Category Archives: public sector

Is BT having trouble meeting some of its promises?

Posted on 10/12/2012 | Leave a comment

By Tony Collins

Six weeks ago BBC’s Watchdog broadcast an advert for BT Vision, which offers broadband-based pay-TV packages.  “With BT Vision you won’t miss a thing,” says the advert.

Chris Hollins, a presenter of Watchdog, then tells millions of viewers:

“Big promises. Tempting promises. But according to customers who contacted Watchdog they are empty promises.”

Can BT always be trusted to deliver on its promises? BT Vision is a completely different part of the company that bids for joint venture and outsourcing contracts with local authorities. At the same time BT is marketing its services to Cornwall Council and other local authorities partly on the basis of its unified corporate strength, as a FTSE 100 company.

Can BT’s culture and practice be separated from one division to the next?

Maragret Outschoorn told Watchdog of how she had been five months without a proper service. Sue Bennett, another BT Vision customer, had had problems for two and a half years, since 2010. She told the programme she had been on the phone to BT Vision nearly every week, sometimes for two or three hours.

“Like others who contacted us Sue fell foul of BT Vision’s habit of passing customers from one person to another for weeks on end without sorting out their problem,” said Hollins.

Joe McCaffrey said he spent about 13 hours on the phone over a period of 18 days and each time he had to re-trace the history of his problems.

Breaking up can be hard to do

“So what if a customer decides there are just too many problems to navigate through and they just want to leave BT Vision?” asked Hollins. “Can they achieve their goal? Kieran Potter couldn’t. He was told he’d have to pay a £200 cancellation fee first.

“I ended up having an argument with them for the best part of 13 months saying I want to cancel; I want to leave,” said Potter. “By the time I did get them to cancel me they still wanted me to pay £70 which was in July this year, which I refused. The only reason they did cancel was because I threatened to get in touch with Watchdog.”

Earlier this  year Ofcom revealed that for every 1,000 customers BT Vision received four times as many complaints as its nearest rivals. “We continue to hear from customers who are told they will be charged to leave even though their service is plagued with problems,” said Hollins.

Cornwall Council will decide tomorrow whether to go ahead with a mega-deal in which IT and other services are outsourced to BT. Some council officers and BT favour the services being delivered by a joint venture company that is owned completely by BT. Underlying the assumptions being made by the council is that BT would fulfil its promises and, if not, could be found in breach of contract. Remedies in the contract would give the council the ability to obtain compensation or terminate and bring services back in-house. A 134-page report to Cornwall’s councillors is underpinned by a catalogue of BT promises and guarantees.

But how easy would it be in reality to ensure that BT meets its promises? And how easy would it be in practice for the council to leave BT if termination became necessary?

BT’s response to Watchdog

“BT would like to apologise to the customers featured in the report. Where issues have occurred with BT Vision, we have made efforts to help customers to enjoy the service at its best.”

“However, it is clear that in these particular cases, we have failed to deliver the excellent and timely customer service customers would expect from BT. Where these customers have asked to leave, we have waived charges for leaving contracts early. We are also in the process of agreeing compensation, where appropriate, for some of these customers…”

BT’s full response to BBC Watchdog broadcast.

Comment:

A deal with BT may be good for Cornwall Council and its taxpayers. The evidence we have seen so far looks one-sided though.

The council’s presentations to councillors appear to make the assumption that BT’s promises and guarantees are inviolable, that contractual remedies for any breaches would be easy to enforce, and termination would be straightforward. Could this be because of what TS Eliot called the inability of humankind to bear very much reality?

BT Vision – Watchdog 31 October 2012

BT Vision tops Ofcom pay TV customer complaints

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Posted in BT, Campaign4Change, local government, managing outsourced services, public sector, public services, public-private partnerships

Parts of report on Cornwall’s planned BT joint venture are missing

Posted on 06/12/2012 | Leave a comment

By Tony Collins

Cornwall Council’s officers have written a 134-page report on the options available to councillors for confronting budget cuts.

It will help councillors  decide at a full council meeting on 11 December whether to ask officers to conclude a joint venture with BT.

The report “Partnership for Support Services – Options Appraisal” is clearly a well-meant attempt to convince councillors that the best option is a deal with BT. The current plan is for BT to set up a subsidiary it would own completely, that would deliver ICT and other services back to the council and parts of the local NHS. BT has no plans for the council to be represented on the subsidiary’s board.

The new report is strong on the benefits of a joint venture with BT, such as guaranteed jobs and savings. Absent, though, are  important parts on costs, risks and local authority experiences on joint ventures and private sector partnerships. 

Secret risks

The report says that the “risks inherent in SP 1 [the joint venture with BT] has been submitted to the Council” by legal firm Eversheds.  A final version of the Eversheds report will be signed off by council officers before any invitation to tender is issued to BT. But there’s no indication that this report on risks will be shown to all councillors.

Secret appendix 

The council’s own procurement costs relating to the proposed joint venture, and further projected costs, are escalating.

In July 2011 the costs to Cornwall’s taxpayers of planning the joint venture  were estimated at £375,000. That figure rose to £650,000, then to £800,000, then £1.8m and now stands at  £2.1m.

“The current forecast estimate of the costs of the procurement process now stands at £2.1m. This is funded from the corporate improvement budget,” says the new report.

There are further costs arising from the partnership, says the report. One example is the pension fund for the transfer of staff which will cost about £10m over 10 years.  “There will also need to be additional budget to create a robust client team [to manage the BT contract],” says the report. This would cost between £400,000 and £700,000 a year.

“Both of these additional costs have been taken into account in the option analysis contained in appendix 2.”

But appendix 2 is missing in the public version of the report.

Also missing  

The report suggests that strategic partnerships are “nothing new”. It adds:

“BT – and other councils (sic) – have been involved in them for more than 10 years. Similarly the outsourcing market is mature and well understood. The UK local government IT and Business Process Outsourcing market is the biggest outsourcing market in the world and there are over 100 deals in operation. Risks are sometimes managed well and sometimes managed badly. The risks have been mitigated by using expert advisors and the Council has senior officers who understand this territory well.”

But the report does not mention that some councils in the mature local authority market have, after poor experiences, outcast joint ventures and one-size-fits-all outsourcing deals. Neither does it mention that the Cabinet Office disapproves of partnerships that lock public sector organisations into one major supplier.

These are some of the partnerships not mentioned in Cornwall’s report:

– Suffolk County Council signed a £330m joint venture deal with BT in 2004. By late 2010 the cost had risen 26% to £417m.  A BT spokesman told  the Guardian that the additional costs were due to “…additional services contracted by the council”.  Suffolk has decided not to renew the BT contract. It will instead outsource to separate specialist firms. Assistant director director strategic finance Aidan Dunn said in a council report that “efficiencies can be achieved by dealing with individual suppliers who are experts in specific areas of back office service provision, rather than contracting with back office generalists”.

He added: “Our analysis suggests that it is not necessary to have one large contract, but that our requirements would best be serviced via three separate contracts: finance and HR, ICT and services to schools.”

– Somerset County Council’s loss-making joint venture is in dispute with its main supplier IBM. Council leader Ken Maddock said the joint venture was “failing to be flexible enough in the changing financial landscape”.  He did not blame the workforce but the “contract, the complications, the failed technology, the missed opportunities, the lack of promised savings”.

– Birmingham City Council is, in effect, locked into a “Services Birmingham” contract with Capita that began in 2006 and lasts for another nine years. The contract has been largely successful but the relationship is deteriorating in some areas, according to a report which was published this week.  The two sides have many problems to overcome.

– Essex County Council has taken civil legal dispute advice over its deal with BT. The European Services Strategy Unit quotes the Financial Times as saying that a 10-year contract began 2002 but in January 2009 Essex Council served BT with a notice of material breach of contract. A spokeswoman for the council said: “We decided it wasn’t value for money and we weren’t getting the level of service we required, so we decided to terminate the contract.”

Analysis of other parts of latest Cornwall report

The options appraisal report says it was produced in a tight timeframe which has limited its usefulness to councillors. But who has imposed a tight timeframe? Councillors have not imposed any specific time limit. It could be that some council officers have. But aren’t artificial time limits usually the prerogative of double-glazing salesmen who offer 60% off if you sign straight away? Cornwall’s report says:

“… it is recognised that the necessity for the Chief Executive to fulfil the mandate of Council in such a tight timeframe means that it has been difficult in terms of ensuring full Member engagement…

” … As stated, the timeframe has been particularly challenging and the report would have benefited from more discussions with and input from Members but it is hoped that the Council has sufficient analysis and background information to make a decision on the best way forward.”

Health partners

The report says of the council’s three proposed health partners that “all are keen to promote closer integration, improve services and deliver savings through the SP 1 [BT joint venture] proposal”.

This isn’t quite what “all” the health partners said.

Kevin Baber, chief executive of Peninsula Community Health in St Austell said the only realistic option was a BT joint venture (though the authority has begun telehealth talks outside the partnership). The other two health authorities were not so definite in their support for a BT joint venture – and one of them  wished expressly not to influence Cornwall Council’s debate.

Lezli Boswell, Chief Executive of Royal Cornwall Hospitals NHS Trust, said:

“It would not be appropriate for me to comment on the Options Appraisal as [the trust] has not been involved in the preparations process and also would not want to appear to be influencing the Council’s debate…”

Phil Confue, chief executive of Cornwall Partnership NHS Foundation Trust, said that the option for a BT joint venture appeared to offer to a real opportunity  to deliver value for money. But he made no commitment to the partnership even if Cornwall votes in favour of a deal with BT.  He said the trust did not want, as an NHS body, to lobby the council over its decision.

“The decision whether to pursue the Strategic Partnership will be made by
our Trust Board of Directors, once the Council has made its decision on the 11 December 2012.”

As the Cornwall options appraisal report concedes, health trusts have the option of outsourcing services to Shared Business Services, a successful shared services organisation run by Steria.

Comment:

Most of the councils that went into joint ventures with high hopes amid promises of large savings have become disillusioned. Such deals are characterised by an anxiety for a deal to be signed as soon as possible, followed by rising costs, lack of flexibility, high prices when there is a need for major legislative and organisational change, and the discovery that ending a contract early carries risks of disruption to services, high re-transitional expenses, legal action and sunk costs.

Some may wonder if the unforeseen rising costs of procurement – they have increased five-fold – may be a sign of what could happen with costs after a contract is in place.

Given the lessons from the growing number of joint venture failures, one would have thought that council officers would be suspicious of supplier promises.  Not at Cornwall. The officer-enthusiasts for the BT deal don’t mention any of the joint venture contracts that have failed. Indeed those officers prefer the claims of suppliers that failures are in the eyes of trouble-makers, media scaremongers and union activists.

Why does so much enthusiasm at the start of contracts dissipate once realities set in? Could it be that the best marketing people are the easiest to sell to? Do the officials that want success so much overlook or minimise the risks and past poor experiences of others?

Links to Cornwall Council’s options appraisal and agenda for 11 December council meeting on the blog of campaigner Cornwall councillor Andrew Wallis.

Cornwall’s joint venture procurement costs escalate

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Posted in BT, Campaign4Change, IT-related failures, local democracy, local government, managing outsourced services, outsourcing, Politics, public sector, public services, public-private partnerships, shared services, supplier relationships

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Success in outsourcing needs political stability says councillors’ panel

Posted on 26/11/2012 | 4 comments

By Tony Collins

A group of councillors has found, after investigating several large local authority outsourcing contracts, that political stability may be a critical factor in successful deals.

Cornwall Council’s “Support Services Single Issue Panel” investigated outsourcing deals that involved Birmingham City Council (Capita), Liverpool City Council (BT),  Taunton Deane Borough Council (IBM), Suffolk County Council (BT) and South Tyneside Council (BT).

The panel is not,  in principle, against outsourcing. It found that,

“Information from other authorities has highlighted the importance of political stability for a project which will extend for many years. This has been the single most important lesson that they have learnt.”

In those councils that have an inherently stable majority of one particular
party, outsourcing has not necessarily been a problem. “Likewise it has not been an issue for those councils who have achieved a cross-party consensus, even where there has been a change of administration,” says Cornwall’s panel of councillors. But …

“For those councils who do not have a cross-party approach the process of going into a strategic partnership has caused significant problems; in some  cases a polarised membership which has also impacted on their staff…”

The finding indicates that the risks of a large-scale failure of outsourcing contracts at Cornwall and Barnet councils – where political dissent has been marked – could be greater than its officials realise.

Cornwall may outsource a range of services, including IT, to BT in a contract that is likely to be worth at least £200m, and possibly hundreds of millions of pounds more,  over 10 years.

Barnet has chosen Capita as its preferred outsourcing supplier as part of its “One Barnet” transformation programme. The plan includes outsourcing IT.

A need for cross-party support

The findings of Cornwall’s Single Issue Panel also suggest that the initial major decision to outsource may need a cross-party consensus to succeed..

“What has proved both corrosive and destructive is where a major decision has been made without the support of a substantial majority of members,” says Cornwall’s panel.

Cornwall Council is putting the major decision of its outsourcing deal with BT to the full council. A yes or no decision is expected in December.

But Barnet is going ahead with its major decision to award a large outsourcing contract to Capita without a vote of the full council, although dissent over the plans are widespread. An inner circle of councillors, the “Cabinet”, is expected to approve a deal with Capita 0n 6 December.

This is part of what Cornwall’s panel says on the importance of political stability to successful outsourcing deals:

“Throughout the investigatory work of the Panel the importance of political leadership has been consistently stressed.

“It has been regarded by most authorities as the single biggest activity to get right and failure of this function will at best lead to problems and at worst to failure of the partnership.

“The form of the leadership is in itself not important and both cross-party support and a stable base from one political party have both been effective…

Comment:

BT in Cornwall and Capita in Barnet have made promises of large savings which, understandably, makes some councillors and officers want to sign large, long-term outsourcing deals.

If suppliers provide money upfront for transformation projects this eases, or even releases, the burden on councillors and officers to make big cuts.

But how will BT at Cornwall and Capita at Barnet pay for savings, and for new investment in changes, if they fail to attract new business?

This was among the findings of Cornwall’s investigating panel of councillors:

“Members of the SIP [Single Issue Panel] have supported the investigation of ways in which jobs in Cornwall Council could be retained by trading shared services.

“All other authorities that have started with a similar ambition have failed to deliver that aspiration. In one case the business model was substantially reliant on trading and growth and has been in place since 2006.

“No significant trading has taken place and this is a similar story in all other authorities that the SIP has been in contact with.”

This finding shows how the promises of suppliers to attract new business can prove over-optimistic; but at least all of Cornwall’s councillors will have a chance to vote on a deal. Barnet is not giving its full council the same opportunity.

If Barnet’s officers and ruling members read Cornwall’s Single Issue Panel report they will be aware of evidence that it can be corrosive and destructive for a council to make a major decision without the support of a substantial majority of members.

If Barnet’s inner circle then goes ahead with making a major decision in the face of widespread and strong dissent among some staff and councillors, could its decision amount of maladministration if the subsequent deal turns sour?

One concern is that the suppliers may put up money in advance and charge for this – with interest – in the latter part of the contract, as in discredited PFI deals.

Today’s councillors and officers would have money for investment in the early stages of the contract. But they may leave future generations of councillors and officers with a legacy of large payments. The full facts should be known before any deal is signed.

Another concern is that the suppliers may rely on major legislative and organisational change – both of which are inevitable – to provide much of their profit.

If a future council does not want to pay the suppliers’ invoices for changes a dispute may arise, for which the suppliers will be much better prepared than the councils.

A further concern is that the savings promised by suppliers may be smaller than the savings the councils could make on their own,  with suppliers acting as consultants, for the costs of technology fall annually – as do some cloud services as competition increases. Again the facts should be known before any long-term deal with a single supplier signed.

It may also be important for officers at Cornwall and Barnet to be aware that Suffolk County Council has decided after its outsourcing deal with BT that it is better to outsource to multiple “expert” suppliers than a single one.

In Barnet the public needs to be able to hold those responsible for a major decision to account, if all goes wrong. The problem is that the individuals on any minority group that is responsible for a outsourcing decision today are unlikely to be in post when any dispute arises.

Links:

Councillor Andrew Wallis – The Single Issue Panel Releases its Third Report on the Support Services Proposals

Capita preferred bidder at Barnet

The Barnet Eye

Shared services disaster

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Posted in BT, Campaign4Change, Capita, change management, cost reduction, IT-related failures, local government, managing change, managing outsourced services, procurement, public sector, public services, public-private partnerships, shared services, supplier relationships

Barnet’s undemocratic BT/Capita outsourcing plan?

Posted on 05/11/2012 | 1 comment

By Tony Collins

Barnet Council is remarkably defensive about its plan to outsource IT, customer services, finance, payroll, HR, corporate procurement and other services to BT or Capita, by the end of December 2012.

After the controversy in Cornwall about whether the full council or an inner circle of councillors – the “Cabinet” – should make momentous decisions affecting the council’s future, Campaign4Change asked Barnet whether it was putting its decision to outsource to BT or Capita to the full council.

Cornwall’s decision on whether to outsource to BT or CSC was going to be taken by the Cabinet alone but Cornwall’s leader Alec Robertson changed course and decided to put the idea of a mega-outsourcing deal to the full council.

Straightforward question

So would Barnet council’s decision to award a mega-outsourcing contract to BT or Capita go to full council for a vote? It was a straightforward question for Nick Griffin, Media Officer, Chief Executive’s Service, Barnet Council. He did not answer the question directly.

His reply:

“There is quite a bit of information available on our website. Please see the links (at the bottom of this post)  …

But was the information on the council’s website out of date? We wanted to be clear on the facts. We asked Griffin again. His reply was polite but insistent: he would not say whether the council was putting its outsourcing decision on BT or Capita to the full council.

Neither would he answer directly another straightforward question on local democracy: Has the decision to approve/reject One Barnet [transformation programme] gone to full council for a vote?

From the council’s website it appears that all key decisions on the outsourcing plans have been made by Barnet’s Cabinet’s alone. This is from the council’s website:

“A decision will be made by Cabinet in late 2012 as to which bidder [BT or Capita] will win the contract. The new provider will start to run the NSCSO [New support and Customer Services Organisation] in spring of 2013.”

Barnet’s website lists as the relevant previous decisions those taken by the council’s Cabinet alone.

– Cabinet, 29 November 2010 – approved the One Barnet Framework and the funding strategy for its implementation.

– Cabinet …2 March 2011 – Customer Services Organisation and New Support Organisation Options Appraisal

– Cabinet … 29 June 2011 – approved the New Support and Customer Services Organisation business case and the start of the competitive dialogue process…

So one of the most momentous decisions affecting the council, its staff and council services is not being made by the full council.

Undemocratic?

Barnet Council comprises 38 Conservatives, 22 Labour, and three Lib-Dem councillors. Most of them will not have a say on the outsourcing of:

  • Customer Services
  • Estates
  • Finance and Payroll
  • Human Resources
  • IT Infrastructure and Support
  • Corporate Procurement
  • Revenues and Benefits
  • Commercial Services.

The decision will be taken by the Cabinet’s 10 councillors, and perhaps not all of them. Is this local democracy in action?

Accusations of Maladministration?

Given that the decision to outsource to BT or Capita could have a major effect on the council’s future for good or ill, and is controversial –councils including Suffolk and Cornwall are rethinking large outsourcing plans – could Barnet’s decision not to put its outsourcing plans to a vote of the full council leave the Cabinet open to accusations of maladministration if things turn sour?

Links provided by Nick Griffin (1)  (2)

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Posted in BT, Campaign4Change, decision-making, local democracy, local government, openness and transparency, outsourcing, oversight, Politics, procurement, public sector, public services, public-private partnerships

Lessons from a government agile success

Posted on 29/10/2012 | 5 comments

By Tony Collins

Some central government departments spend a great deal with large suppliers on the development and maintenance of their websites (more on this in a separate post).  They could save millions of pounds if they followed the example of the Government Digital Service (and were not locked into mega-outsourcing contracts that include website development).

Agile teams within the GDS are responsible for GOV.UK, which largely replaces Directgov and offers a one-stop site for government services and information.

Simple, clear, fast

The guiding principles for GDS’s agile teams were “simple, clear, fast”. Lessons from the open-source project are on the GDS website. These are some of them:

“When things get tough and you want to go back to old ways, go more agile, not less”.

Less is more (a rare attribute for a government IT project).

Use independently-verifiable data to track your programme

Agile can work at scale. “We’ve embraced it culturally and organisationally…”

The Cabinet Office minister Francis Maude said:

“In stark contrast to the way IT has been delivered in government in the past, GOV.UK can rapidly accommodate new standards for development and security, catering to emerging technologies and user requirements quickly and effectively. It has been built the way Amazon built Amazon, and in the way that BA transformed their online business, by being agile, iterative and focused on users.

“GOV.UK has also been built using open source technology, which means we don’t have to pay expensive software licensing costs.”

Comment:

A good result for the Government Digital Service. Will others in central government follow?

What we’ve learnt about scaling agile – Government Digital Service

Agile can fix failed GovIT says lawyer

 

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Posted in Agile, Campaign4Change, Government digital Service, Government IT, innovation, IT projects, managing change, open source, public sector, public services, reducing cost strategically, software licensing

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

Posted on 01/10/2012 | 6 comments

By Tony Collins

Comment and analysis

An inner circle of councillors at Cornwall council is rushing plans to sign a big outsourcing deal despite a council vote against it.  The aims of the deal include an IT-based transformation of services,  the creation of “up to” 500 new jobs and tens of millions of pounds in savings – all too good to be true? 

The warning signs are there. The council’s remarkable naivety,  a hurried enthusiasm for signing a deal, and a confident waving aside of internal and external concerns,  may be early indications of a possible disaster.  An internal report warns of a potential “catastrophe” over service delivery.

 If all turns sour could accusations of maladministration follow? Is there still time for the full council to stop the inner circle from pressing ahead with a contract signing?

Major IT suppliers have some exceptional salespeople. They don’t merely sell hardware, software and services. They inspire. They rouse to action. Their promises are believable because they believe them with a conviction that can be contagious.

Joe Galloway might have been a one-off.  He was managing director of a part of one of the world’s largest IT companies EDS (now HP).  He helped to strike a CRM [Customer Relationship Management] deal with BSkyB in 2000. The contract ended in a £709m legal dispute in which Galloway was a main witness for HP. The judge in the case of BSkyB v HP found that some of Galloway’s evidence was untrue.

He demonstrated an “astounding ability to be dishonest, making up a whole story about being in St John [part of the Virgin Islands], working there and studying at Concordia College. EDS properly distance themselves from his evidence and realistically accept that his evidence should be treated with caution,” said the judge.

The judge also said

“I am driven to the conclusion that he proffered timescales (on the CRM project) which he thought were those which Sky desired, without having a reasonable basis for doing so and knowing that to be the position… I consider that he acted deliberately in putting forward the timescales knowing that he had no proper basis for those timescales. At the very least he was reckless, not caring whether what he said was right or wrong.”

During the High Court hearing, when HP discovered Galloway’s dishonesty, it sacked him.

He had held a senior position at EDS and the company’s customer BSkyB believed what he had said.  The case cost HP £318m plus tens of millions of pounds in legal fees – and the dispute lasted more than seven years. HP, it could be said, became a victim of some of the statements made by one of its executives.

The point about mentioning the case is that supplier promises, even if made with the best of intentions, may in the end come to nothing – or worse, a costly and prolonged legal dispute. Good intentions were behind the setting up of a joint venture between IBM and Somerset County Council – Southwest One – in 2007. The two sides are now immersed in a legal dispute that looks like going to court. Other councils have gone into joint ventures with major IT suppliers only to be disappointed.

So why do councils still want to sign mega outsourcing deals?

Councils keen to enter a large outsourcing deal become convinced that failures of such ventures elsewhere do not apply to them because their plans are unique. Indeed Cornwall council says on its website:

“Our strategic partnership is unlike any that has happened before, and as such, we cannot compare our programme accurately to others.”

But how do potential suppliers explain failing contracts?

In talks with potential customers IT companies correct or clarify reports in the media about outsourcing deals that have failed or are failing. It is customary during the bidding process for salespeople to take potential clients to reference sites where the representatives will agree that the media reports of a failing partnership were inaccurate or hyperbolic.

[Councils that have signed failing outsourcing deals will sometimes be reluctant to publicise the fact – and may put on a brave face in which they align themselves with the supplier; until a council changes hands, as at Somerset County Council, when a new administration is happy to publicise the mistakes of the last, and the full extent of the problems begins to emerge publicly.]

Cornwall council says on its website that it has received responses from its two shortlisted suppliers BT and CSC to specific negative press articles. The Council is now untroubled by any of the articles.

Says Cornwall

 “The feedback we received from the references contacted were balanced and gave us no significant causes for concern… We do need to reflect that these are press stories and we know only too well from our own experience that you can find negative reports on most major companies if you look for them.

“As global companies, it is to be expected that you will find a whole range of perspectives on each; it is important we take a balanced and independent view.  Please be assured that we will continue to work with both companies to deal with any issues that may arise throughout the procurement process and beyond…”

Articles BT and CSC were not asked to respond to included one in the Financial Times which said of NHS IT contracts:

“There are big doubts as to whether the government can fire BT and CSC, its two main suppliers, without paying huge sums in compensation.”

Cornwall says it continues to monitor press coverage, with the help of BT and CSC. It suggests that articles not yet written may be biased.

“… We actively monitor the press, and both companies [BT and CSC] make sure that they let us know if a negative or positive story is going to break, making sure that we understand the background. It is important to note that these articles do not always present an unbiased view,” says Cornwall.

Does setting up a “critical friend” group give a false assurance?

On the face of it Cornwall deserves praise for setting up an independent panel of “critical friends” to scrutinise the council’s outsourcing plans. It is called the “Support Services Single Issue Panel” which comprises mostly Cornwall councillors. It had help from, among others, council officers, and BT and CSC. The Panel also visited some customers of BT and CSC that the suppliers chose.

But when the Panel later expressed serious concerns about Cornwall’s outsourcing plans the council’s inner circle simply replied that it did not accept those concerns. This may strike some as a naive response to real risks.

This was part of the council’s response to the Panel:

“We do not accept the magnitude of some of the risks raised in the SIP [Single Issue Panel]. This includes the risk of service delivery failure and the risk of losing senior officers to the partner. Nor do we think there is a significant conflict between profitable trading and a public service commitment. We do not think our timescales are risking service delivery but will advocate delaying those timescales if this is judged necessary to protect the Council’s interests and/or to achieve greater contractual benefit…”

Is there a danger the council will use the setting up of the critical friend group to say that it has considered all the risks – even if it has considered then dismissed the most serious of them?

A poor supplier would be in breach of contract – but then what?

To the Panel’s concerns that the joint venture may fail to deliver, or costs escalate, Cornwall responds that if its suppliers do not deliver they will be in breach of contract.

But then what?

Said the council:

“The contract obliges the strategic partner to deliver. Any initial failure to deliver would be dealt with through a service credit arrangement. Persistent failures would represent a breach of contractual conditions which would lead to breach of contract where the Cornwall Partners would exit the contract.

“The cost for this would be picked up by the strategic partner. Financial difficulty is covered by a guarantee that the parent company would step in and continue delivery. Costs are largely within our control…”

Is it straightforward to exit a contract after an alleged breach of contract? The Department of Health was in dispute with CSC over alleged breaches of contract on the National Programme for IT, NPfIT. CSC made it clear in its statements to US regulators that the DH was unable to exit the NPfIT contracts without large payments. CSC and the Department ended up accusing each other of breaches of contract which made negotiations for a settlement long and costly.

Heading for claims of maladministration?

Is Cornwall being naive when it says simply that after any breach of contract the council “would exit the contract”? In the past this has been the legal cycle of events in some major legal disputes on IT contracts

– Customer alleges breach of contract

– Supplier makes counter-claim

– Customer withholds money

– Supplier instigates legal action

– Customer wishes to exit contract but cannot because of potential costs, counter-claims and need for supplier’s cooperation to maintain existing services.

– Long and costly settlement negotiations – which is good for lawyers – while service delivery remains in the “hold” position, unresponsive to changes that may need to be made or remedial action that may need to be taken.

International IT companies are experts in the legal side of contracts and dealing with disputes. Do Cornwall’s ruling councillors believe that the council’s expertise and legal advice would trump the supplier’s in the event of an alleged breach of contract?

When Cornwall says that in a breach of contract it would exit the contract and “the cost for this would be picked up by the strategic partner”, do the council’s ruling councillors trust that the supplier would say to the council in any dispute, “Let us know your costs of exiting the contract and we’ll settle up.”

There is another worrying sign of Cornwall’s apparent naivety. The council says “The costs would only escalate if the Cornwall Partners make changes to the services required.”

Unforeseen change is endemic in the public sector: governments change, policies change, legislation changes, organisations change, particularly the NHS which is a potential party to Cornwall’s outsourcing plans.

Is any public authority that signs up to a large and complex outsourcing deal on the basis of ‘no unforeseen change’ leaving itself open to accusations of maladministration?

Has Cornwall’s democratic process broken down?

The most extraordinary single thing about Cornwall’s outsourcing plans is that, at a full council meeting on 4 September, a majority of councillors voted against a deal but the inner circle is going ahead anyway.

Says the council’s website: “A motion calling on Cornwall Council to change its decision to enter into a partnership with the private sector to deliver a range of support services was supported by a majority of 17 Members following a three hour debate at County Hall on 04 September.”

[The motion was put and seconded by two councillors, Andrew Wallis and Andrew Long, who are not members of the major political parties.]

In dismissing the vote of the council, a spokesman for Cornwall’s pro-outsourcing group said

“All the concerns which have been raised today have already been considered by the Cabinet… This is a very complex proposal and unfortunately the decision by Members not to move into private session meant that we were unable to share the detailed confidential information they needed to make an informed decision”.

Should the Council rush to sign a deal?

Somerset County Council’s joint venture was characterised by a rush to sign, which culminated in the signing at 2am at the weekend. The failed NHS IT plan was also notable among potential suppliers for the haste before the signing of contracts, as was the failed Firecontrol contract. Is Cornwall’s deal being rushed? Cornwall’s Support Services Single Issue Panel said

“The timetable restrictions placed on the SIP [Single Issue Panel] has condensed the available time such that this report has had to be compiled within one working day. Had the timetable slipped by just that one day it is certain that no report would have been submitted.”

The Panel also said

“The risk is that this timescale is far too short for detailed evaluation and due diligence to be carried out. This is a significant value contract. The estimated value of the contract in the Prospectus for Cornwall …was £210m to £800m. The current estimated value is not known to the Panel…”

The council’s inner circle concedes that its timescales are “tight but achievable”.

Conclusion

When outsourcing plans have taken up much time and money there is always a danger a contract will have to be signed to justify the effort.  But would the signing of a mega deal at Cornwall be a triumph of ideology over objective reasoning?

One has to wonder how a mega outsourcing deal can improve services, provide a good profit margin for an international IT company, save the council money and create hundreds of jobs. Doesn’t something have to give? Is there so much inefficiency, and so much money floating around the council and its potential NHS partners, that a major supplier can cut tens of millions of pounds, spend to transform services, and make money?

In evidence to MPs last year SOCITM, which represents ICT professionals in councils, said of outsourcing ICT that it “carries many risks for local authorities and can come at a heavy price”.

Some praise for Cornwall’s approach

Cornwall’s ruling councillors should be applauded for two things:

– There is every sign that the inner circle’s plans are motivated are by the best of intentions: to save money, improve services, protect existing jobs and create more.

– Although some criticise the council’s lack of openness, the inner circle is not hiding all of its papers and discussions in a blanket of secrecy. It has published the report of the “critical friend” Panel and the council’s responses. There is much information – and links – on the planned deal on the council’s website. This doesn’t always happen in the run-up to a large public sector outsourcing contract.

But good intentions do not make up for naivety and a wish for outsourcing that may border on fanaticism – the pursuit of a Cause whatever the dangers.

If a majority of councillors at a full council meeting cannot stop the signing of a mega-deal can anyone?

It appears that a tiny group within the council will make the final decision – although it is arguably the most momentous decision in the council’s history.

Says the council: “The final approval of, and the date for, the issuing of the said invitations to submit final tenders be determined by the Chief Executive in consultation with the Leader of the Council and the Portfolio Holders for Environment, Waste Management Policy and Shared Services, Health and Wellbeing and Human Resources and Corporate Resources.”

The final decision is due next month. If Cornwall enters a deal in which it relies on the contract to protect services and the council’s reputation is it being naive? Could it end up facing accusations of maladministration, particularly after side-lining a council vote against the deal?

**

Thank you to Dave Orr and a journalist in Cornwall for your emails on Cornwall’s outsourcing plans.

Council says its joint venture is failing – BBC

Some papers on Cornwall’s outsourcing plans

Local MP’s website on Southwest One.

An ill-judged outsourcing?

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Posted in BT, BT Health, Campaign4Change, CSC, legal disputes, local government, managing outsourced services, outsourcing, oversight, Politics, private sector lessons for the public sector, public sector, public-private partnerships, risk, supplier relationships

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Is £492m cheap for Universal Credit agile project spend?

Posted on 21/09/2012 | 1 comment

By T0ny Collins

Labour MP Frank Field asked what recent estimate has been made of the cost of the IT system for universal credit in each sub-category of expenditure.

Mark Hoban, who became a minister at the Department for Work and Pensions this month, replied on 18 September 2012 that IT investment costs over SR10 are estimated at £638m and include IT development, associated integration with other systems and infrastructure requirements.

The spend on design, development and software – at current estimates – is £492m. That sounds like a worthwhile investment from the point of view of at least one of the DWP’s main Universal Credit IT suppliers Accenture. Is it cheap, though, for a complex agile project?

Some have asked it before – indeed on this blog – and we ask again: To what extent is Universal Credit a genuinely agile project?

And with many hundreds of millions of pounds at stake, shouldn’t Parliament and taxpayers be allowed to view independent progress reports on the state of the project? No says the DWP.

Private Eye has picked up on the DWP’s rejection of our FOI request. [Thank you to Dave Orr for spotting the article]. This is from Private Eye’s latest issue:

“Nearly two years ago Eye 1276 reported with concern how the then chief executive of HM Revenue and Customs had told a committee of MPs that, when it came to delivering universal credits, the work and pensions secretary Iain Duncan Smith had a ‘big hard dependency’ on HMRC’s IT systems.

“Now critics from all sides are wondering whether Whitehall’s imperfect IT systems can be linked up… Labour’s Liam Byrne has claimed the scheme is ‘late and over budget’. Duncan Smith flatly denies this, but his department has refused freedom of information requests from IT campaigner Tony Collins for progress reports. Releasing them would ‘cause inappropriate concern’ apparently. Hardly reassuring.

“PS: Byrne’s credibility as scrutineer of IT is not helped by having been the health minister who in 2006 insisted that the NHS’s National Programme for IT was ‘broadly on track’ when it couldn’t have been further off track…”

Universal Credit IT – current cost estimates:

Design and development £441m
Software  £51m
Changes to dependent systems  £14m
Infrastructure   £52m
Other   £80m

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Posted in Agile, public sector, risk, Universal Credit