational issues

NPfIT central costs rise by tens of millions – even after “dismantling”

Posted on 18/09/2013 | 1 comment

By Tony Collins

On 22 September 2011 the Department of Health announced the dismantling of the NPfIT. As the press release was being issued some officials at the department were aware that they were continuing to spend tens of millions on central administrative costs of the programme.

Today’s report of the Public Accounts Committee has a figure for the central costs of the NPfIT until the end of March 2012 of about £890m. Before the DH announced the dismantling of the programme, in March 2011, the DH put the central costs at £817m.

So there has been a rise in central admin costs of about £70m since the NPfIT was supposedly dismantled.

The administrative costs are separate from spending on the contracts with BT or CSC. The admin costs don’t include the delivery of a single laptop to the NHS under the NPfIT. They are simply the central costs of administering the programme – including day rates for consultants – such as day rates of £1,700 to help senior officials prepare for appearances before MPs on the Public Accounts Committee.

The central costs have never been explained, not even by the National Audit Office which has published several reports on the NPfIT.  It is known that some central costs are explained by items of questionable benefit such as the commissioning of DVD films that marketed the NPfIT.

Some of the cost categories have emerged as a result of an FOI request (below).  Officials made regular visits to various parts of the globe to promote the success of the NPfIT. It’s thought that the DH has spent more than £100m on consultants for the programme.

Millions of pounds have been spent with public relations companies. The DH spent about £30,000 on press cuttings in two years alone.  Released central costs for just two years of the NPfIT between 2005 and 2007 include:

  • £1.23m with Expotel Hotel Reservations
  • £1.87 Harry Weeks Business Travel
  • BT conferencing – £1.15m
  • Intercall video conferencing – £274,973
  • MWB (Serviced Offices) – £15.8m
  • Regus – offices and meeting rooms – £3.17m
  • Spring International Express (courier and other services) – £192, 662
  • Cision UK (press cuttings) – £30,000
  • Fishburn Hedges (includes public relations) – £559,310
  • Good Relations (public relations] – £1.55m
  • Porter Novelli (public relations and information) – £943,000
  • ASE Consulting – £31.7m
  • Capgemini – £15m
  • Deloitte MCS – £42.8m
  • Atos Consulting – £32.3m
  • Gartner – £3.8m
  • QI Consulting – £14.5m
  • Tribal Consulting – £6.9m

Comment

Central administrative costs of nearly £900m on a single IT programme are breathtaking. That makes the National Programme for IT in the NHS one of the world’s largest public sector IT projects – before a penny has been spent on deliveries of hardware or software to the NHS.

It’s almost as surprising that not even the National Audit Office has been able to obtain a breakdown. Has central spending been properly controlled? Perhaps not, given that the DH, even this year, spent up to £1,700 a day on consultants to brief a senior official for a hearing of the Public Accounts Committee in June 2013.

Maybe the taxpayer should be grateful that the consultants were hired for only 52 days between February and June 2013 to prepare for the Committee’s hearing, and that the DH managed to renegotiate the day rate down from £1,714 to £1,000 a day between April and June.

Maybe the taxpayer should be grateful that the total cost of the consultancy for preparing for the PAC hearing was only £73,563.

But the £73,563 was spent after the DH estimated its central administrative costs on the NPfIT at nearly £900m – which are costs up to 31 March 2012.

It’s also remarkable that some at the DH still consider the NPfIT a success. This was the NAO’s conclusions on the NPfIT in its May 2011 report on the NPfIT Care Records Service:

“Central to achieving the Programme’s aim of improving services and the quality of patient care, was the successful delivery of an electronic patient record for each NHS patient. Although some care records systems are in place, progress against plans has fallen far below expectations and the Department has not delivered care records systems across the NHS, or with anywhere near the completeness of functionality that will enable it to achieve the original aspirations of the Programme.

“The Department has also significantly reduced the scope of the Programme without a proportionate reduction in costs, and is in negotiations to reduce it further still. So we are seeing a steady reduction in value delivered not matched by a reduction in costs.

“On this basis we conclude that the £2.7 billion spent on care records systems so far does not represent value for money, and we do not find grounds for confidence that the remaining planned spend of £4.3 billion will be different.”

But this was the Department of Health’s view on NPfIT Care Records Service value for money:

“The Department considers, however, that the money spent to date has not been  wasted and will potentially deliver value for money… The Department believes that the flexibility provided by the future delivery model for the programme will deliver functionality that best fits the needs of the clinical and managerial community. The future architecture of the programme allows many sources of information to be connected together as opposed to assuming that all relevant information will be stored in a single system. This approach has been proven in other sectors and is fully consistent with the Government’s recently published ICT strategy.”

This contradiction between the DH’s view of the NPfIT, and the NAO’s, indicates, perhaps, that the DH continues to live in a world not entirely attached to reality.

From April 2013, the DH’s central team and some local programme teams responsible for the NPfIT moved to the Health and Social Care Information Centre which has taken over the local service provider contracts with BT and CSC. Will it be able to control central spending on the very-much-alive NPfIT?

Update:

The central costs could rise much further – possibly by more than £100m – if the eventual settlement of the legal case between the DH and Fujitsu works out badly for the taxpayer. Legal costs on the case so far are about £31m.

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Posted in BT, Campaign4Change, CRC, excessive secrecy, Freedom of Information, Fujitsu, health records, India, IT projects, IT-related failures, managing outsourced services, NHS, npfit

IT suppliers out of control of DWP on Universal Credit?

Posted on 13/09/2013 | 7 comments

By Tony Collins

The Department for Work and Pensions is investigating with consultants PwC whether poor financial controls on payments to IT suppliers have “materialised into cash that should not have been spent”.

If there is evidence the DWP’s permanent secretary Robert Devereux says the DWP will raise the matter with suppliers.

It’s rare for details of central government’s relationship with specific suppliers to come into the public domain but this has happened to some extent on the Universal Credit IT project, thanks mainly to the National Audit Office.

Last week the NAO published a summary of a PwC report into the financial management of UC’s IT suppliers. PwC’s report was circulated to MPs on the Public Accounts Committee who read out some of its contents at a hearing this week.

The Committee’s MPs questioned Devereux, his Finance Director Mike Driver, and Dr Norma Wood, Interim Director General at the Cabinet Office’s Major Projects Authority.

Wood said the Major Projects Authority noticed that suppliers, in doing user acceptance testing, were increasing their average daily rates from £500 to about £800.

Said Wood:

“We came back down to about £500, in round figures. That could mean that you have much greater quality, so one has to be careful. We didn’t have an evidence base really to be able to probe this, which is why we recommended to the accounting officer that he undertake this [PwC] investigation.”

Wood agreed with Margaret Hodge, chair of the Public Accounts Committee, that financial control of the IT companies was a “shambles”.

Hodge said: “The PwC report reads more shockingly than the NAO report in terms of the lack of financial control.” She said that the DWP had sat on the PwC report for six months [before releasing it internally], a point the department has not denied.

Hodge said the PwC report referred to:
– incomplete contracts
– incomplete evidence to support contracts
– inappropriate authorisations
– insufficient information supporting contract management
– delegated authority given to a personal assistant to authorise purchase orders on the behalf of the chair of the strategic design authority

“This is a shambles,” said Hodge. “The fear that one has is that money was clearly paid out to the four big ones—Accenture, IBM, HP and BT—which they claimed on a time basis. It was not a tight contract; it was on a time-and-materials basis, which could well have paid out for no work being done.”

Wood: “I agree with you…it is quite clear that suppliers were out of control and that financial controls were not in place. As we did the reset, we ensured that everything was properly negotiated and contracted for, so that is very tight in terms of the reset going forward, but there are definitely questions about how it was handled… As with any payments you should have a proper audit trail and they should be properly governed. They should have been properly contracted for…”

Wood said that she would use the same suppliers again. “Under proper control why not?”

Hodge said the DWP appeared to have given suppliers a blank cheque. “Last night Mr Driver [DWP Finance Director] kindly sent me a copy of the PwC report, which is even more damning in my view [than the NAO report Universal Credit: early progress], particularly on the blank cheque that you appear to have given to suppliers and the failure to keep Ministers properly informed.”

Conservative MP Richard Bacon said the findings in the PwC report were “extraordinary”. Reading from the report he said there was:
– Limited cost control
– Ineffective end-to-end accounts payable processing
– Limited control over receipting against purchase orders
– Accenture and IBM accounted for almost 65% of total IT supplier spend, as at February 2013.
– Purchase orders for Accenture and IBM do not allow for granular verification of expenditure as they are raised and approved by value only. Thus, they cannot
be linked to individual delivery and grades of staff use. Receipting is completed by reference to time sheets. However, this confirmation is not complete and/or accurate as the majority of those individuals receipting do not have the capability and capacity to verify all time recording. This constraint has resulted in expenditure being approved with a nil return in many cases. As a result, payments may be made with no verification.

Bacon added:

“After all the history that we have had of IT projects going wrong, how can this
extraordinarily loose control—it is probably wrong to use the word “control”—how can this extraordinarily loose arrangement exist?”

Devereux, who was criticised by Hodge on several occasions for not answering questions directly, replied: “I will try at least to explain what was going on. Let me take you back to the process that we were operating. The process we were operating was seeking to work through, in the space of a four-week period -”

Hodge: “You are doing it again, Mr Devereux.”

Devereux: “I am afraid that I cannot answer the question without giving some facts.”

Hodge: “So is PwC wrong?”

Devereux: No, no. PwC is correct, but I am about to explain what else was going on. I have just had a long set of sessions with PwC, who as we speak, are doing further work for me to establish one particular, critical thing that you will want to know, which is that other things were being checked in the background here that enabled PwC to go back and do some ex post calculations about exactly how much was being paid for each of the outputs we had. It is absolutely right to say-”

Bacon “… Is it not utterly elementary that when you are paying a supplier for having given you something, you know what it is you are paying and what you are getting for it? This is basic!”

Devereux said his department had a resource plan agreed with Accenture (the main UC IT supplier) which was based on a computer model on what a piece of work would involve.

“The contract …in any one month was being based on that calculation of how much work we were likely to put into it in advance. Then the signing off of invoices was indeed based on looking at monthly time sheets. I agree with you that that is not a satisfactory position.”

Bacon: “What is amazing is that you said you did not know any of this until the supplier-led review brought it to you in the summer of 2012. This had been going on for quite a while. There was apparently nothing going on in the Department that was flagging this up. Internal assurance, internal audit—where was it?”

Devereux: “… I conclude this, and it is my responsibility—that more than one line of defence has gone wrong. We have talked so far about whether the programme was properly managing itself.”

Bacon: “This is extraordinary, and it is horribly familiar…it is absolutely central to your job as accounting officer to be sure that you have got lines of defence that are operating effectively. That is part of your job, isn’t it?”

Devereux: “It is part of my job.”

Bacon: “So to be surprised by this is an extraordinary admission, is it not?”

Devereux: “I can only be surprised by this if I am not getting signals from my second line of defence—my financial controllers—that they are worried about what is going on.”

Bacon: “You do sound as though you are blaming everybody underneath you, I am afraid.”

Devereux: “I do not intend to do that, but you are asking me what I knew and what I didn’t know. I am trying to take you through the process by which I am aware of things, and the action I have taken on them.”

Bacon: “But my point is that it was your job to know. It is your job to manage this. You are effectively the chief executive of the DWP.”

Devereux: “I am the chief executive of the DWP, I am the accounting officer, and I am accountable for it. Correct.”

Bacon: “But you didn’t know, did you?

Devereux: “I didn’t know on this, no.”

Hodge revealed that one of the conclusions of the PwC report was that there was a lack of evidence of ministerial sign-off of some contracts. PwC tested 25 contracts over £25,000, and only 11 could be traced with approval; and evidence of value for money provided to the Minister was limited in some cases.

Hodge said: “Basically it [PwC] found that you failed to consult properly with Ministers in signing off the IT contracts.”

Driver: “I think we had a weakness in the process that was operating…It has not always been possible to find all of the paper evidence to confirm a decision. We hold our hands up; we need to improve that. We have now significantly improved the control arrangements that operate within the Department ahead of ministerial sign-off.

“We have also significantly improved the arrangements that apply to any sign-off with the Cabinet Office. I personally chair what is called a star chamber group, which looks at all contracts before we seek authority from the Cabinet Office to go forward…”

Devereux: The work that I was trying to describe to the Chair earlier, which PwC is doing now, is to establish whether the risks we have been running, given this lack of control, have actually materialised into cash that should not have been spent…

“In the event that there is evidence of that, we will go back to the suppliers, obviously. I do not want to run this argument too hard, but there is a set of control weaknesses here which gives rise to a risk of loss of value for money. I accept that.”

MPs dig hard for truth on Universal Credit IT

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Posted in Accenture, Agile, BT, Campaign4Change, DWP, Government IT, HP, IBM, IT-related failures, Major Projects Authority, outsourcing, oversight, procurement, project management, public sector, public services, public-private partnerships, PWC, Universal Credit

A reason many govt IT-enabled projects fail?

Posted on 11/09/2013 | 6 comments

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.

Surprising?

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.

Comment

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.

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Posted in Agile, Campaign4Change, change management, DWP, Government IT, IT-related failures, managing outsourced services, npfit, outsourcing, private sector lessons for the public sector, procurement, project management, public sector, public services, PWC, supplier relationships, Universal Credit

Will Universal Credit ever work? – NAO report

Posted on 05/09/2013 | 8 comments

By Tony Collins

Today’s National Audit Office report Universal Credit: early progress is one of most excoriating the NAO has published on a government IT-enabled project or programme.

Iain Duncan Smith, secretary of state for work and pensions, has already responded to the NAO report by implying it is out of date and that the problems are in the past. This is a standard government response to well researched and highly critical NAO reports.

But the authors of the NAO report have pointed to some UC problems that are so fundamental that it may be difficult for any independent observer to credibly regard the project’s problems as historic. Says the NAO:

“The Department [DWP] is unable to continue with its ambitious plans for national roll-out until it has agreed the future service design and IT architecture for Universal Credit.”

So can the UC project ever be a success if, years after its start, there is no agreed design or IT architecture? Says the NAO

“The Department may also decide to scale back the complexity and ambition of its plans.”

Although the DWP has spent more than £300m on UC IT, mostly with the usual large IT suppliers, complex claims cannot yet be handled without manual work and calculations.

In February 2013, the Cabinet Office’s Major Projects Authority reviewed Universal Credit and raised “serious concerns about the programme’s progress”, says the NAO report. “The review team was concerned that the pathfinder [pilot project] could not handle changes in circumstances and complex cases which had to be dealt with manually, and that this meant the pathfinder could not be rolled out to large volumes.”

The Independent says the DWP gave false assurances on the project’s progress. The Daily Mail says the scheme has got off to a “disastrous start”.

The NAO’s main findings:

 Is £303m spent on IT value for money?

 “At this early stage of the Universal Credit programme the Department has not achieved value for money. The Department has delayed rolling out Universal Credit to claimants, has had weak control of the programme, and has been unable to assess the value of the systems it spent over £300m to develop [up to the end of March 2013].

“These problems represent a significant setback to Universal Credit and raise wider concerns about the Department’s ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”

A projected IT overspend of £233m?

The NAO puts the expected cost of implementing Universal Credit to 2023 at £2.4bn. The spend to April 2013 is £425m, including £303m on the IT. The planned IT investment in the current spending review period from the May 2011 business case was £396m, but the December 2012 business case puts the planned IT investment in the current review period at £637m – and increase of £233m, or 60%. The DWP wants to make changes elsewhere in its budgets to accommodate the extra IT spend.

Ministers and DWP spokespeople have said repeatedly that the project is within budget.

Some of the IT spend breakdown

– Core software applications including a payment management component  – £188m

– Interface with HMRC real time information – £10m

– Case management module – £6m

– Licences – £31m

– Supplier support – £26m

– Hardware, telephony and changes to old systems – £50m

– Departmental staff costs on the Business and IT Solution team – £29m.

– Staff contractors provided by suppliers to support departmental staff  – £26m.

Main IT suppliers – spend to end of 2012/13

– Accenture. Software design, development and testing including: interview system; evidence capture, assessment and verification; and staff contractors – £125m

– IBM. Software design, development and testing including: real time earnings; process orchestration and payment management; and staff contractors – £75m

– HP. Hardware and legacy system software, and staff contractors – £49m

– BT. Telephony. It also supplied specialist advice on agile development methods – £16m

A further £9m was spent on live system support costs provided by HP; bringing total spending with suppliers to £312m, says the NAO.

 Is the IT high quality or not?

The NAO report suggests there may be conflicting views between those in DWP who believe the IT is high quality and others who are not so sure.

“The Department believes that the majority of the built IT is high quality, but has not been fully developed and cannot support scaling up the programme as it stands. Some assessments have commented that systems are inflexible or over-elaborate.”

Will the IT support a national roll-out?

The NAO says it’s uncertain that the IT can support full national roll-out of Universal Credit without further work and investment.

“The Department does not yet know to what extent its new IT systems will support national roll-out. Universal Credit pathfinder systems have limited function and do not allow claimants to change details of their circumstances online as originally intended. The Department does not yet have an agreed plan for national roll-out and has been unclear about how far it will build on pathfinder systems or replace them.”

Will timetable and scope have to change further?

“The Department will have to scale back its original delivery ambition and is re-assessing what it must do to roll-out Universal Credit to claimants. The current programme team is developing new plans for Universal Credit. Our experience of major programmes supported by IT suggests that the Department will need to revise the programme’s timing and scope, particularly around online transactions and automation.”

Over-optimism?

“It is unlikely that Universal Credit will be as simple or cheap to administer as originally intended. Delays to roll-out will reduce the expected benefits of reform…”

Rushed?

“ The ambitious timetable created pressure on the Department to act quickly…”

Open to fraud?

“The Department’s current IT system lacks the ability to identify potentially fraudulent claims. Within the controlled pathfinder environment, the Department relies on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally.

“Without a system in place, the Department will be unable to make the savings it had planned, by reducing overpayments from fraud and error. In December 2012, it estimated these savings to be worth £1.2 billion per year in steady state.”

Separately the NAO states that there have been “unanticipated security problems from putting transactions online”. The DWP may now scale back all that was planned to be online.

In January 2013 the technical director of CESG and other reviewers said that the UC security solution was “over-complex” and could have conflicted with DWP plans to encourage people to claim online.

Delay in national roll-out

“The Department has delayed rolling out Universal Credit nationally. The Department will not introduce Universal Credit for all new out-of-work claims nationally from October 2013 as planned. Instead it will add a further six pathfinder sites from October 2013

 “Pause UC immediately”

In early 2013 the Cabinet Office’s Major Projects Review Group noted that the Department had not addressed issues with governance, management and programme design despite their having been raised in previous reports. The Authority “recommended that the Universal Credit programme be paused immediately”.

All  post-2015 plans under review

The original plans were for UC roll-out to finish by late 2017. All statements by officials and Iain Duncan Smith have confirmed this 2017 deadline. In fact, says the NAO, all milestones beyond the start of 2015 are “currently under review” including:

• National roll-out of all new claims

• Closedown of tax credits new claims

• Roll-out of Pension Credit Plus on Universal Credit platform

• Completion of claimant migration

The NAO says the DWP has considered completing the roll-out beyond 2017.

Complete rethink needed

 The Cabinet Office’s Major Projects Authority reviewed and reported on Universal Credit in February 2013. The Authority’s found that:

“Universal Credit Programme needs a complete rethink of the delivery approach together with streamlining potentially over-elaborate solutions.”

A separate review of the project by Capgemini in January 2013 and a “Reset IT stocktake” in April 2013 concluded that the UC “architecture is of limited extensibility”.

Pathfinders of limited value

“The pathfinder lacks a complete security solution. Claimants cannot make changes in circumstances online. This increases the need for manual work as changes must be made by telephone. The pathfinders also require more staff intervention than planned, because of reduced automation and links between systems.”

100 day planning period

 “In May 2013, the Department appointed the current senior responsible owner [Howard Shiplee] to lead the Universal Credit programme. The team is now conducting a ‘100-day planning period’, which will end at the end of September 2013. The Department will then submit a new business case to HM Treasury, and ask for ministerial sign-off for delivery plans in late 2013.”

Secrecy – even internally?

“The reset took place between February and May 2013. The reset team included departmental, Cabinet Office and Government Digital Services staff. The reset team developed an extensive set of materials as part of a ‘blueprint’ covering design and implementation, and 99 detailed recommendations. The reset team shared the blueprint with the Department’s Executive Team who approved it at each stage of its development. The Department shared the blueprint with a small number of people but did not initially share it widely.”

A £34m write-off – so far

“The Department has acknowledged that it needs to write off some of the value of its Universal Credit IT assets. By the end of 2012-13, the Department had spent £303m on its IT systems and created assets which it valued at £196m – a difference of £107m. But the DWP has decided to write-off £34m – 17% – though it may increase the size of the write-off later.

“The Department is conducting further impairment reviews of the value of its Universal Credit IT assets before finalising its 2012-13 accounts.” The £34m write-off was based on a “self-assessment which it asked its suppliers to conduct”.

Number of claimants well below planned level

“In its October 2011 business case, the Department expected the Universal Credit caseload to reach 1.1 million by April 2014, but reduced this to 184,000 in the December 2012 business case.”

Planned savings down by nearly £500m

“The cost to government of implementing Universal Credit will be partly offset by administrative savings. In December 2012, the Department estimated that a three-month delay in transferring cases from existing benefits to Universal Credit would reduce savings by £240m in the current spending review period and by £247m after April 2015.”

 Anyone know who decided on October 2013 for planned UC roll-out?

 “The Department was unable to explain to us why it originally decided to aim for national roll-out from October 2013. It is not clear whether the Department gave decision-makers an evaluation of the relative feasibility, risks and costs of this target date.”

 Agile … with a 1,000-strong team?

“In 2010, the Department was unfamiliar with the agile methodology and no government programme of this size had used it. The Department recognised that the agile approach would raise risks for an organisation that was unfamiliar with this approach. In particular, the Department

• was managing a programme which grew to over 1,000 people using an approach that is often used in small collaborative teams;

• had not defined how it would monitor progress or document decisions;

• needed to integrate Universal Credit with existing systems, which use a waterfall approach to managing changes; and

• was working within existing contract, governance and approval structures.

“To tackle concerns about programme management, the Department has repeatedly redefined its approach. The Department changed its approach to ‘Agile 2.0’ in January 2012. Agile 2.0 was an evolution of the former agile approach, designed to try to work better with existing waterfall approaches that the Department uses to make changes to old systems.

“After a review by suppliers raised concerns about the achievability of the October 2013 roll-out the Department then adopted a ‘phased approach’ and created separate lead director roles for the pathfinder (phase 1), October roll-out (phase 2) and subsequent migration (phase 3).

“The Cabinet Office does not consider that the Department has at any point prior to the reset appropriately adopted an agile approach to managing the Universal Credit programme.”

Anyone know how UC is meant to work?

“The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work. The Department has struggled to set out how the detailed design of systems and processes fit together and relate to the objectives of Universal Credit.

“This is despite this issue having been raised repeatedly in 2012 by internal audit, the Major Projects Authority and a supplier-led review. This lack of clarity creates problems tracking progress, and increases the risk that systems will not be fit for purpose or that proposed solutions are more elaborate or expensive than they need to be…

“The Department was warned repeatedly about the lack of a detailed ‘blueprint’, ‘architecture’ or ‘target operating model’ for Universal Credit. Over the course of 2011 and the first half of 2012, the Department made some progress but did not address these concerns as expected.

“By mid-2012, this meant that the Department could not agree what security it needed to protect claimant transactions and was unclear about how Universal Credit would integrate with other programmes. These concerns culminated, in October 2012, in the Cabinet Office rejecting the Department’s proposed IT hardware and networks.

“ Given the tight timetable, unfamiliar programme management approach and lack of a detailed operating model, it was critical that the Department should have good progress information and effective controls. In practice the Department did not have any adequate measures of progress.”

High turnover among IT leaders?

“Including the reset and the current director general for Universal Credit, the programme has had five different senior responsible owners since mid-2012.

“The Department has also had high turnover in important roles other than the senior responsible owner. The Department has had five Universal Credit programme directors since 2010.”

The NAO said that the director of Universal Credit IT was “removed from the programme in late 2012 and the Department has replaced the role with several roles with IT responsibilities”. During and since the ‘reset’ the Government Digital Service has helped to redesign the systems and processes supporting transformation.

Good news culture and a fortress mentality

“The culture within the programme has also been a problem…Both the Major Projects Authority and a supplier-led review in mid-2012 identified problems with staff culture; including a ‘fortress mentality’ within the programme. The latter also reported there was a culture of ‘good news’ reporting that limited open discussion of risks and stifled challenge.”

“Inadequate control of suppliers”

The Department had to manage multiple suppliers. Three main suppliers – Accenture, IBM and HP – developed components for Universal Credit. The Department commissioned IBM to act as an Applications Development Integrator from January 2012, providing some oversight and overall management of IT development, but creating risks of supplier self-management.

The NAO found that there were inappropriate contractual mechanisms; charges were on the basis of time and materials, leaving the majority of risks with the Department. The NAO said there were “inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.”

There was “over-reliance on performance information that was provided by suppliers without Department validation”. And weak contractual relationships with suppliers meant that the DWP “did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account”

Said the NAO:

“Various reviews have criticised how the Department has managed suppliers. In June 2012, CESG reported the lack of an agreed, clearly defined and documented scope with each supplier setting out what they should provide. This hampered the Department’s ability to hold suppliers to account and caused confusion about the interactions between systems developed by different ones. In February 2013, the Major Projects Authority reported there was no evidence of the Department actively managing its supplier contracts and recommended that the Department needed to urgently get a grip of its supplier management.”

Suppliers paid without proper checks

“The Department has exercised poor financial control over the Universal Credit programme. The Department commissioned an external review in early 2013 of financial management in Universal Credit. The review found several weaknesses including poor information about the basis for supplier invoices, payments being made without adequate checks and inadequate governance and oversight over who approved spending. The review team checked a sample of invoices against the timesheets of suppliers and found no evidence of inappropriate charging, although timesheet information is not complete and cannot be linked to specific activity…”

The NAO went on to emphasise that there was “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.”

The NAO added that inadequate internal challenge of purchase decisions meant that ministers had “insufficient information to assess the value for money of contracts before approving them”.

50 people on the UC programme board

“The programme board acts as the programme’s main oversight and decision-making body… The programme board has been too large and inconsistent to act as an effective, accountable group. Over the course of 2012, the programme board had 50 different people attending as core members…

“The board did not have adequate performance information to challenge the programme’s progress. In particular, while the board had access to activity measures for IT system development, it could not track the actual value of this activity against spending.

“In the absence of such measures of progress, the board relied on external reviews to assess progress. Such external reviews were not sufficiently frequent for the board to use them as a substitute for timely, adequate management information.”

Programme board disbanded

 “… during the reset [Feb-May 2013], [the DWP] suspended the programme board entirely.

Failure to act on recommendations

“From mid-2012, it became increasingly clear that the Department was failing to address recommendations from assurance reviews… the key areas of concern raised by the Major Projects Authority in February 2013 had appeared in previous reports.

“From mid-2012, the underlying concerns about how Universal Credit would work meant that the Department could not address recommendations from assurance reviews; it failed to fully implement two-thirds of the recommendations made by internal audit and the Major Projects Authority in 2012. Without adequate, timely management information, the Department relied on periodic external assurance reports to assess progress.”

Ceasing work for national roll-out

“By late 2012, the Department had largely stopped developing systems for national roll-out and concentrated its efforts on preparing short-term solutions for the pathfinder…”

Slippery Parliamentary answers

The NAO lists almost imperceptible changes in the language of Parliamentary answers on Universal Credit.

In 2011 the DWP said in a Parliamentary answer that “all new applications” for out-of-work financial help would be treated as a UC claim; and in November 2012 the DWP said in a Parliamentary reply that in October 2013 it would start to migrate claimants from the old system to the new. But by June 2013 the DWP’s line had changed. By then it was saying in a Parliamentary reply that Universal Credit will “progressively roll-out” from October 2013 with all those who are entitled to UC claiming the new benefit by 2017. In fact all new applications for out-of-work help are not being treated as a UC claim. The NAO says that new claimants in the pathfinder must be “single, without children, newly claiming a benefit, fit for work, not claiming disability benefits, not have caring responsibilities, not be homeless or in temporary accommodation, and have a valid bank account and National Insurance number”.

Will UC ever work?

“ …it is still entirely feasible that it [UC] goes on to achieve considerable benefits for society. But to do so the Department will need to learn from its early mistakes.

“As it revises its plans the Department must show it can: exercise effective control of the programme; develop sufficient in-house capability to commission and manage IT development; set clear and realistic expectations about the timescale and scope of Universal Credit; and, address wider issues about how it manages risks in major programmes.”

**

Margaret Hodge MP, Chair of the Public Accounts Committee, says of the NAO report:

“The Department for Work and Pensions has made such a mess of setting up Universal Credit that the Major Projects Authority had to step in to rescue the programme.

“DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4bn, with little idea as to how it was actually going to work.

“Confusion and poor management at the highest levels have already resulted in delays and at least £34m wasted on developing IT. If the Department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure.

“This damning indictment from the NAO gives me no confidence that we will see the £38 billion of predicted benefits between 2010-11 and 2022-23. Vulnerable benefit claimants need a secure system they can rely on.”

NAO report – Universal Credit: early progress

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Posted in Accenture, Agile, BT, Campaign4Change, Capgemini, change management, excessive secrecy, Government digital Service, Government IT, HP, IBM, IT-related failures, Major Projects Authority, managing outsourced services, openness and transparency, Oracle, procurement, project management, public sector, public services, Universal Credit

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Why does truth on Universal Credit emerge only now?

Posted on 04/09/2013 | 2 comments

By Tony Collins

For nearly a year the Department for Work and Pensions, its ministers and senior officials, have told Parliament that Universal Credit IT is on track and on budget.

Together with DWP press officers, they have criticised parts of the media and some MPs for suggesting otherwise.

Now the truth can be held back no longer: the National Audit Office is expected tomorrow to report on UC’s problems. Ahead of that report’s publication, and perhaps to take the sting out of it, work and pensions secretary Iain Duncan Smith has allowed Howard Shiplee, the latest DWP lead on delivery of UC, to own up to the project’s difficulties.

IDS has given permission for Shiplee to write an article for the Telegraph on the UC project. Every word is  likely to have been checked by senior DWP communications officers.

It’s the first time anyone on the UC project has publicly acknowledged the project’s difficulties though, as with nearly every government response to critical NAO reports, the administration depicts the problems as in the past. Shiplee’s article says

“… it’s also clear to me there were examples of poor project management in the past, a lack of transparency where the focus was too much on what was going well and not enough on what wasn’t and with suppliers not managed as they should have been.

“There is no doubt there have been missteps along the way. But we’ve put that right…

“I’m not in the business of making excuses, and I think it’s always important to acknowledge in any project where things may have gone wrong in order to ensure we learn as we go forward.

“To that end, the key decision taken by the Secretary of State to reset the programme to ensure its delivery on time and within budget has been critical.

“When David Pitchford arrived from the Major Projects Authority earlier this year, at the Secretary of State’s request, he began this process in line with those twin objectives…

“I’ve also ensured that as a programme we have a tight grip on our spending, and I have put in place a post for a new Director who will be dedicated to ensuring that suppliers deliver value for money. I am confident we are now back on course and the challenges are being handled.”

Parliament has a right to ask why nearly every central government IT project that goes wrong – whatever the government in power – is preceded for months and sometimes years in the case of the NPfIT by public denials.

From the over-budget and fragmented Operational Strategy project for welfare benefits in the 1980s, to the repeatedly delayed and over budget air traffic control IT at the New En Route Centre at Swanwick, Hampshire, and the abandoned Post Office “Pathway” project in the 1990s, to the failed National Programme for IT – NPfIT –  in the NHS in the last decade, ministers and senior officials were telling Parliament that all was well and that the project’s critics were misinformed. Until the facts became only too obvious to be denied any longer.

These are some of the reassurances ministers and DWP officials have been giving Parliament and the media about the UC project. None of their statements has given a hint of the  “missteps along the way” that Shiplee’s article refers to now.

House of Commons, 20 May 2013

Universal Credit (IT System)

Clive Betts (Lab): What assessment he [the secretary of state for work and pensions] has made of the preparedness of the universal credit IT delivery system.

Iain Duncan Smith: The IT system to support the pathfinder roll-out from April 2013 is up and running…

Betts: I thank the Secretary of State for that answer, but will he confirm that three of the pathfinders are not going ahead precisely because the computer system is not ready? …

Duncan Smith: The hon. Gentleman is fundamentally wrong. All the pathfinders are going ahead. The IT system is but a part of that, and goes ahead in one of the pathfinders. The other three are already testing all the other aspects of universal credit and in July will, essentially, themselves roll out the remainder of the pathfinder, and more than 7,000 people will be engaged in it. All that nonsense the hon. Gentleman has just said is completely untrue.”

**

BBC – 9 Sept 2012

 “A Department for Work and Pensions spokeswoman said: “Liam Byrne [Labour] is quite simply wrong. Universal Credit is on track and on budget. To suggest anything else is incorrect.”

**

Iain Duncan Smith, House of Commons, 20 May 2013

“This [Universal Credit] system is a success. We have four years to roll it out, we are rolling it out now, we will continue the roll-out nationwide and we will have a system that works—and one that works because we have tested it properly.”

Howard Shiplee – FT July 2013

“… Howard Shiplee, who has led UC since May, denied claims from MPs that the original IT had been ‘dumped’ because it had not delivered. ‘The existing systems that we have are working, and working effectively,’ he said. He added, however, that he had set aside 100 days ‘not to stop the programme, but to reflect on where we’ve got to and start to look at the entire total plan’.”

**

DWP spokesperson 16 August 2013

“… a DWP spokesperson said: “The IT supporting Universal Credit is working well and the vast majority of people are claiming online.”

**

Howard Shiplee Work and Pensions Committee, House of Commons, 10 July 2013.

“…The pathfinder, first of all, has demonstrated that the IT systems work…”

Mark Hoban, DWP minister, House of Commons, 6 March 2013.

“The shadow Secretary of State has been touting this story for months. No it has been longer than that. The last outing was in today’s Guardian. I want to make it clear that nobody has walked off the project; all the contractors are in place and the project is on schedule to be delivered at the end of April. Now, if he thinks the idea is good in theory, it is about time he supported it. It is working and the contractors are in place, doing the job and ensuring that the pilots will be up and running at the end of April.”

[Hoban’s response was to a question on whether personnel or contractors at Accenture, Atos Origin, Oracle, Red Hat, CACI or IBM UK had been stepped down, or in any way notified by the Department, that they were to suspend work on Universal Credit. The main IT contractors for UC are Accenture, Hewlett Packard and BT plus input from Agile specialists Emergn. The DWP awarded UC IT contracts without any specific open competitive tender.]

Comment

On this site various posts have questioned whether Iain Duncan Smith has been getting the whole truth on the state of the UC IT project. He repeatedly went before MPs of the Work and Pensions Committee and gave such confident reassurances on the state of the UC project that it was difficult to believe that he knew what was really going on.

What we now know about the UC project’s “missteps along the way” shows, if nothing else, how gullible ministers are in believing their officials.

It is hard or impossible to believe that officials would lie but it is probable they would tell their ministers what they want to hear – and IDS has been in no mood to hear about problems.

Every big IT-based project in government that is failing ends up in a pantomime. From the back of the auditorium the media and MPs shout out when they receive leaks about problems. “Look behind you – there’s chaos,” they call out to departmental ministers and officials who don’t look behind them and reply “Oh no there isn’t!”

One reason this pantomime is repeated over decades is that independent reports on the progress or otherwise on big IT-based projects and programmes in central government are kept under departmental lock and key.  Even FOI requests for the keys consistently fail. 

So it’s usual for ministers and officials to answer media and Parliamentary questions about departmental projects without fear of authoritative contradiction.

Until the NAO is in imminent danger of publishing  a revealing report.

Perhaps it’s a lack of openness and accountability that contributes to IT-enabled change projects in central government going seriously awry in the first place.

With openness would come early and public recognition of a scheme that’s too ambitious to be implementable. With secrecy and the gung-ho optimism that seems to pervade projects like Universal Credit many on the project pretend to each other and perhaps even themselves that it’s all doable, while money continues to be thrown away.

When will the pantomime of misinformation and long-delayed revelation stop? Perhaps when Whitehall becomes genuinely open and accountable on the progress or otherwise of its IT-enabled projects. In other words: never.

Thank you to David Moss for drawing my attention to Howard Shiplee’s article in the Telegraph.

Time for truth on Universal Credit

Millions of pounds worth of secret DWP reports

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Posted in Accenture, Agile, BT, change management, DWP, Gateway reviews, HP, IT projects, IT-related failures, Major Projects Authority, managing outsourced services, npfit, openness and transparency, operational issues, oversight, procurement, project management, public sector, public services, Real-Time Information, Universal Credit

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Has 2 decades of outsourcing cut costs at HMRC?

Posted on 12/08/2013 | 2 comments

By Tony Collins

If HMRC’s experience is anything to go by, outsourcing can, in the long-term, at least triple an organisation’s IT costs.

When Inland Revenue contracted out its 2,000-strong IT department to EDS, now HP, in 1994 it was the first major outsourcing deal in central government.

Costing a projected £1.03bn over 10 years the outsourcing was a success, according to the National Audit Office in a report in March 2000. The deal  enabled Inland Revenue to bring about changes in tax policy to a tight timetable, said the NAO’s Inland Revenue/EDS Strategic Partnership – Award of New Work.

But costs soared for vague reasons. Something called “post-contract verification” added £203m to the £1.03bn projected cost over 10 years. A further increase of £533m was because of “workload increases including new work”. Another increase of £248m was put down to inflation.

By now the deal with HP had risen from £1.03bn to about £2bn.

When the contract expired in 2004, HM Revenue and Customs and HP successfully transferred the IT staff to Capgemini. The new 10-year contract from 2004 to 2014 (which was later extended 2017) had a winning bid price of £2.83bn over 10 years.

So by 2004 the costs of outsourcing had risen from £1.03bn to £2.83bn.

The new contract in 2004 was called ASPIRE – Acquiring Strategic Partners for Inland Revenue. HMRC then added £900m to the ASPIRE contract for Fujitsu’s running of Customs & Excise systems. By now there were about 3,800 staff working on the contract.

The NAO said in its report in July 2006  – ASPIRE, the re-competition of outsourced IT services – that Gateway reviews had identified the need for a range of improvements in the management of the contract and projects.

Now costing £7.7bn over 10 years

The latest outsourcing costs have been obtained by Computing. It found that annual fees paid to Capgemini under ASPIRE were:

  • 2008/09:  £777.1m
  • 2009/10:  £728.9m
  • 2010/11:  £757.8m
  • 2011/12:  £735.5m
  • 2012/13:  £773.5m

So IT outsourcing costs have soared again. The original 10-year costs of outsourcing in 1994 were put at £1.03bn. Then the figure became about £2bn, then £2.83bn, then £3.7bn when Fujitsu’s contract was added to ASPIRE. Now annual IT outsourcing costs are running at about £770m a year – £7.7bn over 10 years.

So the original IT running costs of Inland Revenue and Customs & Excise have, under outsourcing contracts, more than tripled in about two decades.

Comment:

What happened to the prevailing notion that IT costs fall over the long-term, and that outsourcing brings down costs even further?

Shouldn’t HMRC’s IT costs be falling anyway because of reduced reliance on costly Fujitsu VME mainframes, reductions in data centres, modernisation of PAYE, and the clearance of time-consuming unreconciled items on more than 10 million tax files?

HMRC knows how much profit Capgemini makes under “open book” accounting. It’s a margin of about 10-15% says the NAO. Lower margins are for value-added service lines and higher margins for riskier projects. If the overall target profit margin of 12.3% is exceeded, HMRC can obtain an equal share of the extra profits.

There were 10 failures costing £3.25m in the first 15 months. Capgemini refunded £2.67m in service credits in the first year of the contract.

It’s also worth mentioning that Capgemini doesn’t get all the ASPIRE fees. It is the lead supplier in which there are around 300 subcontractors – including Fujitsu and BT.  Capgemini pays 65% of its fees to its subcontractors.

The outsourcing has helped to enable HMRC to bring in self-assessment online and other changes in tax policy. But HMRC’s quality of service generally (and not exclusively IT) is mixed, to put it politely.

The adjudicator for HMRC who intervenes in particularly difficult complaints identifies as particular problems the giving out of inaccurate information and recording information incorrectly.

She says in her 2013 annual report:

“I am disappointed at the number of complaints HMRC customers feel they need to refer to me in order to get resolution. My role should be to consider the difficult exceptions, not handle routine matters that are well within the capability of departmental staff to resolve successfully. At a time of austerity it is also important to note that the cost of dealing with customer dissatisfaction increases exponentially with every additional level of handling.”

RTI

There are complaints among payroll companies and specialists that real-time information  is not working as well as HMRC has claimed. There seems to be growing irritation with, for example, HMRC’s saying that companies owe much more than they do actually owe. And HMRC has been sending out thousands of tax codes that are wrong or change frequently – or both.

HMRC says it has made improvements but the helpline is appalling. It’s not unusual for callers to wait 30 minutes or more for an answer – or to hang on through multifarious automated messages only to be cut off.

That said there are signs HMRC is, in general, improving slowly. Chief executive of HMRC since 2012 Lin Homer is more down-to-earth and slightly more willing to own up to HMRC’s mistakes than her predecessors, and the fact that RTI and the modernisation of PAYE has got as far as it has is creditable.

But is HMRC a shining example of outsourcing at its best, of outsourcing that cuts costs in the long term? No. A decade of HP and a decade of Capgemini has shown that with outsourcing HMRC can cope, just about, with major changes in tax policy to demanding timetables. But the costs of the outsourcing contracts in the two decades since 1994 have more than tripled.

What about G-Cloud? We look forward to a change in direction from the incoming head of IT Mark Dearnley (if he has much say).

**

A Deloitte survey “The trend of bringing IT back in-house” dated February 2013, said that 48% of respondents in its Global Outsourcing and Insourcing survey 2012 reported that they had terminated an outsourcing agreement early, or for cause, or convenience. Those that took IT services back in-house mentioned cost reduction as a factor. Deloitte said factors included:

– the need for additional internal quality control due to poor quality from the outsourcer

– an increase in the price of service delivery through scope creep and excessive change orders.

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Posted in Accenture, BT, Campaign4Change, change management, CIO, Fujitsu, G-Cloud, Gateway reviews, Government IT, HMRC, IT projects, IT-related failures, managing outsourced services, operational issues, outsourcing, oversight, procurement, project management, public sector, public services, public-private partnerships, supplier relationships

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