Category Archives: local democracy

Cornwall a model of openness as outsourcing deal with BT turns sour?

By Tony Collins

Will Barnet Council ever be as open as Cornwall Council has been over the performance of its IT outsourcing supplier?

Two years ago Cornwall signed a 10-year £260m strategic “partnership” with BT. The word “partnership” seems odd now that BT has taken out an injunction against Cornwall to stop the council ending the relationship 8 years early.

The two sides will go to court in December to determine if the council has a right to terminate the contract now.

If it loses  the case, Cornwall will have to retain as its main IT services supplier a company that has been its High Court adversary. The judge may also order the council to pay BT’s legal costs.

The odds may be against Cornwall’s winning because BT has much experience in outsourcing legalities. It’s possible that its managers have been collecting evidence of  any council shortcomings from day 1 of the contract,  in case the relationship turned sour.

But independent Cornwall councillor Andrew Wallis says on his blog that BT is dragging the council to court because of BT’s own failings. The council says BT has not achieved its key performance indicators or met to its guarantees on creating new jobs.

Cornwall council logoCornwall threatened to terminate for breach of contract but did not do so while it was in talks with BT’s senior corporate executives. When an amicable termination could not be agreed BT instructed its lawyers to seek an injunction preventing the council from terminating, which they did at a hearing on 12 August.  The result was that the High Court agreed to an expedited trial that will start on 1 December 2015.

It’s all a far cry from the time two years ago, before the contract was signed, when BT and council officers were promising much, and saying little about what could go awry.

In its literature, amid beautifully-executed artwork and graphics, BT highlighted its success at South Tyneside Council, its sponsorship of events such as Comic Relief, Children in Need and Childline and its presence as one of the largest employers in the South West.

Similarly, Cornwall officers, in 2013,  wrote reassuringly about any forthcoming deal with BT. They said:

“It should also be borne in mind that strategic partnerships are nothing new. BT – and other councils – have been involved in them for more than 10 years.

“Similarly the outsourcing market is mature and well understood. The UK local government IT and Business Process Outsourcing market is the biggest outsourcing market in the world and there are over 100 deals in operation.

“Risks are sometimes managed well and sometimes managed badly. The risks have been mitigated by using expert advisors and the Council has senior officers who understand this territory well.”

A BT spokesman told Government Computing this week:

“BT has commenced legal action to ensure fair and proper handling of the issues which have arisen about BT Cornwall, and while this is taking place, it would be inappropriate for us to comment.”

Comment

How is Capita’s performance on its contract at Barnet? We don’t know. The success or otherwise of the deal is blanketed in secrecy. In May Barnet blogger Mr Reasonable offered to make a charity donation of £250 if the council showed it was making the promised savings. The money went unclaimed.

There is no evidence of any failure of Barnet’s outsourcing deal. But would the public or media ever know if the supplier’s performance was falling short of the council’s expectations?

Cornwall has many independent councillors (36 compared with the 37 ruling Liberal Democrats). Debates tend to be on the merits of the matter not on the basis of party politics.

Barnet’s policy is tied in with a political ideology: ruling councillors want to turn Barnet into a “commissioning council” which involves outsourcing as much as possible.

In  practice the bedrock of this ideology is the relationship with Capita. If it went wrong would Barnet have too much to lose to go into dispute? For the sake of its ideology would Barnet accept any quality of service Capita delivers?

Cornwall

In threatening BT with termination because of breaches of contract, Cornwall Council could be criticised for not letting a 10-year outsourcing bed down. It’s unusual for a strategic partnership to end up in court less than 3 years into a 10-year contract.

On the other hand BT promised to create jobs in year 1 and 2 of the contract that the council say have not materialised. Councillors and officers are unhappy about many other aspects of the deal.  BT took on about 280 full-time equivalent council employees, about 130 of whom worked in Information Services.

What’s striking about the history of outsourcing discussions at Cornwall, and the run-up to the signing of a contract, is its openness. It would be easy for BT’s defenders to say that Cornwall’s open, feisty and unforgiving attitude are factors in the strained relationships so far.

On the other hand the problems Cornwall has experienced in the first 2 years of the relationship may be normal in outsourcing deals at other councils. It’s  just that ruling councillors and officers don’t talk about them in public.

All the more credit to Cornwall for its openness.

Barnet’s outsourcing deal may be more successful than Cornwall’s – but how does anyone outside a small group at Barnet really know? Local government and democratic accountability are often uncomfortable bedfellows.

Thank you to Dave Orr who drew my attention to the latest developments at Cornwall Council. 

Cornwall Council rushes to sign BT deal before elections

Cornwall Council tries to pull the plug on BT Cornwall

BT Cornwall is not working for Cornwall as it should

Overview of BT Cornwall’s performance against commitments and guarantees – as perceived by Cornwall’s officers

KPI measures Achieved (185/289) – 64%

PI measures Achieved (266/402) – 66%

Service Transformation (percentage of plans completed) – 38%

Financial contractual baseline savings (10% & 11.6%) – 100%

Trading gain share received (est £17.4m over 10 years) – £0

Guaranteed new jobs in Cornwall (yrs 1 & 2 111 new jobs target / 35.1 created) – 32%

Committed new jobs in Cornwall (yrs 1 & 2) – 0


Some of BT’s pre-outsourcing deal literature for Cornwall’s councillors

  • BT is a FTSE 100 company
  • We are one of the largest employers in the UK and the SW
  • We currently employ > 5,900 people in the South West including 1,028 Cornwall residents
  • BT already makes a financial impact of over £749m a year in the region
  • BT spent >£145m with local suppliers in 2011/12 and will increase this substantially through the Partnership
  • We generate 142,000 fraud referrals each week for the DWP across 50 data sources from 260,000,000 records
  • We undertake c.1,000,000 criminal record checks per annum at Disclosure Scotland to safeguard vulnerable groups.
  • We provide the highly secure directory services for the 260,000 military and civilian defence staff
  • We collect circa £580,000,000 in tax revenues each year on behalf of our local authority partnerships
  • The NHS Spine platform exchanges £3.5m prescription messages per week
  • We are delivering in excess of £500,000,000 savings in partnership with six UK Councils through efficiency and transformation programmes
  • We run one of the worlds largest data warehouses to enable the timely anonymous collection of patient data and information for clinical and billing purposes other than direct patient care .
  • Yes, we do poles and wires…but did you also know in the public sector we process over 532,000 benefits assessments for new applications and change of circumstances each year in our Local Government Partnerships?
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Are councillors in Somerset ignoring the wisdom of their auditors?

By Tony Collins

It’s good to see auditors in local government doing their job well  – not accepting verbal assurances and seeking proof that all is well with an outsourced system .

But what if councillors apply a lower standard – and accept verbal assurances without checking them?

A  strong report by the South West Audit Partnership [SWAP] went to councillors at Somerset County Council’s Audit Committee on 2 July 2015. The report was about problems with an outsourced system, the Adults Integrated Solution [AIS].

Although not the original supplier, IBM has provided AIS to Somerset County Council under a 10-year outsourcing contract/joint venture – Southwest One –  that was signed in 2007.

The SWAP report said limited progress has been made in implementing the AIS-related recommendations from its 2012-2013 audit report. It added that:

– AIS performance and response times could be “less than adequate for users’ needs”.

– Southwest One was unwilling to develop a service level agreement specifically for the AIS application.

– “Poor response time has led to the disabling of enhanced audit trails/logs that would make it possible to trace and attribute user activity in the system.” SWAP added that this was “worrying” given that the data involved was “sensitive and personal”.

– SWAP had been refused access to the contract between IBM and Northgate, the original supplier of AIS.

Are verbal assurances worth anything?

Having studied AIS from time to time over 2 years, and spoken to its users, SWAP’s auditors have been reluctant, on some of their concerns, to accept verbal assurances that all is well.

When they have sought documentary evidence to support assurances it hasn’t always been forthcoming.

SWAP said in its latest report:

“Verbal assurances were provided that the ToR for AIS Programme Board had been reviewed and that roles and responsibilities in relation to system ownership had been clarified. However, no evidence was provided to support these assurances.”

Now Somerset’s audit committee has done what its auditors wouldn’t do and has accepted verbal assurances that all is well with AIS.

SWAP’s auditors had expressed a multitude of concerns about AIS. But Somerset’s officers verbally assured audit committee councillors that a single upgrade had solved all the problems.

One officer, in a statement, told Dave Orr, a Somerset resident who campaigns for openness over IBM’s relationship with the council:

“I can confirm that all of the fundamental issues raised through the [SWAP] Audit Report [on AIS] have now been addressed…

“The AIS application is one of the top systems used by local authorities for social care services in the UK. The performance issues referred to in the Audit Report were resolved by a system upgrade.”

Comment:

It’s difficult if not impossible to see how a single upgrade could address all the points SWAP made – such as the lack of a service level agreement to cover AIS or the refusal by IBM to supply a copy of its contract with Northgate.

Whenever auditors produce a hard-hitting report there will be 2 opposing sides: defenders of what’s being criticised and the auditors.

It is up to the auditors to cut through any dissimulation, obfuscation and prevarication to identify what’s going well, what isn’t, and what the uncertainties and risks are.

Auditors would not be doing their job if they always accepted verbal assurances at face value.

But what if auditors are undermined by councillors who readily accept verbal assurances from their officers who wish to defend the suppliers?

A supplier that doesn’t have to provide documentary evidence can say anything in defence of its systems and the quality of service.

Somerset’s councillors are lucky to have auditors as independently-minded as SWAP.

It’s unlikely that SWAP would accept at face value the Somerset officer’s suggestion that because AIS is widely used it’s unlikely to be a poor system.

This would be like Ford saying a particular Mondeo is unlikely to be at fault because thousands of people happily own one.

Every IT installation is different, even if the main software package is widely used. The hardware, network configuration, load on the network, facilities and interfaces installed will render every IT installation unique.

It’s conceivable that every council client of AIS could have a trouble-free service except Somerset.

Are the council’s audit committee councillors gullible to accept verbal assurances about the problems with AIS being solved without requiring proof?

Where does this leave the 775 users of Somerset’s AIS, many of whom may be having to do difficult work in managing vulnerable adults while trying to cope with what may be one of the UK’s worst outsourced systems?

Thank you to Dave Orr for providing information that made this post possible.

Pity the 775 users who use this outsourced council system?

SWAP report on AIS for Somerset County Council’s Audit Committee 2 July 2015

SWAP 2012-2013 audit report on AIS

 

 

Does Barnet know if it’s saving money with Capita?

By Tony Collins

Are council outsourcing contracts becoming so unfathomably complex that officials and leading councillors have no real idea whether they’re saving money?

A Somerset County Council report on the lessons learnt from its troubled outsourcing/joint venture deal with IBM emphasized the importance  of “not making  contracts overly complicated”.

The report said:

” Both the provider [IBM] and the Council would agree that the contract is incredibly complicated. A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created…

“The sheer size and complexity of this contract has proven difficult to manage.”

For years there have been arguments in Somerset over whether the council has saved or spent more as a result of the relationship with IBM.  The absence of audited figures means nobody knows for certain.

It seems to be the same at Barnet. An absence of audited figures – the council does not have to produce them for an outsourcing contract – means that nobody knows for certain if Capita is costing or saving money.

It’s likely that councillors who supported the outsourcing to Capita, and critics of the deal, will never agree on whether local residents are better or worse off.

Now a Barnet resident and respected blogger Mr Reasonable, who studies the accounts of the local council as part of his efforts to be more open and accountable, has offered £250 to charity if the Tory leader Richard Cornelius provides evidence of how Capita is making savings as promised.

Mr Reasonable made the offer on 24 May 2015 and has heard nothing. His request to Barnet was followed up by Aditya Chakrabortty, senior economics commentator at the Guardian. The council didn’t reply within his deadline. Says Chakrabortty:

“If you want to see the world of outsourcing at its most illogical, spend a bit of time with detail-hunters like Mr Reasonable.

“He tells me about phoning his local library to see if a children’s book was in stock. The call was of course routed to a Capita call centre in Coventry, where staff spent ages unable to help before connecting him back to the librarians just down the road. By his calculations, for that wasted call Capita would charge Barnet £8.

“Outsourcing is full of these invented costs, which is how the privateers make their billions.

“Mr Reasonable can tell you about how Barnet now pays £800 for a day’s training in how to take minutes, or £14,628 for just two months of occupational health assessments. In both cases these are services that would previously have been provided in-house for minimal cost…

“These examples would be comic, if they didn’t cost blameless taxpayers so much money…”

Commercial confidentiality

Mr Reasonable says all the commercially sensitive elements of Barnet’s contracts with Capita are redacted and there are “numerous clauses relating to incentives and penalties which would have made publishing a single payments schedule almost impossible”.

It’s also impossible he says to know what Capita has billed for or not.

“I have asked repeatedly to see the evidence of precisely what we are paying for and a detailed explanation of why the payments are so high. Whilst a few promises of evidence were made when the previous COO was in place, none actually materialised.”

Open day?

He adds:

“If Barnet Council is serious about openness then why not host an open day where they go through the contract in detail so that we can understand exactly what we are paying for?

“I would have thought it would have made sense for Capita to get involved with this, to work through the contract with interested citizens and to demonstrate clearly how much money they are saving.

“So I hereby throw down a challenge to the Chief Executive Mr Travers, to Richard Cornelius and to Capita – host an open day, bring bloggers and critics in and show them what you are doing, how the contract is working in reality what money is being paid to whom and how much is really being saved – evidence is essential.

“Indeed a few Conservative councillors might want to come along as well seeing as they voted for this contract. I know some of them privately had serious concerns about the contract but were worried about making those views public.

“And to put my money where my mouth is, I will donate £250 to a charity of Richard Cornelius’ choice if he makes this contract open day happen.”

Comment 

Outsourcing deals should be signed on the basis of pure pragmatism, never because of an ideology.

Barnet’s deal with Capita (and Somerset’s) was signed for largely ideological reasons. Somerset wanted to “go beyond excellence” and Barnet’s ruling councillors want to be immortalised by establishing a new frontier for local government – a “commissioning council” whereby all services are bought in.

It might have been cheaper for Barnet’s residents if the council had given its ruling councillors immortality by building statutes of them in the council’s grounds.

Will council officers have enough time or understanding of the nuances of the contract, with its maze of incentives and penalties,  to know whether they are saving money or not?

In any case how accurate were the pre-outsourcing baseline figures and assumptions on which to make a comparison between what services were costing then, and what they are costing now?

There is no equivalent in local government of the National Audit Office, no organisation that will audit a local government outsourcing deal and publish the results.

This means councillors can say what they like in public about the success of a deal without fear of authoritative contradiction. Their critics can only speculate on what is really happening while they try to shine a light at the dense fog that is commercial confidentiality.

It appears that more and more councils are seriously considering large-scale outsourcing, perhaps on the basis that they can promise guaranteed savings without anyone being able to hold them to account on whether genuine savings materialise.

The first we’ll know anything is awry is when a council report, years into a contract, reveals some of the difficulties and says a resolution is being discussed with the supplier; and it’s another year or two before the contract is terminated at considerable extra cost to the council – and nobody is in post from the time of the original contract to be held accountable.

Is this really the shape of local government outsourcing to come?

Mr Reas0nable

 

Stop filming! That’s the IBM exit strategy we’re discussing

By Tony Collins

Dave Orr, a former IT employee at Somerset County Council, is now a local taxpayer trying to see if public statements made aboutthe authority’s joint venture with IBM match up to the facts.

Some councillors don’t seem to welcome his scrutiny, or his campaigning which can attract the attention of the local press.

Somerset claims it is saving millions of pounds through the Southwest One joint venture – which is majority owned by IBM. But Orr has learned through FOI requests and council reports that once extra costs are taken into account the council has had a net loss of £53m on the contract. He points to:

– £52m of SAP and “transformation” costs the council paid upfront to IBM

– £4m of council bid costs

–  £2m for a written-off loan to Avon and Somerset Police for SAP

–  £3m interest on a £30m loan over 10 years

–  £3m in contract management costs

–  £5m in legal costs over a dispute with IBM

This totals £69m. Procurement savings to December 2013 were £16m – which gives a net loss of £53m. The contract is supposed to save £150m over its 10-year life. The deal was signed in 2007 by IBM, Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police. The authorities are considering what they will do at the end of the contract.

Stop filming

At a meeting of the council’s audit committee last month, the chairman of the audit committee asked Orr to stop filming. He was using a Panasonic compact camera. A vote was proposed and seconded that the meeting not be recorded.

Five councillors voted in favour and 3 Lib-dems abstained. Those supporting the motion to stop filming included Tory, Labour and UKIP members.  Somerset is Conservative controlled.

Orr says the discussion shortly before the vote was taken was on Southwest One and the council’s exit strategy from the contract.  Councillors also agreed that they may at a later date go into a secret “Part 2” session to discuss a “lessons learnt” report about the collaboration with Southwest One.

A blow to local democracy?  

The government has issued guidance that states explicitly that councils should allow the public to film council meetings. Under the heading “Lights, camera, democracy in action” an announcement by local government secretary Eric Pickles  says on the gov.uk website:

“I want to stand up for the rights of journalists and taxpayers to scrutinise and challenge decisions of the state. Data protection rules or health and safety should not be used to suppress reporting or a healthy dose of criticism.

“Modern technology has created a new cadre of bloggers and hyper-local journalists, and councils should open their digital doors and not cling to analogue interpretations of council rules.

“Councillors shouldn’t be shy about the public seeing the good work they do in championing local communities and local interests.”

Before the meeting of the audit committee Orr had obtained informal consent from the council to filming.

Comment

Open government is not a party political issue – none of the parties seem to want it. Indeed councillors at Somerset seem at their most comfortable  when voting for secrecy.  Is this because it gives them a feeling of privilege – having access to information the ordinary citizens don’t have?

In central government one of the first things the civil service does after a general election is give new ministers access to state secrets. It distances the ministers from ordinary people. Ministers feel privileged – “one of us”.  Is this the main unspoken reason some Somerset councillors  love to have secret meetings?

Councillors may feel weighed down by Orr’s questions and campaigning. But his questions are arguably more important than those raised internally by deferential party politicians who don’t ask the most difficult questions.

If anything they should be asking themselves whether they should ask the questions he is asking.

It’s too easy on big outsourcing contracts for supplier and client to put a gloss on the relationship. It’s easier talking about unsubstantiated savings than explaining why the contract isn’t making the savings originally intended. And it’s even easier when you shun scrutiny from members of the public.

Should Liverpool Council smile now it’s ending BT joint venture?

By Tony Collins

Liverpool Direct Ltd describes itself as the largest public/private partnership of its kind in the UK. BT and Liverpool City Council formed the joint venture in 2001. At one point it employed more than 1,300 people.

Last year the joint venture had a visit from  Prince Edward who met its apprentices and trainees.

Now Liverpool City Council is taking full ownership of the joint venture. BT is handing back its 60% share in Liverpool Direct to the council. But the way the dissolution is being handled is like a theatre compere smiling exaggeratedly at the audience while he pushes off stage a performer who has overstayed his welcome.

Indeed the council’s report on why BT is being pushed out has an oversized grin on every page. Too much self-conscious praise for BT, perhaps. Which may show how political outsourcing deals have become.

This is the first sentence of the council’s report on why the joint venture with BT is ending:

“BT and Liverpool City Council have enjoyed a long and successful partnership through the joint venture company Liverpool Direct Limited.”

And then:

“The ethos of the Partnership was to place the ‘customer at the heart’ of the organisation through the development of innovative new ways of working building on BT’s global brand and reputation.”

There’s much more praise for BT. From the council’s report:

Groundbreaking achievements have included:

  • Establishment of the first ever 24x7x365 local government contact centre including a call centre which is top quartile
  • The only ‘Benefits Plus’ service in the UK.
  • A comprehensive and integrated network of One Stop Shops serving 350,000 visitors each year.
  • First class ICT infrastructure.
  • Creation of 300 new jobs supporting 3nd party business won by LDL.

But there’s a give-away line in one of the sets of bullet points on some of the benefits of the partnership. In 2011 came a refresh of the 10 year-old deal. The benefits of the refresh:

  • Further price reduction of £22.5m.
  • Increased share of third party business. Potential investment of £17m.
  • Continued sponsorship of ( e.g. BT Convention Centre 2012-2017)
  • The ‘write off’ by both parties of potential legal claims against Liverpool City Council estimated by BT of approximately £56m.
  • Increased ownership level from 20% to 40% in favour of the council.

Spot the anomaly – a write-of legal claims against each other of £56m? So the partnership wasn’t quite so wonderful. But that was 2011. Why is the council now pushing out BT from the Liverpool Direct joint venture – what the council calls officially “The Way Forward”?

Amid all the praise for BT it is not easy to see at first glance why Liverpool Direct is being taken into the council’s full ownership. It turns out that austerity is the reason. The council needs to make more cuts than BT is willing to make, and it recognises that BT needs to make a profit. Which raises the question of whether the council was willing to pay BT a decent profit during bountiful times until cuts began to bite.

From Liverpool Council’s report:

“In the early Autumn of 2013, both parties were in active discussions in an effort to resolve the serious financial savings Liverpool City Council needed to make between 2014 and 2017.

“As a result of these discussions and negotiations, BT agreed a further price reduction of £5m contribution to the budget process for 2014/15 together with a further £5m for the following financial year.

“Whilst the Council really appreciated BT’s continued commitment to the city, the current budget deficit would require a far more substantive financial contribution from the Contract both for 2014/15 and for future years.

“Unfortunately BT feels unable to commit to any further price reduction within the Contract as they need to sustain their own financial position. Moreover, the City Council is now well placed, as a result of the long collaboration with BT and the learning gained from the Partnership, to continue to drive forward business transformation and run the services with consequent cost savings to the city.”

The result is that negotiations will continue with a view to transferring BT’s 60% share in Liverpool Direct to the council by 31 March 2014; and the good news doesn’t stop there.

“The City Council and BT both believe that the transfer will enable additional savings to flow to the council including all income from third party contracts.

“BT remains committed to serving residents and businesses in Liverpool and its long and successful relationship with Liverpool City Council will carry on with BT continuing to provide a range of services to the council. During negotiations in late 2013 BT announced it plans to recruit a further 240 staff in Liverpool to support the growth of high-speed broadband services and has recently committed to being a major sponsor of the 2014 International Festival of Business.”

A dark side?

Behind the smiles Liverpool City Council has, it seems, an unusually secretive side.   Richard Kemp CBE has been a member of Liverpool City Council for 30 years having held major portfolios in both control and opposition. He is leader of the Liberal Democrats on the Council. He was Vice Chair of the Local Government Association of England & Wales for more than 6 years.

He says on his blog that has “taken the very unusual step of asking for two independent enquiries into activities of Liverpool City Council”. He adds: “The cases are related and refer to the tangled web of relationships which surround the Liverpool/Liverpool Direct Ltd/Lancashire/One Call Ltd/BT activities.

“In the first instance I have asked that the Lancashire Police extend their Lancashire investigation into Liverpool. In the second I have asked the Information Commissioner to look at the appalling record of the council in responding to freedom of information requests about any matter relating to Liverpool Direct Ltd.”

He says the council has an excellent record of responding to FOI requests – except when it comes to LDL. “When I raised this with the Mayor at the Mayoral Select Committee I didn’t get any answers …”

He also says:

“I find it amazing that I have been told that no contract exists between Liverpool, Lancashire and BT only to find that there is a legal agreement! As a layman I am unclear as to what the difference is between these two positions.

“We now need external scrutiny and investigation to examine these tangled relationships and work out not only who agreed what and when but also whether Liverpool and Lancashire tax payers are getting value for money for this deal.

“In a system where there is no internal scrutiny, Liverpool Labour members have to ask permission to raise issues in the scrutiny process, I feel that I have no alternative but to ask for help in looking at these affairs outside the council.

“In my career I have not only been a councillor for a long time but also asked to work in other councils which were in severe difficulties with their governance structures. Liverpool feels as bad as any council that I have worked in. There is no clear definition of Member and Officer roles.

“ No effective challenges exist within the system and a centralised almost Stalinist decision-making process pertains … I hope that these external investigations will take place and then that they force change in this secretive and opaque council.”

Infighting

A local paper, the Liverpool Echo, has also been investigating the council and its deal with BT.

It says the deal “has been dogged by accusations of infighting between BT and the Council, after top QCs were brought in to settle disputes over how much work would be awarded to LDL under the terms of its contract”.

An internal council report obtained by the Echo before agreement for the contract refresh in 2011 “showed the it took place amid the threat of costly legal claims by BT if city bosses pulled the plug and did not stay in partnership with them until 2017”.

Private/public deals too secretive – MPs today

A report by the Public Accounts Committee published today Private Contractors and Public Spending says private and public partnerships are too secretive – and they lie largely outside the FOI Act. Indeed a BBC File on 4 investigation into the growing influence of accountancy companies such as Capita in public life reached similar conclusions. File on 4 suggested that even if the contract between Service Birmingham, Capita and Birmingham City Council were published in full it could prove impenetrably complicated.

Margaret Hodge MP, chairman of the Public Accounts Commitee, said today:

 “There is a lack of transparency and openness around Government’s contracts with private providers, with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information.

“It is vital that Parliament and the public are able to follow the taxpayers’ pound to ensure value for money. So, today we are calling for three basic transparency measures:

– the extension of Freedom of Information to public contracts with private providers;

– access rights for the National Audit Office; and

– a requirement for contractors to open their books up to scrutiny by officials.

Comment:

It’s remarkable how council outsourcing deals are becoming more cabalistic despite many initiatives toward more open government.

It’s a pity that things have reached a point where Richard Kemp, a Liverpool councillor of 30 years, ends up reporting his authority to the police and the Information Commissioner.

Meanwhile Liverpool City Council, which is one of the most self-image-protecting authorities in the UK, ends a long-standing joint venture with BT by giving the supplier nothing but praise – in public.

Democracy is a form of government in which all eligible citizens participate equally, either directly or indirectly through elected representatives. Clearly that’s not happening properly in Liverpool – or  some other parts of local government.

Reasons I have asked police and Information Commissioner to come in 

BT ad Capita  –  outsourcing joint ventures under pressure in Liverpool and Birmingham 

Private contractors and public spending – Public Accounts Committee report published today

Officials black out IT security report after it’s published in full

By Tony Collins

In one of the most bizarre regressions since the FOI Act came into force in 2005, officials at Somerset County Council have redacted an audit report on SAP security weaknesses after the report was published in full.

The result is that anyone can see links to both reports. This is the report with parts of it redacted – blacked out. These are links to the full versions, which were published before the redactions – here and here.

The report was written by auditors Grant Thornton for Somerset County Council and highlights weaknesses in a database that is shared by the council, Taunton Deane Borough Council and Avon and Somerset Police.  The database is part of a SAP system run by Southwest One on behalf of the three authorities.

Southwest One is an IBM-led enterprise that provides IT and other services to the three authorities under a controversial outsourcing contract. Dave Orr has written comprehensively about the deal.

Somerset published the Grant Thornton report in full. The media including Campaign4Change published some details of the IT security weaknesses mentioned in the Grant Thornton report. It appears that Avon and Somerset Police asked officials at Somerset to black out details of some of the weaknesses.

Somerset-based FOI campaigner Dave Orr says the blacking out is to save the blushes of the police.

Says Orr: “Much of the redaction in the Somerset County Council IT Controls report by Grant Thornton, especially generic and available password advice in Section 3, is not based in a genuine security threat, but looks to be rooted in a Police culture that seeks to avoid criticism and/or embarrassment.”

Somerset MP Ian Liddell-Grainger says:

“SAP was built on the cheap by IBM to serve three different customers – the County Council, Taunton Deane district council and the Police. It would have made sense to bung in a few partitions to stop council eyes taking a peek at police matters, or vice versa. But that would have cost money – perish the thought.”   

 Police SAP systems’s “significant” security weaknesses. 

Top 5 posts on this site in last 12 months

Below are the top 5 most viewed posts of 2013.  Of other posts the most viewed includes “What exactly is HMRC paying Capgemini billions for?” and “Somerset County Council settles IBM dispute – who wins?“.

1) Big IT suppliers and their Whitehall “hostages

Mark Thompson is a senior lecturer in information systems at Cambridge Judge Business School, ICT futures advisor to the Cabinet Office and strategy director at consultancy Methods.

Last month he said in a Guardian comment that central government departments are “increasingly being held hostage by a handful of huge, often overseas, suppliers of customised all-or-nothing IT systems”.

Some senior officials are happy to be held captive.

“Unfortunately, hostage and hostage taker have become closely aligned in Stockholm-syndrome fashion.

“Many people in the public sector now design, procure, manage and evaluate these IT systems and ignore the exploitative nature of the relationship,” said Thompson.

The Stockholm syndrome is a psychological phenomenon in which hostages bond with their captors, sometimes to the point of defending them.

This month the Foreign and Commonwealth Office issued  a pre-tender notice for Oracle ERP systems. Worth between £250m and £750m, the framework will be open to all central government departments, arms length bodies and agencies and will replace the current “Prism” contract with Capgemini.

It’s an old-style centralised framework that, says Chris Chant, former Executive Director at the Cabinet Office who was its head of G-Cloud, will have Oracle popping champagne corks.

2) Natwest/RBS – what went wrong?

Outsourcing to India and losing IBM mainframe skills in the process? The failure of CA-7 batch scheduling software which had a knock-on effect on multiple feeder systems?

As RBS continues to try and clear the backlog from last week’s crash during a software upgrade, many in the IT industry are asking how it could have happened.

3) Another Universal Credit leader stands down

Universal Credit’s Programme Director, Hilary Reynolds, has stood down after only four months in post. The Department for Work and Pensions says she has been replaced by the interim head of Universal Credit David Pitchford.

Last month the DWP said Pitchford was temporarily leading Universal Credit following the death of Philip Langsdale at Christmas. In November 2012 the DWP confirmed that the then Programme Director for UC, Malcolm Whitehouse, was stepping down – to be replaced by Hilary Reynolds. Steve Dover,  the DWP’s Corporate Director, Universal Credit Programme Business, has also been replaced.

4) The “best implementation of Cerner Millennium yet”?

Edward Donald, the chief executive of Reading-based Royal Berkshire NHS Foundation Trust, is reported in the trust’s latest published board papers as saying that a Cerner go-live has been relatively successful.

“The Chief Executive emphasised that, despite these challenges, the ‘go-live’ at the Trust had been more successful than in other Cerner Millennium sites.”

A similar, stronger message appeared was in a separate board paper which was released under FOI.  Royal Berkshire’s EPR [electronic patient record] Executive Governance Committee minutes said:

“… the Committee noted that the Trust’s launch had been considered to be the best implementation of Cerner Millennium yet and that despite staff misgivings, the project was progressing well. This positive message should also be disseminated…”

Royal Berkshire went live in June 2012 with an implementation of Cerner outside the NPfIT.  In mid-2009, the trust signed with University of Pittsburgh Medical Centre to deliver Millennium.

Not everything has gone well – which raises questions, if this was the best Cerner implementation yet,  of what others were like.

5) Universal Credit – the ace up Duncan Smith’s sleeve?

Some people, including those in the know, suspect  Universal Credit will be a failed IT-based project, among them Francis Maude. As Cabinet Office minister Maude is ultimately responsible for the Major Projects Authority which has the job, among other things, of averting major project failures.

But Iain Duncan Smith, the DWP secretary of state, has an ace up his sleeve: the initial go-live of Universal Credit is so limited in scope that claims could be managed by hand, at least in part.

The DWP’s FAQs suggest that Universal Credit will handle, in its first phase due to start in October 2013, only new claims  – and only those from the unemployed.  Under such a light load the system is unlikely to fail, as any particularly complicated claims could managed clerically.

 

Will truth ever be told when things go wrong?

By Tony Collins

Cabinet Office minister Francis Maude has criticised civil servants who don’t always tell ministers what is going on in their departments. He used the Universal Credit project as an example.

He told the Financial Times: “There were a lot of failures in DWP and it isn’t good that it took a review commissioned . . . by the secretary of state to disclose what was going on.”

He added:

“You’ll find a lot of ministers don’t know a lot of things going on in the department because there’s no way you’ll find out.”

Maude’s comments touch on a common factor in IT-related project disasters in government – that ministers get mostly “good news” from their officials, and learn little or nothing about the seriousness of problems until a debacle is only too apparent to be denied.

But can ministers or the boards of large private companies ever expect their senior staff to be the bearers of bad news?

The Performing Right Society did not find out the truth about its failing IT-based project until it appointed a new head of IT who had no emotional equity in what had gone on before. [Crash – chapter 1)

The National Audit Office report “Universal Credit: early progress” referred to a “good news” culture at the Department for Work and Pensions that “limited open discussion of risks and stifled challenge”.

Ministers in charge of the Rural Payments Agency’s Single Payment Scheme said they were kept in the dark about the seriousness of IT-related problems. “When delays occurred, many stakeholders only found out at the last minute,” said a report of the Public Accounts Committee.

“Conspiracy of optimism”

The PAC report of March 2007 is worth a further mention:

“Lord Bach [minister in charge of the Single Payment Scheme] told us that he felt very let down by the advice he had received from the RPA [Rural Payments Agency], upon whom he said the Department relied very heavily in these circumstances, and the “conspiracy of optimism” on the part of the Agency.”

Lord Bach told MPs that he kept being told by officials that all was well.

“I frankly have to say that I do not think that that was satisfactory from senior civil servants whose job is to tell ministers the truth.”

Let down by civil servants – Universal Credit

Now the FT reports that Francis Maude has “entered the controversy over the implementation of the government’s universal credit scheme”. Maude told the FT he believed that Iain Duncan Smith, the work and pensions secretary, had been let down by his civil servants.

Maude said senior civil servants in charge of projects should tell ministers bluntly if they felt they were being misdirected and insist on a formal “letter of direction” to show that they had raised their objections. If they did not, they should be accountable for failings on their watch.

Maude did not comment directly on whether Robert Devereux, the top official in Mr Duncan Smith’s department, should take the rap for the much-criticised implementation of universal credit, but said: “I think everybody has to take responsibility for what they were part of”.

SROs accountable to MPs?

He suggested that civil servants who are in charge of big projects, known as senior responsible owners (SROs), should account directly to parliament, which would “toughen the relationship with ministers” and give officials a greater incentive to challenge developments they believed were wrong.

He said: “If you have an SRO who knows that he or she is going to be hauled up in front of select committees and interrogated . . . then I think you’re much more likely to have what is a very healthy thing in our system which is push-back. . . There’s a great phrase ‘speaking truth unto power’ and it’s very important – it doesn’t happen enough.

He added: “I’ve never had a civil servant come to me and say ‘Would you like us to stop doing this?’ The answer might easily be, ‘yes’.”

Comment:

Do ministers and boards of large private companies always have to commission their own independent reports to find out if their organisation’s biggest IT-based projects are failing? Probably.

The problem is not one of lying. Civil servants tend not to lie. Neither do senior executives when reporting to their boards. But the sin of omission – the art of not telling the truth while not lying – is well practiced in public life.

A succession of IT-based project disasters in the US, Australia and the UK show that truth is the first casualty of any large failing IT-based project.

Barnet Council and Capita

It’s isn’t just IT-based projects that bring out the sin of omission. Outsourcing deals do too. Barnet Council’s outsourcing deal to Capita is mired in controversy over truth.

Why did Barnet’s officials give Capita £16m after saying that the council had no spare cash, and that Capita would make the necessary upfront IT investments?

Officials have given a long-winded explanation which is a little like the drawn-out, incomprehensible explanation a six year-old may give in the playground when teacher asks why he took his friend’s bar of chocolate.

Liverpool LDL, BT and excessive mark-ups?

Liverpool Direct Ltd, a joint venture between Liverpool council and BT, is also mired in a controversy over truth. According to the Liverpool Daily Post, Local Government Minister Brandon Lewis has questioned whether LDL is proving value for money. There are allegations of excessive mark-ups on IT and services supplied by BT to the council.

It seems that BT makes a mark-up on what it supplies to LDL and LDL makes a further mark-up on what it supplies to the council.

But a council spokesperson said: ““The mark up incorporates a calculation of the cost of setting up a particular piece of hardware or software by LDL. The important figure is the profit after tax per item which is much lower, and on some items, LDL actually makes a loss.”

The minister said Liverpool Council needed to open up its books if it wants to insist it gets value for money from the BT deal. Will Liverpool Council open up?

Hardly.

Politicise parts of the civil service?

There is a strong argument for politicising the top echelons of the civil service so that ministers are not so reliant on officials who are thought to be neutral but evidence shows can be biased towards good news and suppressing the bad.

Ministers and boards of large companies do not need various versions of the truth when things go wrong. They need their own version.

As Richard Nixon said when accepting the presidential nomination in 1968 [pre-Watergate]:

“Let us begin by committing ourselves to the truth—to see it like it is, and tell it like it is—to find the truth, to speak the truth, and to live the truth.”

Doubtless Nixon believed it when he said it. Just as countless officials and executives in public and private life believe they are speaking the truth when they ministers and boards on their big IT-based projects. It may be the truth. But how much of it are they telling?

Update:

In a tweet BrianSJ3 makes a great suggestion: Genchi Genbutsu – “go and see for yourself” he says.

Capita has duty to promote success of Barnet contract

By Tony Collins

Capita has a contractual duty to promote the success of the “One Barnet” outsourcing deal with Barnet Council – apparently without taking into account facts that may count against success.

Within the 2,400 pages that make up contracts between Capita and Barnet Council, Unison has discovered clauses that appear to put the onus on the service provider to talk up the success of Barnet’s outsourcing deal.

These are excerpts from the contracts:

“The Service Provider shall use its relationships to create advocates of the success of the One Barnet programme by informing the Department of Communities and Local Government and the Local Government Association of key milestones and achievements within the programme thereby supporting increased political awareness of the Authority and the Service Provider shall utilise its corporate and personal networks to support the communication of the success of the Partnership via appropriate case studies.”

The contract points out that the service provider has “frequent meetings across central government at official level and occasional meetings at ministerial level”. It also sits on the Public Services Strategy Board, the Whitehall & Industry Group, Reform, Policy Exchange and Localis.

“The Service Provider shall use its relationships to create opportunities for the successes of the Partnership to be promoted enhancing the profile of the Authority at strategic level across the public sector,” says one of the contractual clauses.

Thank you to Dave Orr, a campaigner for openness over local government outsourcing deals, for drawing my attention to the Barnet Council clauses.

Comment

It now seems to be official – that outsourcing deals in local government have to be perceived as successful. Perhaps these sorts of clauses in local government outsourcing contracts help to explain why the public don’t learn of failing “partnerships” and joint ventures until what has gone wrong can be hidden no longer.

This is not open government. This is a contractual expectation that the supplier’s representatives should smile, and smile broadly, whenever the subject of an outsourcing deal with Barnet is discussed, or there is an opportunity to discuss it.

Which rather undermines the credibility of the Public Services Strategy Board, the Whitehall & Industry Group, Reform, Policy Exchange and Localis if supplier’s representatives are there to pass on PR messages about their outsourcing deals, whatever the truth.

“Smile and others will smile back. Smile to show how transparent, how candid you are. Smile if you have nothing to say. Most of all, do not hide the fact you have nothing to say nor your total indifference to others. Let this emptiness, this profound indifference, shine out spontaneously in your smile.” Jean Baudrillard.

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

By Tony Collins

Six years into Southwest One’s joint venture between IBM and three public authorities, the outsourced service is not a big success.  

Somerset County Council, one of the joint venture’s partners, has been in dispute with IBM, the major shareholder in Southwest One. It cost the county council £5.9m to settle, including £800,000 in costs when bringing back staff who had been outsourced.

The joint venture’s SAP-based “transformation” led to complaints of poor quality of service by some of Somerset’s finance users; the venture has consistently made losses and on the matter of savings, Somerset Cabinet member for resources, David Huxtable, said there have been some but added:

“It was a very complex contract and lots of the savings were predicated on an ever-increasing amount of money being put into public services and we know in the last four years that has gone into reverse.”

Now IBM has sold its low-margin customer care outsourcing unit which could affect the future of Southwest One.

Yet a smaller partner in Southwest One, Taunton Deane Borough Council, describes the relationship as a “success”. Reports to Taunton Deane’s councillors on Southwest One are remarkably positive.

Dave Orr an IT specialist who used to be work for Somerset County Council and has kept a close eye on Southwest One since it was formed in 2007 has drawn my attention to Taunton’s latest reports on the joint venture. When read quickly Taunton’s reports are upbeat, almost breathless with praise for the joint venture.

Below are excerpts from two reports that have been written for today’s meeting of Taunton Deane’s Corporate Scrutiny Committee.  The first is a “Procurement Transformation Update”, report to the council by Southwest One’s Chief Procurement Officer.

There are no hints of any difficulties on the contract except a comment that cutting spending will make it harder to achieve procurement savings. From Southwest One’s report to Taunton:

“Executive Summary

“As at 31/07/13, in excess of £1.8m [report’s emphasis] savings have been delivered to the Council through signed-off procurement-related initiatives brought about by Southwest One’s Strategic Procurement Service. This is up from £1.59m when last reported in January 2013.

“A further £1.364m of savings are scheduled to be delivered from these signed-off initiatives during the life of the current Southwest One contract, which expires in 2017.

“Multiple projects continue to be progressed by Southwest One Strategic Procurement Service which are expected to significantly add to the pipeline of savings. These Include initiatives for a new pool & spa at Blackbrook; Waste; Insurance; various small scale initiatives within the DLO/HPS areas .”

A second report for Taunton’s Corporate Scrutiny Committee “SouthwestOne Partnership Update report” is written jointly by a team at Taunton council and the CEO of Southwest One. Again it’s upbeat and summarises Southwest One’s performance over the last six months.

“Service delivery for TDBC, viewed in the round, is broadly on track. The majority of services perform well or extremely well (eg Customer Services). We do have concerns in some areas and we are working closely with the services in question to remedy the issues. “

The report says that the shared service model in conjunction with larger authorities provides Taunton with “much needed resilience” (report’s underlining) in service delivery, although “this has been impacted to a certain extent by changes made recently to the contract by the other partners”.

Additionally, “our secondee staff to SWO benefit from ‘assured employment’, which was offered by IBM”.

A survey of staff in June 2013 “saw marked improvements in staff morale and communication”.

Sickness absence for the financial year to the end of March 2013 was slightly down to about 9 days per full-time employee though up a little more recently.

Appendices – now for the problems

It’s only when councillors come to the report’s appendices that they will see some detail of the problems. But how many councillors will scrutinise a report’s appendices? From the Taunton report’s appendices:

“There are service and capacity issues. The helpdesk move caused significant problems, leading to an increased number of issues being raised with the Client Team from TDBC [Taunton Deane Borough Council] staff. We are closely monitoring the plan SWO [Southwest One] have put in place to fix these issues.

“Project delivery capacity and project scheduling continues to cause concern, with improved governance within TDBC highlighting this problem more acutely. Our issue tracker is currently tracking 11 escalated issues with SWOne, 6 of them with a Red RAG status.

“ SRM (Supplier Relationship Management) performance in SAP continues to be well below the required level despite the amount of focus it is receiving from SWOne. Work on a revised governance process for the SAP system is underway and looks likely to deliver a more controlled SAP Change process.”

The most serious problem – and it is not mentioned until the penultimate page of the report’s appendices – is that savings will be nowhere near the original target of £10m.

“This is red, tracked against the original [savings] £10m target. To date £2.8m has been signed-off and it is not yet clear how the lower target of £5.7m will be achieved as there are fewer savings opportunities and initiatives emanating from SWO…”

From the small print of Taunton Deane’s report it is possible to work out that the cost of the council’s SAP implementation was supposed to have been paid off by savings but hasn’t. Indeed a debt of nearly £1m is still incurring interest.

Comment

Perhaps it’s unfair to pick on Taunton Deane’s reports to councillors. The positive tone is little different to dozens, perhaps hundreds, of NHS, council and central government board reports I have read over two decades.

If you’re a director of a public authority your job is probably made harder if you’re getting self-vindicating internal reports on the organisation’s progress. It would be more helpful if management reports were neutral and objective, framed by unvarnished facts.

When you hire a roofing company and it reports back on the finished job, you want to know about the tiles that leave a gap or are loose, not the ones that fit nicely.

NHS trust reports can often be particularly one-sided, often of the type that say:

“We had 3 fatalities on the main staircase last month because of a ruptured floor lining but the overall accident rate in that part of the building is down over the last 3 years and our falls rate overall is 3% below the average for the NHS as a whole.

“Our contractor confirms that the floor lining is within KPI requirements and a repair will be effected shortly.”

It appears that those who write board reports for public authorities feel an obligation to motivate and inspire, to leave the reader feeling good, to clothe bad news in layers of good news, omit it altogether or put it in the appendix hardly anyone reads.

Is this one reason so many outsourcing and NHS scandals stay hidden for years?