According to this blog from the Office for Public Management, there are three key ingredients that make up a mutual:
* Getting key people on board
* Taking a strategic approach to looking at different options
* Managing the process efficiently
How new models of ownership may help the health and social care sector
Posted in Campaign4Change, health, mutualisation, mutuals, public sector, public services, social enterprise
By TonyCollins
An NAO report today suggests that some officials are fiddling projected savings figures from a shared services deal involving seven research councils.
It all began so well. A Fujitsu press release in 2008 said:
“UK Research Councils to implement shared services with Fujitsu. £40 million project will generate cost and efficiency savings across the organisations.”
An executive who representedFujitsu Services’ was quoted in the press release as saying at the time:
“Fujitsu is consistently proving that it can deliver effective shared services infrastructures and is playing a vital role in driving forward the transformational government agenda through shared services.
“Organisations that adopt a shared services approach can experience genuine economies of scale and reduction in costs which can be essential in their drive for continuous improvement.
Twenty-one months later Fujitsu and Research Councils UK parted company. The 10-year shared services contract began in August 2007. It was terminated by mutual consent in November 2009.
A revealing report, which is published today by the National Audit Office, shows how, despite the best intentions by the Cabinet Office to improve the management of IT-related projects and programmes, and decades of mistakes to learn from, some officials in departments are still making it up as they go along.
The worrying thing in the NAO report is not only what happened in the past – few will be surprised that the NAO report characterises the shared services deal as lacking professionalism. What’s worrying is officialdom’s more recent disregard for the truth when claiming savings for its shared services arrangements.
The NAO’s report”Shared Services in the Research Councils” suggests that officials manipulated – some could say fiddled – projected savings figures.
The NAO also found that officials awarded a £46m shared services contract to Fujitsu which came second in the bid evaluation. Exactly how the contract came to be awarded will be investigated soon by MPs on the Public Accounts Committee.
Origins of shared services contract
In 2004 a review led by the Government adviser Peter Gershon suggested that the public sector should save money by sharing support services such as IT, HR and finance. In 2006 officials at the Department of Trade and Industry (now the Department for Business, Innovation and Skills) encouraged their colleagues at seven research councils to set up a shared service centre, which they did.
The UK Research Councils is an important organisation. In 2009/10 it spent £3.7bn, mostly on giving research grants to universities, the European Space Agency and other organisations. Its biggest recipient of grants is the Medical Research Council.
Fujitsu contract
Public servants appointed Fujitsu in August 2007 to put in place the ICT systems to underpin the shared service centre in a ten-year contract worth £46m. Fujitsu came second in the initial bid evaluations.
The NAO said that the bidding process produced a shortlist of three companies including Fujitsu. Said the NAO:
“The initial weightings applied by the [bid] panel had placed Fujitsu second: although the bid had scored well on quality, it was 19 per cent more expensive than the cheapest bid.”
An independent review commissioned by the project board backed the evaluations which put Fujitsu second. But the bid panel and the project board had concerns about the evaluation. The supplier chosen in the evaluation – which the NAO refuses to name – did not score well on quality requirements.
It appears that the bid panel and the project board preferred Fujitsu.
Mathematical error
Then officials happened to spot a mathematical error in the bid scoring. The corrected scoring left Fujitsu on top, as the new preferred bidder.
Said the NAO:
“… a mathematical error was identified by a member of the project team that changed the order of the preferred suppliers, leaving Fujitsu as the front runner
“The [bid] panel reconvened to discuss this but, rather than re-performing in full the quantitative and qualitative analysis and submitting this to independent review, it decided to appoint Fujitsu on the basis of a vote.
“In September 2007 the gateway review team concluded that the incident had weakened the value of the overall process and had left the project at risk of challenge.”
User requirements unclear
Full delivery was due in September 2008 but the project team and Fujitsu “quickly encountered difficulties, resulting in contract termination by mutual consent in November 2009”.
The NAO said there was “miscommunication between the parties about expectations and deliverables, primarily because design requirements had not been sufficiently defined before the contract started”.
Fujitsu consequently missed agreed milestones. “Fujitsu and the Centre told us that the fixed-rate contract awarded by the project proved to be unsuitable when the customers’ requirements were still unclear.”
Officials paid Fujitsu a total of £31.9 million, of which £546,000 related to termination costs. Despite the payments to Fujitsu, parts of the system were withdrawn and rebuilt in-house.
Overspend on Fujitsu contract
The NAO found there were “significant overspends on design and build activities and the contract with Fujitsu.”
At least £13m wasted on Fujitsu deal
Said the NAO:
“Had the Fujitsu contract worked as planned, we estimate that the additional £13.2m design and build costs … would not have been needed. In addition the project management overspend of £9.1m would have been lower, as, after termination of the Fujitsu contract, a significant overhead in managing contractors was incurred by the project.”
Fujitsu out – Oracle in
The breakdown in relations with Fujitsu led to the appointment of Oracle as supplier of the grants element of the project. “The contract with Oracle suggested that lessons had been learnt by the project following its experience with Fujitsu, with greater effort given to specifying the design upfront,” said the NAO.
Did officials know what they were doing?
In deciding how to share services the research councils came up with six options including setting up a centre run jointly by the councils or joining with another public sector agency such as one supplying the NHS.
But two of the options including the NHS one were dropped without proper analysis, said the NAO. The remaining four options were each given a score of one to three, against seven criteria. “The scores appear to be purely judgemental with no quantified analysis,” said the NAO.
Even if the six options had been properly appraised, the evaluation would have failed because it did not include a “do-minimum” option as recommended by HM Treasury.
“Overall, the quality of options appraisal was poor,” said the NAO.
Fiddling the figures?
The NAO found that:
– Initial estimates were of zero projected procurement savings from shared services. But by the time the first draft of the business case had been written the projected savings had soared to £693.9m.
– When this project board queried this figure the research councils’ internal audit service scaled down the figure to £403.7m – but this included £159.3m of savings that internal audit had concluded were not soundly based.
– Since the shared services centre began officials have recorded procurement savings of £35.2m against the business case and while of these are valid savings some are not. The NAO investigated 19 high-value savings that represented 40% of savings recorded to the end of 2010 and found that 35% “should not be claimed against the project investment”.
– The research councils have been “unable to provide paperwork to substantiate the claimed saving”.
– Savings claimed were indistinguishable from normal business practice such as disputing costs claimed by a supplier.
– Clear evidence exists that the budget holder had no intention or need to pay the higher price against which the saving was calculated
– Last month the research councils claimed that savings were £28m higher than they had reported previously owing to errors in the original numbers. But the NAO found that the councils were unable to reconcile fully the two sets of numbers; had not used a single method for calculating benefits or tracked these effectively; and had not included £7m of spending incurred by the councils. “Overall, this review has highlighted that Councils have not put in place proper processes to track benefits and forecast future operational savings,” said the NAO.
– Further, investments needed to deliver projected savings have not been included in calculations.
– Double counting. A revised target for projected procurement savings procurement “includes elements of double counting …”
Other NAO findings:
– Four Gateway review reports of progress on setting up the shared services centre, including a review which put the project at “red – immediate action needed”, were not fully followed up.
– There was no evidence of intervention by the Department for Business, Innovation and Skills when it became clear the shared services project was likely to overspend.
– The shared services centre has begun to match the pre-shared services payment performance of the research councils but a high number of invoices was on hold at the end of July 2011 because of problems with the end-to-end processes. About 5,900 invoices were on hold, awaiting payment, in July 2011, which was 21 per cent of all invoices due to be paid in that month. The reason for the delay was being investigated.
– Despite the shared services arrangements, some research council staff were at times running parallel systems, or managing their businesses without adequate data.
– In July 2011 the shared services centre had 53 key performance targets to meet but was only able to measure activity against 37 of them and of these met only 13..
– Five of the seven research councils did not file annual accounts on time in 2011 in part because functions in the finance ICT system were not delivered by the project.
Some good news
Said the NAO:
“The grants function and its associated ICT system developed by the project has allowed the Councils to replace older systems that were increasingly at risk of failing. This is of critical importance, given that the processing of research grant applications lies at the heart of what the Councils do. The single grants system has the potential to make it easier for the Councils to collectively modify their processes in the future…”
Comment
The commendably thorough NAO investigation has shown once again how badly departments and their satellites are in need of independent Cabinet Office oversight when it comes to major IT-related projects. In that respect thank goodness for the Cabinet Office’s Major Projects Authority. But how much influence can it really have? How much influence is it having?
This NAO report suggests that some officials are fiddling the figures without a care for professional accounting practices. Double counting, not including full costs in projected savings calculations, not having paperwork to support figures and other such administrative misdemeanours indicates that some officials are making up savings figures as they go along.
What is to be done when some departments and their agencies are not to be trusted in managing major projects?
Posted in Campaign4Change, change, change management, collaboration, Government IT, improving communications, legal disputes, managing change, openness and transparency, outsourcing, private sector lessons for the public sector, procurement, public sector, public services, reforms, research, Uncategorized
Tagged Cabinet Office, Coalition, Efficiency and Reform Group, Francis Maude, government IT, government procurement, outsourcing, procurement, public sector
By David Bicknell
Cabinet Office minister Francis Maude is to reinforce the message that the government wants its services to be run and delivered by mutuals, social enterprises and small businesses.
Maude will tell a conference: “In the current climate we can no longer afford waste – demand for services is growing at a time of fiscal constraint.
“But we should not tolerate wasting public money whatever the economic climate. We need to find new ways of delivering public services that are high quality, cost effective and genuinely responsive to the needs of individuals, communities and businesses at local level.
“We believe that nearly all public services can be improved by being delivered by a wide range of organisations. What and how services are delivered are more important than who they are delivered by, and competition breeds innovation and creativity. These in turn will deliver service improvements.
“We want services to be run and delivered by mutuals, social enterprises and small businesses; and we want the talented people who are enthusiastic about what they do to be freed up to deliver services in the way that they think is best.”
Maude’s message comes as most public sector managers say they outsource work to save money, with few believing it leads to improved services.
A survey of 100 human resources directors from government departments, local authorities, NHS trusts and police forces revealed concerns that outsourcing services to private firms would lead to a loss of expertise in the public sector.
The research, by Totaljobs.com, found that almost two-thirds of managers believed outsourcing would cut costs, while only one in four said it would deliver better quality services.
The report will be discussed at the conference aimed at examining the implications on recruitment and skills of Government plans to achieve £40 billion of procurement savings in the next three years
Mike Booker of Totaljobs.com said: “The perception that the skills needed in the public and private sector are somehow different is being swept away by the more pressing need to work together to achieve £40 billion in savings.
“While we’re seeing large numbers of public sector workers looking to migrate to the private sector, it must not be forgotten that essential private sector skills are in high demand in the public sector with our site alone housing 326 postings for public sector procurement professionals.”
By Tony Collins
CSC’s chairman and CEO, Mike Laphen, is to retire within a year, reports ComputerworldUK.com.
His announcement comes at a time when the company faces some of the toughest challenges in its history with a US SEC regulatory investigation, an accounting controversy and a legal challenge over its statements in relation to its work on the NPfIT.
Anthony Miller, chairman of analysts TechMarket View, said CSC has undergone several “meaning of life reviews” as contract margins have been squeezed.
CSC has yet to sign a new agreement with the Department of Health over the future of Lorenzo and its NPfIT work. CSC’s share price today is a little above its five-year low.
Posted in Campaign4Change, change management, Government IT, NHS, npfit, public sector, public services, Uncategorized
Tagged Cabinet Office, NHS, npfit, outsourcing, public sector
By David Bicknell
It’s a couple of weeks since Steve Jobs left us. Many tributes have been paid. With sustainability in mind, I liked this blog post from Andrew Winston entitled ‘What Sustainability should learn from Steve Jobs.’
It’s not so much about Apple and sustainability. But it’s about Steve Jobs’ eye for innovation and one important lesson that sustainability-minded leaders can learn from Jobs’ legacy: you should lead your customers and show them a better way.
Winston, who writes regularly for the Harvard Business Review, suggests that most large companies today are “fast followers” – with ‘fiscal and strategic conservatism breeding a culture where execs prefer to wait and talk to customers before doing anything drastic. Of course customer (and other stakeholder) perspectives are critical. But as with tablet computers, when it comes to sustainability, often the customers don’t really know what they need.
“Companies often gather data on what their business customers think a sustainable product should be, and the survey might show that including recycled material is important, even if that’s a tiny part of the real footprint story. Nobody knows the value chain of your product and service as well as you do (or if someone else does, get them in the room pronto). So figure out where the impacts really lie and what you can do to reduce your customer’s footprint in ways they hadn’t considered. This might require asking heretical questions about whether the product should even exist in its current form or should be converted into more of a service.”
Winston believes the next generation’s Steve Jobs is likely to focus on sustainability since that’s where the largest challenges and business opportunities lie.
I like Winston’s thinking on “fast followers.” It’s far easier to be a follower than to take a lead, get out there, take a risk and make a market. That’s fine, as long as second place is somewhere, and not nowhere.
As well as sustainability and business leaders, maybe there’s also a lesson here for those who aspire to create public sector mutuals: to take a lead and show that there’s a better way.
By David Bicknell
This Thursday, 20th October, Local Government Law.tv is hosting a webinar on procurement and contracts issues arising out of the government’s encouragement of the formation of staff mutuals by public sector employees to take over the running of services from their employers.
The course will cover the following:
• Outline Government policy towards transfer to mutuals
• Explain the provisions of the Community Right to Challenge under the Localism Bill
• Outline issues which may arise under Public Contract Regulations
• Consider the ability of such a body to discharge a statutory function
• Look at possible contractual issues to be considered
• Examine potential Governance issues which may arise
By David Bicknell
With much discussion about how public service mutuals and social enterprises can truly compete with the private sector, this article from the Guardian’s Public Leaders Network argues that perhaps the way forward is for spin-outs and the private sector to work together in joint ventures.
It suggests that there are attractions in the partnership model, though there could also be problems as the public service ethos attempts to find a ‘mutual’ agenda with the commercial side.
We’re very much into conference season with a number of up and coming events competing for attention.
These include conferences on social enterprise organised by The Guardian on 8th November; on co-operation between IT and the business, collaboration and IT asset management organised by FAST at Twickenham on 21st November; and one by Capita on Public Service Mutuals on 7th December.
The Guardian’s one day event discusses how social enterprises are providing public sector services as well as the obstacles and practical solutions to the challenges the sector faces.” Speakers include Nick Hurd, minister for civil society at the Cabinet Office and Nick O’Donohue, chief executive of Big Society Capital.
FAST’s event, ‘Lessons from the Touchline’ has two streams: ‘finance and business’ and ‘technology and soft skills.’ Speakers include Olympic Gold Medal winner Ben Hunt-Davis, Kirstin Furber, HR Director for BBC Worldwide, Doug Clark, Head of Cloud Computing at IBM, Internet entrepreneur and Internet visionary Frank Joshi speaking on the importance of relationships and collaborative technology, and Chris Rawson, former CIO and Managing Director of Exvine.
Speakers at the Capita event include Mutuals Taskforce chair Julian Le Grand; Carole Leslie, Director of Policy, Employee Ownership Association; and Councillor Steve Reed, Leader, Lambeth Council.
By Tony Collins
Last month the Department of Health briefed the Daily Mail on plans to dismantle the National Programme for IT. The result was a front page lead article in the Mail, under the headline:
£12bn NHS computer system is scrapped… and it’s all YOUR money that Labour poured down the drain.
The article said:
“The Coalition will today announce it is putting a halt to years of scandalous waste of taxpayers’ money on a system that never worked. It will cut its losses and ‘urgently’ dismantle the National Programme for IT…”
Now the DH has briefed the Telegraph on the success of Summary Care Records, the national database run by BT under its NPfIT Spine contract.
So the Telegraph has given good coverage to the summary care records scheme.
By its selective briefings the DH has achieved prominent coverage in the national press for dismantling a failing £12bn NHS IT programme, and for modernising the NHS by successfully creating summary care records (under an IT programme that is being dismantled).
The DH’s officials know that the national press will usually give priority to off-the-record briefings by representatives of departments, especially if the briefing is in advance of the issuing of a press release. The Telegraph’s article was in advance of the DH’s publication of this press release.
Prominent in the Telegraph’s coverage was Simon Burns, the NPfIT minister, who in May 2011 spoke on BBC R4’s Today programme of the “fantastic” NPfIT systems [which are based on Cerner Millennium] at the Royal Free Hampstead NHS Trust.
Last week in his praise of summary care records in the Telegraph Burns quoted various medical organisations as supporting the scheme. Taken together the Telegraph articles depict the Summary Care Records scheme as a success – an important part of patient care and treatment. Said Burns :
“Patient charities have seized on the Summary Care Record; a new type of national, electronic record containing key medical information, as a way of making sure the NHS knows what it needs to about their condition.
“Some of these groups have told us how this can sometimes be a real struggle. Asthma patients being asked to repeat their medical history when they are struggling to breathe. The patient with lung disease carrying around a wash bag with ‘Please make sure I take this medication’ written on it when they are admitted to hospital. Or even the terminally ill patient who ends up dying in hospital because their wish to die at home wasn’t shared with an out–of–hours doctor.
“Patient groups are recognising that one of the easiest and most effective ways of giving these patients a stronger voice is to use the record to tell the NHS the most crucial information about their condition.
“The record contains information about medications, allergies and bad reactions to drugs and is mainly being used by outof–hours GPs to provide safer care where no other information is available…
“Patients can speak to their GP about adding extra information that they want the NHS to know about them in an emergency to their record. The Muscular Dystrophy Campaign has urged their patients to do just this as the first group to recognise the potential of the Summary Care Record. Mencap, AsthmaUK, DiabetesUKand the British Lung Foundation are also raising awareness among patients about how the Summary Care Record can be used to improve and personalise the care they receive.
“Some seriously ill patients have added information about their end of life wishes to their record, helping to ensure that their wishes, typically to die at home, are respected.
“This is because information about their wishes can be shared with everyone, including, most critically, outof–hours doctors and paramedics, involved in their care.
“Some patients have voluntarily added ‘do not resuscitate’ requests to their records, which would be cross–checked against other sources of information at the point of care. Families and carers report that this has saved them and their loved ones much needless distress…”
The Telegraph noted that about 8.8 million people – a fifth of the total number of patients in England – have summary care electronic records. All 33.5 million NHS patients in England are being offered the opportunity of having the service, said the newspaper which added that only a “few” people have opted out. [About 1.2% have opted out, which is about double the rate of opt-outs in the early stages of the SCR programme.]
Comment:
When he meets his Parliamentary colleagues Simon Burns does not like to hear criticism of the NPfIT. He is earning a reputation as the NPfIT’s most senior press officer, which may seem odd given that the programme is supposedly being dismantled.
But Burns’ enthusiasm for the NPfIT is not odd. He is reflecting the views of his officials, as have all Labour NPfIT ministers: Caroline Flint, Ben Bradshaw and Mike O’Brien were in the line of Labour NPfIT ministers who gave similar speeches in praise of the national programme.
That Burns is following suit raises the question of why he is drawing a minister’s salary when he is being simply the public face of officialdom, not an independent voice, not a sceptical challenge for the department.
Burns and his Labour predecessors make the mistake of praising an NPfIT project because it is a good idea in principle. Their statements ignore how the scheme is working in practice.
The NPfIT’s projects are based on good ideas: it is a good idea having an accurate, regularly-updated electronic health record that any clinician treating you can view. But the evidence so far is that the SCR has inaccuracies and important omissions. Researchers from UCL found that the SCR could not be relied on by clinicians as a single source of truth; and it was unclear who was responsible or accountable for errors and omissions, or keeping the records up to date .
Should an impractical scheme be justified on the basis that it would be a good thing if it worked?
The organisations Burns cites as supporting the summary care record scheme are actually supporting the underlying reasons for the scheme. They are neutral or silent, and perhaps unaware, of how the scheme is working, and not working, in practice.
That has always been the way. The NPfIT has been repeatedly justified on the basis of what it could do. Since they launched it in 2002, ministers and officials at the DH and NHS Connecting for Health have spoken about the programme’s benefits in the future tense. The SCR “will” be able to …
Hence, six years into the SCR, the headline of the DH’s latest press release on the scheme is still in the future tense:
Summary Care Record to benefit millions of patients with long term conditions, say patient groups
Burns says in the press release that the SCR has the “potential” to transform the experience of healthcare for millions of patients with long term conditions and for their families and carers.
Caroline Stevens, Interim Chief Operating Officer at the British Lung Foundation says in the same press release that the SCR “will” bring many benefits for patients.
And Nic Bungay, Director of Campaigns, Care and Support at the Muscular Dystrophy Campaign says in the press release that his organisation sees the great “potential” for Summary Care Records…”
Summary Care Records – the underlying problems
Shouldn’t the SCR, hundreds of millions of pounds having been spent, be transforming healthcare now? The evidence so far is that the SCR scheme is of limited use and might have problems that run too deep to overcome.
Trisha Greenhalgh and a team of researchers at UCL carried out an in-depth study of the SCR with funding from NHS Connecting for Health though CfH did not always extend the hand of friendship to the team.
Greenhalgh showed a conference of Graphnet healthcare users at Bletchley Park code-breaking centre last year how the SCR scheme was entangled in a web of political, clinical, technical, commercial and personal considerations.
Quite how political the scheme had become and how defensive officials at the DH had been over Greenhalgh’s study can be seen in her presentation to Graphnet users which included her comment that:
“All stakeholders [in the UCL report] except Connecting for Health wrote and congratulated us on the final report.”
CfH had sent Greenhalgh 94 pages of queries on her team’s draft report, to which they replied with 100 pages of point-by-point answers. The final report, “The Devil’s in the Detail“, was accepted by peer review – though it later transpired, as a result of UCL investigations, that one of the anonymous peer reviewers was in fact working for Connecting for Health.
These were some of the Greenhalgh team’s findings:
– There was low take-up of the SCR by hospital clinicians for various reasons: the database was not always available for technical reasons, such as a loss of N3 broadband connection; and clinicians did not always have a smartcard, were worried about triggering an alert on the system, were not motivated to use it, or might have been unable to find a patient on the “spine”. The SCR was used more widely by out-of-hours doctors and walk-in centres.
– GP practices had systems that were never likely to be compliant with the Summary Care Record central system.
– The SCR helped when a record existed and the patient had trouble communicating.
– The SCR helped when a record existed and the patient was unable to say what multiple medications they were using.
– There were tensions between setting a high standard for GPs to upload records or lowering standards of data quality to encourage more GP practices to join the scheme.
– Front-line staff didn’t like asking patients for consent to view the SCR at the point of care. This consent model was unworkable, inappropriate or stressful.
– There was no direct evidence of safer care but the SCR may reduce some rare medication errors.
– There was no clear evidence that consultations were quicker.
– Costly changes to supplier contracts were needed to take in requirements that were not fully appreciated at the outset of the programme.
– The scheme was far more complex than had been debated in public. Its success depended on radical changes to systems, protocols, budget allocations, organisational culture and ways of working. And these could not be simply standardised because nearly every health site was different.
So what’s the answer?
The SCR is an excellent idea in principle. Every out-of-hours doctor should know each patient’s most recent medical history, current medications and any adverse drug reactions.
But this could be provided locally – by local schemes that have local buy-in and for which there is accountability and responsibility locally. It can be argued that the Summary Care Record, as a national database, was never going to work. Who is responsible for the mistakes in records? Who cares if it is never widely used? Who cares if records are regularly updated or not? Why should GPs care about a national database? They care about their own systems.
It appears therefore that the SCR has benefited, in the main, the central bureaucracy and its largest IT supplier BT. The SCR national database has kept power, influence and spending control at the centre, emasculating to some extent the control of GPs over their patient records.
The central bureaucracy continues to justify the scheme with statistics on how many records have been created without mentioning how little the records are looked at, how little the information is trusted, and how pervasive are the errors and omissions.
BT and DH officials will be delighted to read Simon Burns’ commentary in the Telegraph on the SCR. But isn’t it time IT-based schemes were unshackled from politics? DH press releases on the success of local IT schemes would be few and far between. But why should £235m – the last estimated cost of the SCR – be spent so that ministers can make speeches and be quoted in press releases?
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Campaign4Change 