Category Archives: procurement

CSC withdraws from Cornwall bid

Posted on 17/10/2012 | Leave a comment

By Tony Collins

Updated

CSC has withdrawn from an outsourcing/joint venture bid at Cornwall council after the leader of the authority was ousted yesterday in a vote of no confidence.

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

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

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

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

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But it is highly unlikely they would have any claim on the council for their legal and other costs should the tender be withdrawn.

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

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

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Andrew Wallis has now reported on his website that at a briefing on the outsourcing bids he learned that CSC has withdrawn following the ousting of the leader Alec Robertson yesterday.

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

Cornwall says in a statement on its website:

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

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

 Outsourcing costs in Cornwall escalate – and no deal signed yet

A mega-outsourcing plan beset by naive fanaticism?

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Posted in BT, CSC, local government, procurement, public sector, public services, public-private partnerships, supplier relationships

Outsourcing costs in Cornwall escalate – and no deal signed yet

Posted on 16/10/2012 | 3 comments

By Tony Collins

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Comment:

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

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

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

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

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

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

Will council leader be asked to stand down?

Cornwall outsourcing/partnership debate.

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Posted in BT, Campaign4Change, CSC, IT-related failures, KPMG, legal disputes, local government, Major Projects Authority, managing outsourced services, procurement, project management, public sector

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Campaign for electronic patient information centre

Posted on 12/10/2012 | 1 comment

By Tony Collins

Shane Tickell, CEO of health IT supplier IMS Maxims, is leading a campaign for a national electronic patient information centre.

It would enable NHS staff, healthcare organisations and government suppliers to share details of, or learn about, innovative practices that work.

In a guest blog, Tickell argues that there are many examples of innovation in the NHS but information on the successes is scarce or not available in one place.

He advocates a physical and a virtual centre. Information, case studies, best practice and ideas from the NHS would be shared online. There are some websites that do this, but in isolation. The virtual site he proposes would be interactive and a way of collating information that exists in silos.

The physical centre, Tickell says, could be anywhere on the UK, potentially using some of the 2,000 acres of unused NHS estate. It would be a forum for education and sharing, where suppliers could showcase their systems, and NHS staff could speak openly about what they need from suppliers.

It would also be a place for policy to be explained by government officials, where quangos define their requirements, and NHS trusts share what they are doing and the lessons they have learned.

Shane Tickell writes:

“As an acceptance grows across the NHS that there is a crucial need for integration across health and social care, the extent to which our National Health Service is disjointed is becoming increasingly clear.

In many areas, although of course not all, there are so many examples of different approaches, poor collaboration and lack of joined thinking between organisations despite their attempts to achieve the same goals. On many occasions, I’ve seen examples where an NHS organisation has shared the results of a successful pilot with another organisation hundreds of miles away and yet the trust just a few miles down the road has no idea the initiative even exists.

In recent years, healthcare IT events such as EHI Live have helped suppliers of all sizes showcase their solutions, albeit just once a year.

However, despite best efforts, most often suppliers with the biggest marketing budgets often take the centre stage, while the smaller, more innovative companies huddle around the edges trying to grab the attention of the odd delegate who is less wowed by the exciting gizmos and freebies on the bigger stands.

Equally, these events have been valuable in enabling the NHS to share their experiences by allowing them to participate in best practice showcases. But while these shows are valuable in providing those once-a-year opportunities to network and see what is available, ideas and information gathered can soon be forgotten once back in the busy NHS setting, until the next time an event comes around.

There are more than 400 pilots across the NHS and 300 ‘examples of innovation’ alone, according to the BCS. On top of all of that, my team recently mapped more than 40 NHS organisations and bodies, who work virtually disparately to attempt to provide the NHS with direction, standards and protocols.

So where does this leave the NHS – confused? Disjointed? Not a clue where to start when they are told that they need to collaborate and innovate to improve patient safety and care while saving vast sums of money?

The NHS needs a place that provides an educational and innovation forum covering everything related to electronic health and wellbeing that is available all year round – an electronic patient information centre.

At present there are pockets of innovation across the country. Initiatives set up by the National Innovation Centre and its associated ‘innovation hubs’ are providing a useful mechanism to support and adopt healthcare technology across the regions.

But an all year round centre would provide a central location for healthcare organisations, bodies, government and suppliers to meet, discuss and understand policy. Equally important, the centre would provide a valuable place to educate on future challenges and where they are being driven from and an opportunity to work together to help to address them as soon as they start to emerge.

Although it would require investment, such a centre would provide trusts, CCGs, private and independent organisations and just about anyone with an interest in health and social care regardless of their budget, size, location or IT savviness with the opportunity to attend at a time that is convenient for them.

Meanwhile, suppliers of any shape or size would have a level playing field from which to be represented and educate their current and potential customers, rather than trawling up and down the country trying to find inroads to speak to those on the frontline. In addition, it would ensure that all is not lost from the National Programme for IT and that lessons learned are shared.

For too long the NHS has had to rely on word of mouth and second-guessing how surrounding organisations are achieving success. Now is the time to really work together to ensure true innovation is shared and for everyone to have a chance to be part of it.”

LinkedIn group – Electronic Patient Information Centre 

shane.tickell@imsmaxims.com.

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Posted in Campaign4Change, health, health records, improving communications, innovation, procurement, public sector, public services, SME, technology

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DWP starts media campaign on Universal Credit IT tomorrow

Posted on 19/09/2012 | Leave a comment

By Tony Collins

The Work and Pensions Secretary Iain Duncan Smith has told MPs his department is launching a “major exercise” tomorrow to inform the media about Universal Credit, including progress with the IT project.

The public relations push will include a demonstration to journalists of the Univeral Credit front-end, and an explanation of the ability of “agile” to rectify problems as you go along. Duncan Smith said there is a lot of ignorance in the media, and suppositions, that need tackling head on.

His full statement on the PR campaign is at the foot of this article.

Comment

Iain Duncan Smith’s remarks to MPs sound remarkably like the statements that were made in the early part of the National Programme for IT in the NHS, when DH ministers and senior officials were anxious to correct ignorance and suppositions in the media – and to show journalists the front end of new electronic patient record systems.

Several times journalists were invited to Richmond house in Whitehall, the HQ of the DH, to hear how well the NPfIT was going. So anxious were the minister and leading officials to give a good impression of the programme that, on one occasion, trade journalists who had an insight into the NPfIT’s progress and could ask some awkward questions in front of the general media were barred from attending.

I would like Universal Credit to succeed. In concept it simplifies the excessively complex and costly benefit system. The worrying thing about the scheme, apart from the DWP’s overly sensitive reactions to scepticism in the media, is the way UC seems to be following the path which led to NPfIT’s downfall.

The Secretary of State attacks the media while trying to show UC in a glowing light and at the same time keeps secret all the DWP’s interview reviews and reports on actual progress. Duncan Smith says that the DWP wants to be open on UC but his department is turning down FOI requests.

There is no doubt that Duncan Smith has a conviction that the programme is on course, on budget, and will deliver successfully. But there still a morass of uncertainty for the DWP to contend with, and lessons to be learnt from pilots, some of which could be important enough to require a fundamental re-think. That’s to say nothing of HMRC’s Real-Time Information project which is part of UC.

Duncan Smith says the UC project is not due to be complete until 2017 which gives the DWP ample time to get it right. But ministers and officials in the last administration gave the NPfIT 10 years to complete; and today, nine years later, the scheme is being officially dismantled.

Did NPfIT ministers really know or understand the extent of the project’s true complexities and uncertainties?  Did they fully grasp the limited ability of suppliers to deliver, or the willingness of the NHS to change?  But they were impressed with the patient record front-end system and they organised several Parliamentary events to demonstrate it to MPs.

The NPfIT public relations exercises – which included DH-sponsored DVDs and a board game to market the NPfIT – were all in the end pointless.

Should Duncan Smith be running Universal Credit?

This is another concern. Duncan Smith is much respected and admired in Parliament but he appears too close to UC to be an objective leader. At a hearing of the Work and Pensions this week Duncan Smith took mild criticism of UC as if it were a verbal attack on his child.

It is doubtful anyone working for Duncan Smith would dare give him bad news on UC , though he attends lots of departmental meetings. Doubtless he listens to all those who agree with him, those who are walking press releases on the progress of the UC programme. He’d be a good marketing/PR man on UC. But surely not its leader. Not the one making the most important decisions. For that you would need somebody who’s free from the politics, who is independently minded, and who welcomes informed criticism.

Is there any point in a demo of front-end systems?

Seeing a front-end system means little or nothing. The question is will it work in practice when it is scaled up, when exceptions come to light, and when large numbers of people try to contact the helpdesks because they cannot get to grips with the technology and the interfaces,  or have particular difficulties with their claim.

What will a media campaign achieve?

If the NPfIT experiences are anything to go by, journalists who criticise the UC project will be made to feel stupid or uninformed.

In a totalitarian regime the media could be forced to publish what the government wants people to believe. Will the DWP’s PR campaign be designed to achieve the same end without the slightest attempt at coercion?

Duncan Smith’s comments to MPs

Below is some of what Iain Duncan Smith told Work and Pensions Committee MPs this week. He had been asked by a Committee MP to have a dialogue with the media to ensure that people believe that Universal Credit is a good thing.

Duncan Smith:

“On Thursday we are carrying out a major exercise in informing the median about what we are doing, looking at the system front-end, about budgets and all the elements the committee has been inquiring into.

“We will take them through that, show them that. We are going to open up much more. It is such an important system that I want people to learn what it is all about.  There is a lot of ignorance in the media and suppositions made; things that are important to tackle head on. Everyone says you mustn’t have a big bang; you are not going to be ready in time. The time we deliver this is 2017 when it is complete.  That is over four years…”

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Posted in Agile, Campaign4Change, change, change management, culture, DWP, e-health, excessive secrecy, FOI, Government IT, IT projects, managing change, managing outsourced services, NHS, npfit, Politics, procurement, project management, public sector, public services, Real-Time Information, Universal Credit

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Government Digital Service sets an example on cloud

Posted on 18/09/2012 | Leave a comment

By Tony Collins

The Government Digital Service is putting its money where its mouth is. A leading public sector advocate of the cloud, GDS says that the first cloud hosting provider it is working with is Skyscape.

Mark O’Neill, Head of Service Delivery and Innovation at GDS, which is a team of innovators based at the Cabinet Office, writes that GDS is building GOV.UK, currently in beta at http://www.gov.uk.

“In the past, we might have looked at dedicated servers or possibly even our own rack in a datacentre somewhere. We would then have had to decide if we wanted to own the servers or if we should rent them some time to break out amortisation tables and spreadsheets.

“We would have to make sure that we were not locked in if we needed to move servers, so it would be necessary to negotiate break clauses in contracts; we would need to arrange access to server rooms for security accreditation; we would need to… well, the list goes on and on.

“The cloud has transformed all of this. Through the G-Cloud framework we are able to simply and rapidly buy highly reliable, highly cost-effective hosting services.

“Colleagues in GDS put together a statement of our requirements based on the experience we had gained during the alpha and the ongoing beta releases of GOV.UK and experience from the delivery of other major online services, both public and private sector.

“We then tested that statement of requirements against the list of suppliers on the G-Cloud framework. This allowed us to sift the number of potential providers down to four who met the statement of requirements.

“We then invited each of the suppliers in and used a consistent set of questions to explore their ability to meet our needs, their approach to operational service delivery and how they could provide flexible, scalable services through the cloud.

“To meet the needs of GOV.UK, we are planning to work with a number of different Infrastructure as a Service providers. We are happy to announce that the first cloud hosting provider we are working with is Skyscape.

“We have used G-Cloud previously for a number of small projects covering services like hosting and operations. We were very happy to discover that letting a major service contract for our flagship platform, GOV.UK, was equally straightforward and quick.

“Whilst the GOV.UK contract is the largest we have let so far, it is one of an increasing number we are letting through G-Cloud, which is now our standard way of procuring infrastructure services… If you have not used G-Cloud before then take a look, you will be pleasantly surprised. In the words of a song of my youth, ‘It was easy. It was cheap. Go and do it!'”

Introducing a new supplier – Skyscape

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Posted in Campaign4Change, Cloud, cost reduction, efficiency savings, Government IT, IT projects, private sector lessons for the public sector, procurement, public sector, public services, reducing cost strategically

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Fujitsu on blacklist? Cabinet Office issues statement

Posted on 14/09/2012 | Leave a comment

By Tony Collins

The Cabinet Office has denied it is operating a blacklist of poorly-performing suppliers – but says that suppliers deemed high risk may find it “more difficult to secure new work with HMG”.

In its statements to Kable’s Government Computing, the Cabinet Office also made it clear that suppliers deemed high risk can redeem themselves.

“Mechanisms exist to remove suppliers from the High Risk classification when performance improves dramatically.”

This suggests that Fujitsu would no longer be deemed high risk if it settled its dispute with the government over the NPfIT. Fujitsu has been seeking £700m after the failure of its NPfIT contract. A settlement has proved elusive and the case may go to court.

The FT said on Tuesday that Fujitsu has “in essence” been blacklisted. Neither Fujitsu nor the Cabinet Office are denying that Fujitsu has been put in the high-risk classification.

A Cabinet Office spokesman told Government Computing:

“We cannot comment on the status of individual suppliers, but we are absolutely clear that this Government will not tolerate poor supplier performance.

“We want to strengthen our contract management by reporting on suppliers’ performance against criteria and sharing the information across Government. This means that information on a supplier’s performance will be available and taken into consideration at the start of and during the procurement process (pre-contract). Suppliers with poor performance may therefore find it more difficult to secure new work with HMG.

“This policy will include the identification of any high-risk suppliers so that performance issues are properly taken into account before any new contracts are given.

“High-risk classification is based on material performance concerns. Suppliers deemed high risk will be subject to particularly close scrutiny when awarding new work.

“Overall, this is simply good commercial practice and in line with how we are improving the way government does business and emulating the best of the private sector.”

The spokesman said that contract extensions are within scope of the poor-performance policy but will be tackled in a proportional way – depending on the overall cost of the contract, the relative cost of extending it, and how critical the extension is.

The high-risk classification “applies to strategic suppliers who do business across Government, and is not limited to any specific sector”. Frameworks are also included.

“Our performance policy will apply to central government departments, where we have direct control of spending,” said the spokesman. But it is still unclear what direct control the Cabinet Office has of departmental spending.

That said, the Cabinet Office announced in June spending controls on central government that “allow government to act strategically in a way it never could before”. It added that there were “strict controls on ICT expenditure”.

That means that large ICT contracts to be awarded by departments must go to the Cabinet Office for approval; and the Cabinet Office has introduced a single point of contact for major suppliers, which means that the performance of strategic suppliers will be viewed in the round.

In the past suppliers have been able to tell departments that were about to award contracts that rumours of alleged poor performance in other departments were incorrect.

Comment

While not a blacklist the high-risk classification seems a good idea. Francis Maude, the Cabinet Office minister, is sending a message to suppliers that if they take legal action against a department it could stop them getting business across Whitehall.

But he’s also saying in effect: settle and we’ll remove you from the high-risk list.

Is there a danger that the power could swing too much in the government’s favour, allowing departments to poorly manage contracts with impunity? Probably not. Suppliers will have to take the high-risk list into account when signing deals.

They know that, in the insurance industry for example, if they mess up one contract word will soon get around.

Poorly-performing suppliers risk being frozen out of Government business – Government Computing

Fujitsu banned from goovernment contracts?

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Posted in Campaign4Change, cost reduction, Fujitsu, Government IT, innovation, legal disputes, Major Projects Authority, operational issues, private sector lessons for the public sector, procurement, supplier relationships

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Fujitsu banned from Whitehall contracts?

Posted on 11/09/2012 | 6 comments

By Tony Collins

The FT reports today that Fujitsu has been deemed for the time being too high risk to take on new public sector deals, along with another unnamed IT services contractor.

The newspaper quotes “people close to the situation”.

It’s likely the article is correct in naming Fujitsu as a supplier that is deemed by the Cabinet Office to be high risk. It is unclear, though, whether being categorised as “high risk” by the Cabinet Office amounts to a ban for the time being on future government contracts.

The FT says that Fujitsu has “in essence” been blacklisted.  “The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted,” says the FT.

It is also unclear whether the Cabinet Office could exclude a supplier from shortlists even if it wanted to. The Cabinet Office awards few large IT contracts of its own; contracts are awarded by departments, and the Cabinet Office has no unambiguous power to exclude particular suppliers from shortlists drawn up by autonomous departments that take their own decisions on which companies to award contracts to.

Mega-contracts to be awarded by central departments must, however, must go to the Cabinet Office’s Major Projects Authority for approval.  The Authority could in theory require that Fujitsu be excluded from a shortlist before it gives approval.  This blacklisting would require Francis Maude, the Cabinet Office minister, and the minister signing the mega-contract to be in agreement.

If a departmental minister refused to exclude  a supplier from a bid or shortlist because of its past performance what could the Cabinet Office do, especially if the minister argued that the supplier’s continued work , in the form of a renewed contract, was not just desirable but essential?

The FT says that the latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture.

He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. He is quoted in the FT as saying that his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Comment

The idea of a blacklist is a good one; indeed it would be the most important innovation in government IT since the general election. For decades MPs and others have said that under-performing suppliers should not be awarded new contracts. Now at last that may be happening.

After Fujitsu sued the Department for Health for about £700m over the NPfIT a settlement has been elusive, despite the intervention of the Cabinet Office. It is likely that Fujitsu UK’s hands will have been controlled by its parent in Japan.

Fujitsu’s performance on the “Libra” contract for IT in magistrates’ courts was strongly criticised by MPs and the National Audit Office which exposed repeated threats by the supplier to withdraw from the contract unless its terms were met.

Fujitsu could circumvent any blacklisting by becoming a subcontractor on a mega-contract, as it is at HMRC on the “ASPIRE” contract and at the DWP where its hardware runs benefit systems. Or a department could ignore the Cabinet Office and award non mega-contracts to Fujitsu.

We hope the Cabinet Office finds a way to make its blacklist – if that is what it is – stick. A  private sector company would not award a new contract to a supplier that had bitten in the past. Why would the public sector?

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Posted in EU procurement, Fujitsu, Government IT, IT-related failures, legal disputes, Major Projects Authority, private sector lessons for the public sector, procurement, project management, public sector, supplier relationships

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IBM sues its council “partner”

Posted on 06/09/2012 | 3 comments

By Tony Collins

Earlier this week we reported IBM’s disclosure that it is in dispute with Somerset County Council, its lead partner on a joint venture Southwest One.

In  its annual statement on Southwest One, a joint venture owned by IBM in which Somerset County Council is the lead partner, the company said that a dispute with its partners had gone to mediation which had failed.

Now it turns out that the dispute has escalated: IBM, in the form of Southwest One, is suing Somerset County Council according to BBC online.

On its website Southwest One says how “collaboration and cooperation can help to deliver procurement savings”.  But it is largely over the level of procurement savings that Southwest One is going to court.

Southwest One’s statement

Southwest One said it had taken court action because an agreement could not be made with Somerset Country Council.

“Southwest One complies with its contractual obligations, providing a robust service to all partners which includes the identification of substantial procurement savings.

“Throughout the course of the contract, Southwest One has secured procurement savings that amount to £22 million which have been approved by all partners, with contracts in place to deliver a further £71 million of savings.

“Southwest One has also successfully achieved external recognition from the Cabinet Office for Customer Service Excellence and operates an award-winning Customer Contact Centre.”

Somerset’s statement

Somerset County Council said

“We are in disagreement with Southwest One about the quality of the procurement service and what payments Southwest One is entitled to as a result of savings made by getting better deals through the joint venture.

“As set out in the terms of the contract, we had hoped we would be able to settle this issue through mediation and negotiation.

“It is now apparent that this will not be possible and it is disappointing that we are in the position of going to court.

“It is paramount that we look after the best interests of tax payers and take action when standards of performance and quality are not being met.

“We will therefore robustly defend our position and make counter-claims where we believe we have suffered losses.

“Somerset County Council will not be commenting any further on this issue at this stage.”

Thank you to Dave Orr for drawing my attention to IBM’s legal action.

Comment

As procurement expert Peter Smith asks: what is a procurement saving? Amid a complexity of transactions the phrase “procurement saving” can mean almost anything.

Southwest One was supposed to be a partnership between IBM and three public authorities: Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police.

Now the primary beneficiaries will be lawyers … And so we plough along, as the fly said to the ox.

Links

Southwest One sues Somerset County Council

Procurement savings disputes are not unusual

IBM in dispute with partners on £585m contract

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Posted in IBM, IT-related failures, legal disputes, local government, managing change, managing outsourced services, procurement, public-private partnerships, SAP, shared services

CSC signs NHS agreement with UK government – finally

Posted on 04/09/2012 | 1 comment

By Tony Collins

Four-year deal to deliver Lorenzo and other healthcare products

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CSC gets £68m settlement up to 31 August 2012

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

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

Comment

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

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

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

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

Is NPfIT being dismantled – brick by brick?

CSC gets £68m settlement

DH statement

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

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

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

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

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

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

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

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

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

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

Minister for the Cabinet Office Francis Maude said

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

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

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

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

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

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Posted in CSC, e-health, health, health records, IT-related failures, NHS, openness and transparency, procurement, project management

IBM in dispute with its joint venture partners on £585m contract

Posted on 31/08/2012 | 1 comment

By Tony Collins

IBM says it is currently in dispute with the joint venture partners on a number of contractual matters relating to South West One, a joint venture between IBM and three public authorities. IBM owns the joint venture company.

South West One’s annual report says that a mediation was held on 4 and 5 July 2012 between IBM and Somerset County Council, which is the main public authority partner, on a confidential basis.

“No settlement has been reached and accordingly the board [of South West One] will be reviewing which of the remaining options in the contractual procedure should now be pursued,” says SW1’s annual report.

South West One’s report doesn’t give any detail on the “contractual matters” in dispute.

Possible matters under discussion might have included a withholding of money (the councils are expected to pay IBM about £585m over 10 years, from 2007),  contention over KPIs (IBM did not meet all of its key performance indicators and indeed met fewer of Somerset’s KPIs in 2011 than in 2010), changes to the contract which is being re-negotiated, a lack of remedial action over accounting problems in Somerset’s finance department following a major SAP implementation , a shortfall in expected savings, and the council’s extra costs of working around SAP-related problems .

It is known that a contract renegotiation has been underway for some time.

The contract was subjected to review after the Conservatives took control of Somerset County Council from the Liberal Democrats in May 2009.

The review in June 2010 found that some aspects of the contract had been successful but “figures provided do, however, tend to indicate that the anticipated procurement savings are currently falling short of projections”.

On service delivery the review said there had been “major and minor system problems and difficulties in implementation have been experienced which have often involved Somerset County Council staff in additional time and effort in working around these issues”.

It said that a “significant area of difficulty has been in relation to financial and processing components of SAP which have also had a serious effect on others outside Somerset County Council.

“As a result, there appears to have been substantial but unquantified additional direct and indirect costs incurred by the County Council and others in resolving the various difficulties encountered.

“Southwest One has also provided intensive additional resources at its own expense, notably in addressing the issues that arose in relation to the SAP phase one roll out where lessons have clearly been learned and applied to the more successful phase two implementation. More work is, however, still required as a priority in some key areas where concerns remain around the efficiency and effectiveness of service delivery and financial systems.”

South West One is dependent on the financial support of IBM to continue trading, says  company’s annual report. It adds that the “difficult political and economic environments in which the company has been operating have not shown any signs of easing”. Somerset has taken back from South West One finance, an HR advisory service, design and print.

“The difficult environment for business, both public and private, will continue to place strains upon opportunities for South West One,” said the annual report.

“There will be specific challenges in the forthcoming year due to the implementation of Universal Credit, the requirements of the Winsor report and changes in regard to the move from Police Authorities to Police Crime Commissioners.”

South West One made a loss in 2011 of £6.8m (a loss of £22.7m in 2010) and has accumulated net liabilities of £43.2m. The company can continue trading, in part because it has the support of IBM UK’s parent:  International Business Machines Corporation based at Armonk New York.

IBM owns 75% of the shares in South West One. Somerset owns 11.75%, Avon and Somerset Police Authority 8.25%, and Taunton Deane Borough Council 5%.

This article owes much to Dave Orr who has campaigned tenaciously for the facts of the South West One deal to be made known.  

Comment

The unsettled dispute suggests that the “partnership” aspect of the contract between IBM and the three public authorities – Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police Authority –  is at an end. A partnership normally implies a harmonious relationship between the parties.

Is it any surprise that things have come to this?

The South West One contract was signed in 2007, in the early hours, at a weekend, amid great haste and secrecy.  The deal was driven by a senior official at Somerset who wanted to take the council “beyond excellence”. But the joint venture had little support from many of the council staff who were seconded to South West One. Most councillors took little interest in the setting up of South West One.

IBM has found to its cost that signing a major contract with just an inner circle of enthusiasts is not enough to make such a deal work. Though some have changed many of Somerset’s councillors remain. It could be said that they deserve the deal they have got, given that so few of them took any interest in the negotiations in 2007.

Besides, it is unlikely that any joint venture which doesn’t have the support of most staff will work, which makes mutuals a potentially better shared-services option.

IBM struggles with SAP two years on – a shared services warning?

IBM-led model partnership based on SAP makes loss

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Posted in Campaign4Change, change, change management, cost reduction, culture, IBM, IT-related failures, legal disputes, local government, managing outsourced services, mutuals, openness and transparency, operational issues, outsourcing, Politics, procurement, public-private partnerships, SAP, shared services, Universal Credit

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