Category Archives: outsourcing

Reasons for councils to avoid large-scale outsourcing? – lessons learnt report

Posted on 24/09/2014 | 6 comments

By Tony Collins

Somerset County Council’s Audit Committee has just published “Update on Lessons Learnt from the Experience of the South West One Contract”. The lessons could be read by some as a warning against any all-encompassing outsourcing deal between a council and a supplier, in this case IBM.

The carefully-worded report is written by Kevin Nacey, the county council’s Director of Finance and Performance. It updates a “lessons learnt” report the council published in February 2014.

The latest report concludes:

“… All parties have been working very hard to keep good relationships and to fix service issues as they arise. The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.”

All local authority large-scale outsourcing deals are complex and difficult to manage. So are councils that sign big outsourcing deals courting trouble? Should councils avoid such contracts whatever the supplier incentives?

Somerset County Council was a top performing council when it created a joint venture owned by IBM in 2007. The aim was to take the council “beyond excellence” in the words of the then Somerset chief executive Alan Jones. His councillors hoped that the new company, Southwest One, would attract much new business and so cut costs for each of the partners.

But even without attracting new business, IBM had difficulties managing the sometimes conflicting expectations and services for each of the initial three clients: the county council, Taunton Deane Borough Council and Avon and Somerset Police.

Former Somerset County Council IT specialist Dave Orr has written a well-informed series of articles on the Southwest One contract.

What’s interesting now is that Somerset County Council, under pressure from Orr and others, has investigated what has gone wrong and why, and is disseminating the lessons, after giving them much thought.

Originally Somerset was proud of its deal with two councils and a police force. Its auditors in 2007 praised the deal’s innovative approach. Now we learn from the latest Somerset report that the contract was “incredibly complicated”. The report says:

“One of the most significant lessons learnt related to the sheer size, breadth and complexity of the contract. 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.”

[But all big outsourcing contracts run to thousands of pages and are unlikely to be anything but incredibly complicated.]

More from the council’s latest lessons learnt report:

“What has become clear over time is that any such partnership depends upon having similar incentives …”

[Does any big outsourcing deal have similar incentives for supplier and client? Only, perhaps, in the press releases. In reality suppliers exist to make money and, in times of austerity, councils want to spend less.]

“Dissatisfaction can occur”

The county council’s report: “The well-documented financial difficulties faced by the provider [IBM] early into the contract life also affected its ability to meet client expectations. The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur.”

Client function too small

“The Client function monitoring a major contract needs to be adequately resourced. At the outset the size of the client unit was deemed commensurate with the tasks ahead … However, as performance issues became evident and legal and other contractual disputes escalated, the team had to cope with increasing workloads and increasing pressure from service managers and Council Members to address these issues. This is a difficult balancing act.

“You do not want to assemble a large client function that in part duplicates the management of the services being provided nor overstaff to the extent that there is insufficient work if contract performance is such that no issues are created.

“With hindsight, the initial team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team.”

3,000-page contract of little use?

“Performance indicators need to be meaningful rather than simply what can be measured. Agreement between the provider and the SCC client of all the appropriate performance measures was a long and difficult exercise at the beginning of the contract.

“Early on in the first year of the contract, there were a large number of meetings held to agree how to record performance and what steps would be necessary should performance slip below targets. Internal audit advice was taken (and has been at least twice since under further reviews) on the quality and value of the performance indicator regime.

“It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive. Perhaps the regime was too onerous for both sides to administer.”

[A 3,000 page contract proved of little value in holding the supplier to account on performance. So was there much value in the contract apart from making a lot of money for lawyers? Too tight a contract and it’s “too onerous for both sides to administer”. Too loose and there’s no point in the contract. Another reason for councils to avoid entering a big outsourcing deal?]

“Too ambitious for all parties”

The report says:

“Contract periods need to be different for different services as the pace of change is different. The range of services provided under the initial few years of the contract were quite extensive. On another related point the provider also had to manage different services for different clients. This level of complexity was perhaps too ambitious for all parties.

“Although there were many successful parts to the contract, it is inevitable that most will remember those that did not work so well. The contract period of 10 years is a long time for 9 different services to change at the same pace…”

Drawback of seconding staff

“The secondment model introduced as part of the contract arrangements had been used elsewhere in the country. Nevertheless, it was the first time that 3 separate organisations had seconded staff into one provider.

“In many ways the model worked as staff felt both loyalty to their “home” employer, keeping the public service ethos we all felt to be important, and to Southwest One as they merged staff into a centre of excellence model.

“The disadvantage was that Southwest One was hampered by the terms and conditions staff kept as they tried to find savings for their business model and to provide savings to the Council in recent years given the changing financial conditions we now operate under.”

Different clients on one main contract – a nightmare?

“Another aspect of this contract in terms of complexity is the nature of the partnering arrangement. It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided.

“Remedy for such circumstances differed depending upon initial views of the scale of the performance issue and what each client required for its service.”

Quick audit work “stifled”

“It has been particularly challenging to achieve effective audit of the contract, both by internal and external auditors. Access for auditors has been a prime issue with clearance of those auditors often being slow as process involved all clients being satisfied that audit scope, coverage and findings were appropriate.

“The contract allowed for transparent audit access and there is no suggestion here that SWO did not welcome audit.

“Indeed, for the first few years of the contract there was a team within business controls in SWO that enabled and carried out their own audit work on behalf of IBM. It again proved to be the controls required by all partners and the complexity of access that stifled quick audit work to be performed.

“Increasingly, there was debate about capacity to support audit work within SWO and therefore, SWAP [South West Audit Partnership] suffered in terms of their ability to conduct audit work in good time. In addition,

“Police levels of security needed to be far higher than SCC and this complicated access for auditors.”

Arguments over confidentiality – FOI requests “incredibly difficult to answer”

“The most recent SWAP [South West Audit Partnership] audit of the contract client function found that there has been effective monitoring of SWO performance.

“The problem is that reporting of that performance has been hampered by arguments over commercial confidentiality and sensitivities about the validity of reporting.

“It is fair to say that the three clients do not always agree on the quality of service provided, which of course gives rise to SWO management challenging SCC’s robust approach if other clients do not agree when in our view service is deficient.

“The transparency surrounding contract performance has been a contentious issue given these difficulties, and especially at times of dispute and with court proceedings pending. Future contracts must make these issues clearer and give the authority the ability to follow the national agenda for transparency more explicitly and without fear of upsetting either partners or the provider.

“The Freedom of Information legislation is there to serve the transparency agenda but such requests have been incredibly difficult to answer because of need to ensure all parties are sighted on information made public.”

Confused data ownership

“A further issue is that of data ownership and responsibility. SCC must make available data if indeed it has that data. On a number of occasions SCC did not and SWO held data that contained references to other authorities.

“The shared service platform and the nature of service delivery occasionally made it costly to segregate data to respond to FoI and other requests. Secondees were also often torn between their allegiance to their ‘home’ employing authority and their commitment to SWO, which did cause some confusion regarding information ownership.

“In all contracts SCC must strive to ensure transparency is foremost in our thoughts and that clearance of data release is not subject to other parties’ views.”

ICT, SAP and splitting a one-vendor database – a host of issues

“Another lesson learnt from this contract relates to the use of ICT systems to be delivered and managed by the provider in any contract… Firstly, the introduction of SAP so early in the contract life and the system issues experienced meant that SWO performance became synonymous with SAP performance.

“There were many other benefits provided by SWO in the first few years of the contract related to other improvements in the network and associated applications but this was overshadowed by the SAP technology issue.

“Over time SAP has worked for SCC albeit there are still outstanding issues with its configuration and its flexibility to adjust to the Council’s changing needs.

“The creation of one vendor database in support of the shared service agenda is now with hindsight going to be a bigger issue for all clients as we approach the end of the contract.

“There is still insufficient knowledge transfer to secondees and this will leave a legacy issue for our authorities. Future contracts must clarify asset ownership, system maintenance and replacement infrastructure issues.”

Comment

Somerset County Council’s Audit Committee deserves recognition for the work it has put into the lessons learnt report.

It has produced the report under the pressure of years of intense outside scrutiny, by Dave Orr, and others.

Without such scrutiny Somerset could have ended up concealing contractual problems even from itself. We’ve seen in other parts of the country, where councils have failing outsourcing contracts, that the most enthusiastic councillors convince themselves that all is well.

They assume that negative local newspaper reports of problems on their major outsourcing contract are prompted by the profoundly disaffected, just as some councillors and officials in parts of the UK wrongly blamed the lifestyles of complainants when they alleged child abuse.

Mutual incentives?

The Somerset report says each side in an outsourcing relationship needs to be motivated by similar incentives. But can that ever happen? Councils exist to provide good public services as cheaply as possible. Suppliers exist to make as much money as possible.

There can only be similar incentives if a council is so inefficient that there’s enough spare cash to cover council savings and the supplier’s profits.

If there isn’t the spare cash, the council, in its enthusiasm to do something different by outsourcing, can simply fictionalise the figures for benefits and potential savings.

This creative (and legal) exercise is perfectly possible given the depth of the conjecture needed to project costs and savings over 6 years or more.

Part-time councillors who are considering a big outsourcing contract have the time only to glance at summary documents or the preferred supplier’s Powerpoint slides. They are unlikely to spot the assumptions that pervade the formalised legal language.

During such a pre-contract exercise, the most sceptical councillors are often excluded from internal scrutiny, and the disinterested ones who are admitted into the inner chamber can find their heads swimming in a supplier-inspired language that either swathes uncertainty in the business jargon of near certainty or obscures reality in opaque legalese.

How are these lay councillors to get at the truth? Do they have the time?

Big outsourcing deals between councils and suppliers are inherently flawed, as this Somerset report indicates. Too many such deals have ended badly for council taxpayers as Dexter Whitfield’s investigations have shown.

But still some councils sign huge outsourcing deals. Their leading officials and councillors say they took lessons from failed contracts around the country into account. But what does that mean? If a deal is inherently flawed, perhaps because of diverging incentives, it is inherently flawed.

The disaster that is Southwest One could be a priceless jewel in the public sector’s display case if it serves to deter councillors and officials signing further large-scale council outsourcing deals.

Thanks to Dave Orr for alerting me to the lessons learnt report.

Somerset report “Update on Lessons Learnt from the Experience of the South West One Contract”.

UK outsourcing expands despite high failure rates.

 

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Posted in Campaign4Change, FOI, Freedom of Information, IT-related failures, local government, outsourcing, public sector, SAP, shared services, supplier relationships

DWP’s advert for a £180k IT head – what it doesn’t say

Posted on 06/08/2014 | 2 comments

By Tony Collins

Soon the Department for Work and Pensions will choose a Director General, Technology.  Interviewing has finished and an offer is due to go out to the chosen candidate any day now.

The appointee will not replace Howard Shiplee who runs Universal Credit but has been ill for some months. The DWP is looking for Shiplee’s successor as a separate exercise to the recruitment of the DG Technology.

In its job advert for a DG Technology the DWP seeks a “commercial CIO/CTO to become one of the most senior change agents in the UK government”.

The size of the salary – around £180k plus “attractive pension” – suggests that the DWP is looking for a powerful, inspiring and reforming figure. The DWP’s IT makes 730 million payments to a value of 166bn a year.

In practice it is not clear how much power and influence the DG will have, given that there will be a separate head of Universal Credit (Shiplee’s successor) and there is already in place a Director General for Digital Transformation Kevin Cunnington.

What’s a DG Technology to do then?

The job advert suggests the job is about bringing about “unprecedented” change.  It says:

“The department is undergoing major business change, which has at its heart a technology and digital transformation of the services it provides, which will radically improve how it interacts with citizens.”

The role, says the advert, involves:

  • “Designing, developing and delivering the technology strategy that will enable unprecedented business change.”
  • “… Reducing the time to taken to develop new services and cutting the cost of delivery.”

The chosen person needs “a clear record of success in enabling the delivery of service driven, user focused, digital business transformation,” says the advert.

What the DWP doesn’t say

If DWP officials took a truth pill when interviewing candidates they might have said:

  • “No department talks more about change than we do. We regularly commission reports on the need for transformation and how to achieve it. We issue press releases and give briefings on our plans for change.  We write  ministerial speeches on it. We employ talented people to whom innovation and productive change comes naturally. The only thing we don’t do is actually change. It remains an aspiration.
  • “We remain one of the biggest VME sites in the world (VME being a Fujitsu – formerly ICL – operating system that dates back to the 1970s). VME skills are in ever shorter supply and it’s increasingly costly to employ VME specialists but changing our core software is too risky; and there is no commercial imperative to change: it’s not private money we’re spending.  We’ve a £1bn a year IT budget – one of the biggest of any government department in the world.
  • DWP core VME systems run an old supplier-specific form of COBOL used on VME, not an industry standard form.
  • We’ve identified ways of moving away from VME: we have shown that VME-based IDMSX databases can be transitioned to commodity database systems, and that the COBOL code can be converted to Java and then run on open source application servers. Still we can’t move away from VME, not within the foreseeable future. Too risky.
  • We’d love the new DG Technology to work on change, transformation and innovation but he/she will be required for fire-fighting.
  • It’s a particularly difficult time for the DWP. We are alleged to have given what the Public Accounts Committee calls an unacceptable service to the disabled, the terminally ill and many others who have submitted claims for personal independence payments. We are also struggling to cope with Employment and Support Allowance claims. One claimant has told the BBC the DWP is “not fit for purpose”.
  •  The National Audit Office will publish an unhelpful report on Universal Credit this Autumn. We’ll regard the report as out-of-date, as we do all negative NAO reports. We will say publicly that we have already implemented its recommendations and we’ll pick out the one or two positive sentences in the report to summarise it. But nobody will believe our story, least of all us.
  • If we could, we’d appoint a representative of our major suppliers to be the head of IT.  HP, Fujitsu, Accenture, IBM and BT have a knowledge of how to run the DWP’s systems that goes back decades. The suppliers are happily entrenched, indispensable. That they know more about our IT than we do puts into context talk of SMEs taking over from the big players.
  • One reason we avoid major change is that we are not good at it: Universal Credit (known internally as Universal Challenge), the £2.6bn Operational Strategy benefit scheme that Parliament was told would cost no more than £713m, the £141m  (aborted) Benefit Processing Replacement Programme, Camelot which was the (aborted) Computerisation and Mechanisation of Local Office Tasks,  and the (aborted)) Debt Accounting and Management System. Not to mention the (aborted) £25m Analytical Services Statistical Information System.
  • They’re the failures we know about. We don’t have to account to Parliament on the progress or otherwise of our big projects, and we’re particularly secretive internally, so there may be project failures not even senior management know about.
  • We require cultural alignment of all the DWP’s most senior civil servants. This means the chosen candidate must – and without exception – defend the department against all poorly-informed critics who may include our own ministers.
  • The Cabinet Office has some well-meaning reformers we want nothing to do with. That said, our policy is to agree to change and then absorb the required actions, like the acoustic baffles on the walls of a soundproofed studio.

 

 

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Posted in Accenture, BT, Campaign4Change, DWP, excessive secrecy, Fujitsu, Government IT, HP, IT projects, IT-related failures, Major Projects Authority, managing change, National Audit Office, outsourcing, procurement, project management, public sector, public services, SME, supplier relationships, Universal Credit

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Capgemini and Fujitsu pocket “incredible” £1.2bn profits from HMRC

Posted on 22/07/2014 | 1 comment

By Tony Collins

In an outsourcing deal of then unprecedented size Inland Revenue contracted out about 2000 IT staff and services to EDS – now HP – in 1994.

The deal was worth about £1bn over 10 years. Later Inland Revenue joined with Customs & Excise and became HM Revenue and Customs. As part of the merger HP took over Customs’ IT which was largely run by Fujitsu. The £1bn outsourcing contract with HP turned into a £2bn deal.

In 2004 the merged contracts were called “Aspire” and Capgemini took over staff and IT services from HP in a 10-year deal expected to be worth between £3bn and £5bn.  The contract was later extended by 3 years to 2017.

Today a National Audit Office report Managing and replacing the Aspire contract says the deal is worth £10.4bn to Capgemini and Fujitsu.

Margaret Hodge, chairman of the Committee of Public Accounts, says of the NAO report on the Aspire contract:

“HMRC’s management of Aspire, its most important contract which provides 650 IT systems to help HMRC to collect tax, has been unacceptably poor.

“While it may have secured a good level of IT service in the end, by the time the contract ends in 2017 HMRC will have spent £10.4 billion – more than double what it initially expected to spend.

“What’s worse, it has spent £5 billion of this total without first checking whether other providers could deliver a better deal, even though it had evidence that it was paying above market prices.

“It is deeply depressing that once again a government contract has proved better value for the private companies involved than for the taxpayer, with Capgemini and Fujitsu pocketing an incredible £1.2 billion in combined profits – more than twice the profit HMRC expected.

“Its own lack of capability meant HMRC was over-reliant on providers’ technical expertise, undermining its ability to act as an intelligent customer on behalf of the taxpayer.

“HMRC is planning to replace the Aspire contract in 2017, but its new project is still half-baked, with no business case and no idea of the skills or resources needed to make it work. All of this gives me little confidence that HMRC’s senior team has the capability to manage large and complex contracts.”

“More changes than normal”

The NAO found that in more than 80% of projects, HMRC and Capgemini changed the agreed scope, time or budget. Says the NAO report:

“One feature of the cooperative approach between HMRC and Capgemini has been a willingness on both sides to make changes once the extensive planning is complete and budget, scope and timing has been agreed commercially.

“These changes are made through formal governance processes and usually help to educe risk. Some change is to be expected as part of good project management.

“However, we consider that HMRC and Capgemini made more changes than normal on projects after the point at which budgets, scope and timing had been commercially agreed. The degree of change makes it very difficult to hold the Aspire suppliers to account for their performance across the portfolio of projects.”

Managing and replacing the Aspire contract – NAO report

Good summary of NAO report at Computerworlduk

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Posted in Campaign4Change, Capgemini, Fujitsu, Government IT, HMRC, outsourcing

Are passport officials hiding IT problems?

Posted on 08/07/2014 | 2 comments

By Tony Collins

Are Passport Office systems crashing regularly – for up to half a day – without anyone outside knowing?

Last month a Home Office spokesman told Government Computing that IT was “not to blame” for delays in issuing passports.

But yesterday a Passport Office insider gave the opposite impression to Eddie Mair’s BBC R4 “PM” programme. She said that passport systems are sometimes out of action for up to half a day.

It also emerges that the Passport Office’s contract with one of its contractors, Steria, takes into account, in peak periods, the sorts of numbers of applications that offices are receiving – about 150,000 a week.

Home Office minister James Brokenshire told the House of Commons yesterday (7 July 2014) that there have been about 4 million applications so far this year, implying that the number is unexpectedly high.

But 4 million applications is not out of line with Steria’s contractual expectations of up to 150,000 applications a week.

This raises the question of whether the delays are due to a combination of IT problems and high numbers of applications – rather than high numbers alone.

On the BBC “PM” programme the comments by the Passport Office insider were spoken by an actor.  She said the backlog of passport applications has increased since the government announced emergency measures last month.

” The numbers have increased significantly and they are just the ones in the system.  What you need to take into account – and I don’t think people have realised – is that we have another huge backlog of applications that have not been scanned onto the system and are not in process.

“The backlog of applications – what they call “work in progress” – is not a true figure because but you still have another backlog that has not been scanned …”

BBC reporter: So there is another set of passports that don’t appear in official figures?

“That’s correct.”

She said that increasing backlogs are indicated on figures on boards around offices that give dates of which offices are working on what on certain dates.

“Her Majesty’s Passport Office is in total crisis. It’s a total mess …  it is chaos.”

BBC reporter:  A member of my family phoned up to try and make an appointment to sort out a passport last week and while she was on the phone she was told the computer kept crashing. Is that a common problem?

“Yes.  Once the system crashes you cannot issue anything or do anything. You just have to sit there until the technicians or the IT experts reboot the system or put a patch in to get it up and running again.”

BBC: How long does that last? How long are the computers and therefore the people handling the passports out of action for?

“Sometimes I would say a minimum of half an hour up to half a day.”

She said that passports are being stored in meeting and conference rooms which are locked. The windows have been “blacked out or covered with paper so no photos can appear, for instance, in the Guardian“.

She does not believe the Home Secretary Theresa May or her ministers have a grip of the situation. “I don’t think they understand. I am not too sure whether it is because they haven’t been fed the correct information or whether they are just putting their heads in the sand.”

The Home Office said a minister was not available to speak to the BBC.  It provided a statement instead – which gave no response to the insider’s claims of computer problems.

The statement said:

“These allegations are false. We receive thousands of application every week with their numbers constantly changing. We aim to log applications within 48 hours of receipt at which point they become active work in progress…”

Update 18.00 8 July 2014

Paul Pugh, Chief Executive of the Passport Office, appeared before MPs on the Home Affairs Committee this afternoon and was not asked about IT problems and made no mention of any.

He declined to say how many applications have been received by the Passport Office which have not been scanned into the systems. He said the number varied daily. He conveyed a quiet self-confidence which wasn’t in any way dented by committee members who in general did not put him under pressure.

They thanked him repeatedly for dealing with complaints from their constituents.  Committee chairman Keith Vaz handed Pugh 180 emails from people who are facing delays and need a passport urgently.

He denied the Passport Office was in chaos and said the “vast majority” of people working there would disagree with the comments of the anonymous contributor to the BBC “PM” programme.

Comment

The insider’s comments may be relevant given that the Passport Office had serious IT processing difficulties when it has changed its main processing systems in 1989 and 1999.   Has it had a third IT-related calamity as a result of an upgrade of passport systems in 2013?

US-based supplier CSC helped with the upgrade last year but no information has been released on the change-over.  The new system was installed as part of a $570m services contract the Passport Office awarded CSC in 2009.

Steria manages the front-end of passport application processing. It receives applications from the public, scans them digitally, verifies the contents, checksthe scanned documents for accuracy and makes corrections where necessary, and banks payments received. It then passes applications to Her Majesty’s Passport Office to complete the examination.

Steria expected up to 150,000 passport applications a week at peak times and it appears that actual applications have been around this number for much of this year. So why are ministers and officials blaming delays on a record number of applications?

There may be IT problems that nobody in officialdom is mentioning.

The most worrying thing is that they do not have to mention them. Perhaps the cause or causes are complex and they are unsure who bears most of the responsibility.

In politics nobody seems to expect the truth to be told. So it’s likely that ministers and officials will continue to blame the delays in issuing passports on record numbers of applications, and not mention anything to do with IT, except to deny it has anything to do with the backlog.

BBC PM programme (approx 47 minutes into the programme).

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Posted in Campaign4Change, CSC, excessive secrecy, IT-related failures, openness and transparency, outsourcing, Passport Office, Steria

2 councils cut costs of Capita deals, bringing hundreds of staff in-house

Posted on 25/06/2014 | 1 comment

By T0ny Collins

Councils in Birmingham and Swindon are cutting the costs of their Capita outsourcing deals, in part by bringing hundreds of staff in-house.

Labour-controlled Birmingham City Council, the largest local authority in Europe, is bringing back about 500 staff after the council negotiated with Capita to cut £20m a year from the cost of running Service Birmingham, a contract which started in 2006 and has 7 years left to run, reports the Birmingham Post.

Service Birmingham is two-thirds owned by Capita and a third by Birmingham Council.

Deputy leader Ian Ward is quoted in the Birmingham Post as saying the changes would bring major savings and a greater degree of control over council communications.

“We have negotiated an agreement with Service Birmingham which provides a major step forward in reducing our cost base for ICT. On balance, the council considers the risk of changing ICT provider at this time too risky.

“It would take a considerable period of time to procure and would cost an additional tens of millions up front in early termination charges and re-procurement costs.”

The council will bring the call centre in house by the end of the year, as part of a “One Contact” vision to resolve queries at the first point of contact.

Councillors routinely face complaints from constituents about poor service when attempting to phone the council, according to a local political blog, The Chamberlain Files.

Ward said: “It’s not just about how quickly we can answer the telephone or how polite the person answering the phone is. These things are important but we need ensure that queries are resolved to the citizen’s satisfaction.”

The blog quotes Birmingham’s leader Sir Albert Bore as saying that Capita had taken a pragmatic view and recognised the changing circumstances faced by the council.

A clause in the existing contract enabling the council to withdraw ‘at will’ from the Capita agreement within 60 days will remain. A controversial 17% mark-up on purchases has been removed.

The council hopes to gain more value from the new contract by limiting the number of projects it requires Capita to oversee and reducing the number of IT applications run by the authority. Capita was appointed originally because the council did not have the expertise to develop a modern contact centre and had invested little in new technology.

Ward said he hoped the council’s relationship with Capita, which has not always been harmonious in the past, would improve.

“What I also want to see coming out of this challenge is for both parties to work harder to make the partnership work better than it has to date. We need to make sure we have an ICT strategy that is fit for purpose and that will improve our control and planning for projects.”

The contract’s cost has reduced from about £120m a year to £80m a year, says The Chamberlain Files.

Swindon Council

Conservative-controlled Swindon Council is set to save about £2m a year by renegotiating with Capita on back-office services, says the Swindon Advertiser. It says that around 200 Capita staff will move to the council’s employment.

A contract with Capita, worth more than £240 million, was signed in 2007 and was set to last for 15 years.

Council leader David Renard is quoted as saying: “A number of years ago we entered into a 15-year contract with Capita but we obviously now live in a very different world.

“The council has to find savings every year and that means nothing is off the cards, so we have asked to sit down and have a look at the contract.

“The potential saving of £2m is very significant so it is something we have to look at. In fairness to Capita, we have asked to look at the arrangement on a number of occasions and they have been receptive.

“We want to maintain a positive relationship with them because there are things, such as revenue and benefits, which they do very well.”

A Capita spokeswoman said: “Swindon Council has undertaken a thorough review of its budget and services, including those services delivered by Capita.

“The council is considering a range of options to ensure it delivers integrated and effective services and Capita is fully engaged in that process.

“Capita’s priority is to continue delivering high quality services to the council and residents in Swindon, and to keep our employees informed throughout the process.”

Since signing the deal with Capita seven years ago many of the services can now be provided in-house, said the Swindon Advertiser. The council has become less reliant on Capita for some of its services, it says.

The deal with Swindon Council has allowed the company to win contracts with other local authorities and there are now fewer specialists to dedicate their time to Swindon, it adds.

 

 

 

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Posted in Campaign4Change, Capita, local government, managing change, outsourcing, public sector, public services

G4S is off the naughty step

Posted on 11/04/2014 | 1 comment

By Tony Collins

The BBC says that G4S is again being considered for government business after being barred from bidding for new contracts in a row about overcharging.

In 2012 the Cabinet Office issued a notice to all departments, agencies and other public organisations saying that they should take into account a bidder’s past performance when considering a new contract.

The notice said that officials should satisfy themselves:

– that the principal contracts of those who would provide the goods and/or services have been satisfactorily performed in accordance with their terms

– where there is evidence that this has not occurred in any case, that the reasons for any such failure will not recur if that bidder were to be awarded the relevant contract.

If the Departmental Body remains unsatisfied that the principal contracts of those who would provide the goods and/or services have been satisfactorily performed, it should “exclude that bidder on the grounds that it has failed to meet the minimum standards of reliability set”, said the notice.

It appears that G4S was excluded from bidding on these grounds.

But the company agreed to repay £109m after an audit found it charged too much for providing electronic prisoner tags. The Serious Fraud Office is examining G4S and Serco over the contracts.

The firm has not bid for any government work since the Ministry of Justice started an investigation a year ago into its supply of electronic monitoring tags for prisoners in England and Wales since 2005.

After an audit by accountancy firm PricewaterhouseCoopers, it emerged that G4S – which insisted it had asked for the review itself – and Serco had overcharged the government by “tens of millions of pounds”.

Now the Cabinet Office has nothing but good to say about G4S. The CO’s statement says that the payments made by G4S to reimburse the taxpayer are a “positive step”.

Cabinet Office minister Francis Maude says:

“Following the material concerns that emerged last year, relating to overcharging on Ministry of Justice electronic monitoring contracts, G4S has engaged constructively with the government…

“Throughout, the government has engaged closely with G4S to understand their plans for corporate renewal. These discussions have been constructive; and following scrutiny by officials, review by the Oversight Group and reports from our independent advisors (Grant Thornton), the government has now accepted that the corporate renewal plan represents the right direction of travel to meet our expectations as a customer.

“This does not affect any consideration by the Serious Fraud Office, which acts independently of government, in relation to the material concerns previously identified. However, we are reassured that G4S is committed to act swiftly should any new information emerge from ongoing investigations.

“The changes G4S has already made and its commitment to go further over coming months are positive steps that the government welcomes. However, corporate renewal is an ongoing process and the government places a strong emphasis on their full and timely implementation of the agreed corporate renewal plan.

“The Crown Representative together with Grant Thornton will continue to monitor progress as their plan is implemented, reporting to government on a regular basis. I hope this will enable our confidence to grow.”

Comment:

A company has to do something very serious to be excluded from bidding – and it may be thought that G4S has come off the naughty step too quickly. On the other hand the notice on barring poor suppliers from bidding has a requirement that bidders provide a list of their main customers in the previous three years.  Certificates of satisfaction should be obtained from the customers. If necessary suppliers should obtain the certificates.

This is a useful incentive to suppliers to keep their customers happy.  But will departments implement what would be, in essence, a blacklist?

Thank you to openness campaigner Dave Orr for alerting me to G4S developments.

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Posted in Campaign4Change, EU procurement, Government IT, managing outsourced services, outsourcing, supplier relationships

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

Posted on 14/03/2014 | 3 comments

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

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Posted in BT, Capita, excessive secrecy, FOI, Freedom of Information, legal disputes, local democracy, local government, managing outsourced services, outsourcing, public sector, public services, public-private partnerships, reducing cost strategically

Coroner criticises hospital’s new IT after boy’s death

Posted on 06/03/2014 | 3 comments

By Tony Collins

Avon coroner Maria Voisin said yesterday that a new booking system at the Royal United Bath was responsible for three year-old Samuel Starr not being seen and given timely treatment.

It’s rare for a coroner to criticise a hospital’s new IT in direct terms. It is also rare for evidence to emerge of a link between the introduction of new hospital IT and harm to a patient.

Since patient administration systems began to be installed as part of the National Programme for IT in 2005, the disruption arising from go-lives has led to thousands of patient appointments being delayed at a number of trusts. Usually  trusts contend that no patients have suffered serious harm as a result.

Yesterday at the coroners court near Bristol, the coroner Voisin said: “Due to the failure of the hospital outpatients booking system, there was a five-month delay in Samuel being seen and receiving treatment. Samuel’s heart was disadvantaged and he died following urgent surgery.”

Catherine Holley, Samuel’s mother, said her first warning of Cerner implementation problems came in June 2012, about three months before her son’s death, when the RUH cardiologist’s post clinic letter said:

“I apologised to the parents that I should have seen him in January of this year, but I am afraid a few patients have fallen foul of the Millennium changeover and I suspect this is the case here”.

The RUH installed the Cerner Millennium system at the end of July 2011. After the go-live the trust’s board reports, and a post-implementation review of the system by Pwc in February 2012, raised no serious concerns.

One of Pwc’s main criticisms of the system was the lack of clinical engagement – a common problem with NPfIT deployments.

Some excerpts from Pwc’s report:

“Given the issues and delays there is a still a good deal of uncertainty about whether the planned benefits can be realised. It is therefore important that there is a concerted effort to focus on driving out these benefits, early in 2012.”

“The go live itself did have some issues, but most of those interviewed felt that, relative to other Cerner Millennium implementations, it had gone well. Since the go-live the Trust has been working hard to address the issues, and to help users use the system more effectively…”

“There are a number of issues which arose during the audit which, although not directly covered within the audit objectives, are important in ensuring that the trust realises all the potential benefits from the Cerner Millennium implementation. These are as follows:

“There is a need for greater clinical engagement to ensure that clinicians are using the system in the most effective way – the Trust operates a Clinical Engagement Group which meets on a monthly basis.

“However feedback from a number of interviewees is that this meeting isn’t as productive as it might be and that the Trust needs to think of other ways to improve clinical engagement.”

Pwc said that the trust needed a clinical lead for Cerner Millennium who would focus on key clinical priorities and “sell” the benefits of Millennium to other clinicians. The trust also needed a CIO who would be responsible for IM&T, the Business Intelligence Unit, the Care Records Service team, Records Management, and managing the end of a [local service provider] contract with BT in 2015.

Pwc said the risks included:

  • The end of the contract with BT in 2015
  • Recent issues with BT delivery, with several significant outages of service
  • The issues with clinical engagement.

None of the trust reports – or Pwc’s review –  mentioned any adverse impact of the new system’s implementation on patients.

In 2011, several months after the go-live, the RUH’s “Insight” magazine quoted the Chief Executive James Scott as suggesting the go-live had been a success.

“Thanks to everyone for their hard work and patience during the switchover period,” Scott is quoted as saying. “It has been a major project for the RUH (and our partners BT and Cerner are describing it as the smoothest deployment yet), but we now have the foundation in place to meet the future needs of the Trust and the NHS.”

Care plan?

Catherine Holley expected Samuel to go onto a care plan after he had successful heart surgery at the age of nine months, in 2010. But it proved difficult to arrange an appointment for a scan on the new Cerner Millennium system installed at Royal United Hospital, Bath.

When the scan was eventually carried out Samuel’s heart had deteriorated and he died in September 2012 after an operation that was more complicated than expected.

This week’s three-day inquest at Flax Bourton Coroners Court heard that although Samuel’s medical records had been created on Millennium, no appointments were transferred across.

Speaking after the inquest, Samuel’s parents said they believe the system at Bath failed their son and that mistakes were made.

“It was devastating to hear evidence that an improperly implemented computer appointments system and a series of human errors resulted in the death of our son,”said Paul Starr’s Samuel’s father.

“We accept that mistakes happen but we believe that leaving a child unmonitored for as long as Samuel was, with so many opportunities to attend to him, goes beyond a simple error.

“Our three year old son had a complex cardiac condition and had been scheduled for regular cardiac reviews. In fact he was not properly assessed or nearly 21 months because of further delays.”

A Freedom of Information request revealed that there were 63 missed paediatric cardiac appointments as a result of problems arising from the Cerner implementation – some of which took nearly two years to discover.

Comment

It’s unlikely to have been the Cerner system itself at fault but an  implementation that involved several organisations including the Southern Programme for IT, a branch of the dismantled National Programme for IT.  As such nobody is likely to held responsible for what the coroner called a “failure” of the IT system.

Then again blaming an individual would be pointless.  Learning lessons – the right ones, and not just technical ones – is the objective. It may make a world of difference if those in charge of major go-lives in hospitals acknowledged that delayed appointments, or difficulties arranging them, and a disrupted administration, can harm patients – or worse.

IT in the NHS is seen as an integral part of hospital care when the technology, clinicians, nurses, administrators and other users are working in alignment. But when the IT is not working well, it is seen as something techie which has little or nothing to do with patient care and treatment.

Samuel Starr’s inquest draws attention to the fact that the difference between a good and bad IT implementation in a large hospital can be the difference between life and death.

But hospital deployments of patient administration systems have been going wrong with remarkable regularity for many years.  Isn’t it time to learn the right lessons?   

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Posted in BT, BT Health, Campaign4Change, Cerner, NHS, npfit, operational issues, outsourcing, project management, public sector, public services, PWC, SPfIT

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

Posted on 05/02/2014 | 1 comment

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. 

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Posted in Campaign4Change, Freedom of Information, IT security, local democracy, local government, outsourcing, public sector, public services, public-private partnerships, SAP, security, supplier relationships

BBC World at One’s focus on Government IT

Posted on 28/01/2014 | 5 comments

By Tony Collins

The lead item on BBC R4’s World at One on Friday was about Government IT contracts.

On the programme were the government’s Chief Procurement Officer Bill Crothers, Cabinet Office minister Francis Maude, the chairman of the Public Accounts Committee Margaret Hodge, the UK IT Association, and me.

Some of the points made:

–  Bill Crothers gave an example of what he called “abuse” by some big IT suppliers. He said a young man who works for him lost his power cable. The supplier quoted £65 for a replacement. The price should have been £5 or £6.  When Crothers queried it, the supplier justified its price on grounds of security. Crothers could not believe that a power lead had security implications so he questioned the price again and received several pages of explanation from the supplier, which he did not read. Eventually the supplier “was good enough to reduce the price to £37”.

– HMRC was charged £30,000 for changing some text on its website.

– Francis Maude said a DWP team and a further 12 people from the Cabinet Office’s Government Digital Service had built – in only three months – a prototype of a digital solution to support the introduction of Universal Credit. The system cost just over £1m, he said. [Separately big IT suppliers at DWP have been paid £303m up to March 2013 for Universal Credit work.] Maude declined to predict the outcome of the “twin-track” work on the UC project.

– Some big legacy systems may soon need replacing – those that pay about £60bn a year in state pensions and collect nearly £100bn a year in VAT. “Those are going to be big projects,” said Margaret Hodge. “I don’t think we have seen the end of big projects, or the end of disasters.”

World at One in detail

Presenter Shaun Ley and BBC political correspondent Ross Hawkins focused on government IT because of an announcement by the Cabinet Office that it is drawing the line on “bloated and wasteful IT contracts”. The Cabinet Office was pitching its announcement as marking a “massive change,” said Hawkins.

Ley said Francis Maude announced the safeguards  in an attempt to ensure that IT contracts don’t become multi-billion pound failures. He said that the abandoned NPfIT had cost close to £10bn.

Hawkins quoted the UK IT Association as saying that  government did not know how to do deals with smaller suppliers. On the government’s relationship with big suppliers UKITA said the government was like a “battered wife or husband who doesn’t seem to know how to leave.”

Appalling

Hawkins said Crothers has the air of a man going to war. Crothers’ conclusion on the way things are at the moment:

“This is about the oligopoly, the cluster of big suppliers that have had it took good for too long. It’s reflective of monopolistic or oligopolistic behaviour.  It is not acting as if they are in hungry and in a competitive market.  That’s appalling.”

Universal Credit

Hawkins asked Francis Maude how confident he was that what was being put in place on Universal Credit would work.

“I hope it will work,” said Maude. “The digital solution was created by a team within DWP with a dozen or so GDS [Government Digital Service] staff assisting.

“They created a working prototype for a digital solution within 3 months at a cost of only a bit over £1m. That certainly can be basis of a successful long-term solution.”

Hawkins [to Maude] “I asked you whether you were confident the approach with DWP would work and you said you hoped it would. That suggests to me that maybe you are not (confident).”

Maude: “N0-one knows with these things. Anyone who says you are certain everything is going to succeed … the way we do things now is build something quickly, test it, prove it, test it with users, and so you can’t have certainty about any of these outcomes.”

Outsourcing failures

Hawkins said “We have had story after embarrassing story about outsourcing failures [such as the] government being charged for tagging dead people … now ministers  have an interest in coming out on the front foot and just for once being on the attack and having a whack at the IT companies.

“You don’t need to be a political genius to work out why they would like to do that rather than be endlessly explaining themselves after embarrassing stories in the papers.”

Ley (to me): “Is this the best way to deal with the problems government has experienced? The journalist Tony Collins has written widely  about project failures in IT in both the public and private sectors.”

I replied that big companies have sometimes charged a lot to make small software changes.  The Cabinet Office’s “red lines” were a good idea though they were a formalising of restrictions that had been in place some time.

The Cabinet Office doesn’t have the power to make changes happen because departments are accountable to Parliament for their spend and so don’t want much interference from the Cabinet Office. But the Cabinet Office is right to try and reduce the amounts spent on big projects.

Ley: “What will be the effect of breaking up contracts?”

I said I hoped the Cabinet Office’s restrictions would bring about a change in culture in departments against the assumption that big is beautiful. Big projects should be split into components which would give SMEs a greater involvement and could reduce the risks of projects failing.

More project disasters?

Hodge gave her reaction to the Cabinet Office’s restrictions in the context of the Universal Credit project.

“Francis Maude and Cabinet Office have been trying really hard to get some sense into the way that project has developed. But sadly the news we have had lately suggests to me that they have failed. It is about £400m so far on IT.

“What went wrong there was that the department [DWP] thought it [UC] was a big IT project instead of thinking:  we are going to be changing our business; we are going to get 6 benefits rolled into one. They [the DWP] have not written off that money [£303m] which is what my committee thinks they should have done, because they want to save face. Down the line I think we’ll see some disasters there.

“There are a lot of projects around  government, what are called legacy projects, where old systems need to be replaced . They are big projects – pensions in DWP where £60bn is given out a year;  VAT receipts  in HMRC where nearly £100bn is collected. Those are going to be big projects. I don’t think we have seen the end of big projects, or the end of disasters.”

Ley: “What about breaking them up into smaller projects? Won’t that reduce potential risks?”

Hodge: “The important thing is what Tony Collins was saying to you. What we find is that the skills don’t exist within departments, either to commission the IT properly or to manage the suppliers once they have the IT in place.

“We are about to examine the army recruitment contract – I think that is what we’ll find.  The MoD hasn’t got the skills to manage it.

Ley: “Do you welcome the ending of automatic contract extensions?”

“I warmly welcome that. This is a small step in the right direction. Having an expert as we have in Bill Crothers in the Cabinet Office is really important. What we haven’t got are skills in the departments. It is not like a business. If it was, Bill Crothers would probably run IT across the whole of government. Our departments run in silos. They haven’t got the skills. They have this demand for big, big programmes in the future and I don’t think we have seen, sadly, the end of IT disasters.”

Update

Thank you to Dave Orr for drawing my attention to an excellent piece on the World at One item by procurement expert Peter Smith who concludes:

“… There is a big issue – large suppliers have not covered themselves in glory, but small suppliers just can’t develop huge systems for DWP or MOD.

“The large suppliers must have a role, but we have to manage these contracts better. And the answer can’t just be a small hit squad in Cabinet Office. This needs real capability development across government, which we haven’t really seen as yet in a coordinated fashion.”

BBC World at One – Government IT contracts

Bill Crothers on BBC Radio 4 – suppliers get another good kicking

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Posted in DWP, Government digital Service, Government IT, HMRC, IT projects, IT-related failures, managing outsourced services, MoD, npfit, outsourcing, procurement, project management, public sector, public services, reducing cost strategically, supplier relationships, Universal Credit

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