Category Archives: risk

Companies nervous over HMRC customs IT deadline?

By Tony Collins

This Computer Weekly article in 1994 was about the much-delayed customs system CHIEF. Will its CDS replacement that’s being built for the post-Brexit customs regime also be delayed by years?

The Financial Times  reported this week that UK companies are nervous over a deadline next year for the introduction of a new customs system three months before Brexit.

HMRC’s existing customs system CHIEF (Customs Handling of Import Export Freight) copes well with about 100 million transactions a year. It’s expected a £157m replacement system using software from IBM and European Dynamics will have to handle about 255 million transactions and with many more complexities and interdependencies than the existing system.

If the new system fails post-Brexit and CHIEF cannot be adapted to cope, it could be disastrous for companies that import and export freight. A post-Brexit failure could also have a serious impact on the UK economy and the collection of billions of pounds in VAT, according to the National Audit Office.

The FT quoted me on Monday as calling for an independent review of the new customs system by an outside body.

I told the FT of my concern that officials will, at times, tell ministers what they want to hear. Only a fully independent review of the new customs system (as opposed to a comfortable internal review conducted by the Infrastructure and Projects Authority) would stand a chance of revealing whether the new customs system was likely to work on time and whether smaller and medium-sized companies handling freight had been adequately consulted and would be able to integrate the new system into their own technology.

The National Audit Office reported last year that HMRC has a well-established forum for engaging with some stakeholders but has

“significant gaps in its knowledge of important groups. In particular it needs to know more about the number and needs of the smaller and less established traders who might be affected by the customs changes for the first time”.

The National Audit Office said that the new system will need to cope with 180,000 new traders who will use the system for the first time after Brexit, in addition to the 141,000 traders who currently make customs declarations for trade outside the EU.

The introduction in 1994 of CHIEF was labelled a disaster at the time by some traders,  in part because it was designed and developed without their close involvement. CHIEF  was eventually accepted and is now much liked – though it’s 24 years old.

Involve end-users – or risk failure

Lack of involvement of prospective end-users is a common factor in government IT disasters. It happened on the Universal Credit IT programme, which turned out to be a failure in its early years, and on the £10bn National Programme for IT which was dismantled in 2010. Billions of pounds were wasted.

The FT quoted me as saying that the chances of the new customs system CDS [Customs Declaration Service) doing all the things that traders need it to do from day one are almost nil.

The FT quotes one trader as saying,

“HMRC is introducing a massive new programme at what is already a critical time. It would be a complex undertaking at the best of times but proceeding with it at this very moment feels like a high stakes gamble.”

HMRC has been preparing to replace CHIEF with CDS since 2013. Its civil servants say that the use of the SAFe agile methodology when combined with the skills and capabilities of its staff mean that programme risks and issues will be effectively managed.

But, like other government departments, HMRC does not publish its reports on the state of major IT-related projects and programmes. One risk, then,  is that ministers may not know the full truth until a disaster is imminent.

In the meantime ministerial confidence is likely to remain high.

Learning from past mistakes?

HMRC has a mixed record on learning from past failures of big government IT-based projects.  Taking some of the lessons from “Crash”, these are the best  things about the new customs project:

  • It’s designed to be simple to use – a rarity for a government IT system. Last year HMRC reduced the number of system features it plans to implement from 968 to 519. It considered that there were many duplicated and redundant features listed in its programme backlog.
  • The SAFe agile methodology HMRC is using is supposed to help organisations implement large-scale, business-critical systems in the shortest possible time.
  • HMRC is directly managing the technical development and is carrying out this work using its own resources, independent contractors and the resources of its government technology company, RCDTS. Last year it had about 200 people working on the IT programme.

These are the potentially bad things:

  • It’s not HMRC’s fault but it doesn’t know how much work is going to be involved because talks over the post-Brexit customs regime are ongoing.
  • It’s accepted in IT project management that a big bang go-live is not a good idea. The new Customs Declaration Service is due to go live in January 2019, three months before Britain is due to leave the EU. CHIEF system was commissioned from BT in 1989 and its scheduled go-live was delayed by two years. Could CDS be delayed by two years as well? In pre-live trials CHIEF rejected hundreds of test customs declarations for no obvious reason.
  • The new service will use, at its core,  commercially available software (from IBM) to manage customs declarations and software (from European Dynamics) to calculate tariffs. The use of software packages is a good idea – but not if they need large-scale modification.  Tampering with proven packages is a much riskier strategy than developing software from scratch.  The new system will need to integrate with other HMRC systems and a range of third-party systems. It will need to provide information to 85 systems across 26 other government bodies.
  • If a software package works well in another country it almost certainly won’t work when deployed by the UK government. Core software in the new system uses a customs declaration management component that works well in the Netherlands but is not integrated with other systems, as it would be required to do in HMRC, and handles only 14 million declarations each year.
  • The IBM component has been tested in laboratory conditions to cope with 180 million declarations, but the UK may need to process 255 million declarations each year.
  • Testing software in laboratory conditions will give you little idea of whether it will work in the field. This was one of the costly lessons from the NHS IT programme NPfIT.
  • The National Audit Office said in a report last year that HMRC’s contingency plans were under-developed and that there were “significant gaps in staff resources”.

Comment

HMRC has an impressive new CIO Jackie Wright but whether she will have the freedom to work within Whitehall’s restrictive practices is uncertain. It seems that the more talented the CIO the more they’re made to feel like outsiders by senior civil servants who haven’t worked in the private sector.  It’s a pity that some of the best CIOs don’t usually last long in Whitehall.

Meanwhile HMRC’s top civil servants and IT specialists seem to be confident that CDS, the new customs system, will work on time.  Their confidence is not reassuring.  Ministers and civil servants publicly and repeatedly expressed confidence that Universal Credit would be fully rolled by the end of 2017. Now it’s running five years late.  The NHS IT programme NPfIT was to have been rolled out by 2015.  By 2010 it was dismantled as hopeless.

With some important exceptions, Whitehall’s track record on IT-related projects is poor – and that’s when what is needed is known. Brexit is still being negotiated. How can anyone build a new bridge when you’re not sure how long it’ll need to be and what the many and varied external stresses will be?

If the new or existing systems cannot cope with customs declarations after Brexit it may not be the fault of HMRC. But that’ll be little comfort for the hundreds of thousands of traders whose businesses rely, in part, on a speedy and efficient customs service.

FT article – UK companies nervous over deadline for new Customs system

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HMRC seeks smaller IT contracts – a big risk, but worth taking?

By Tony Collins

Public Accounts Committee MPs today criticise HM Revenue and Customs for not preparing well or quickly enough for a planned switch from one main long-term IT contract to a new model of many short-duration contracts with multiple suppliers.

It’s a big and risky change in IT strategy for HMRC that could put the safe collection of the nation’s taxes at risk, say the MPs in a report “Managing and replacing the Aspire contract”.

But the Committee doesn’t much consider the benefits of switching from one large contract to smaller ones, potentially with SMEs.

Is the risk of breaking up the huge “Aspire” contract with Capgemini, and its subcontractors Fujitsu and Accenture, worth taking?

Suppliers “outmanoeuvre” HMRC

The PAC’s report makes some important points. It says that HMRC has been “outmanoeuvred by suppliers at key moments in the Aspire contract, hindering its ability to get long term value for money”.

The costs of the Aspire deal have soared, in part because of extra work. Before it merged with Customs and Excise, Inland Revenue spent about £200m a year on its IT outsourcing contract with EDS, now HP.  Customs and Excise’s contract with Fujitsu cost about £100m a year.

After the Revenue and Customs merged, and a new deal was signed with Capgemini, the money spent on IT services soared to about £800m a year – arguably out of control.

HM Revenue and Customs spent £7.9bn on the Aspire contract from July 2004 to March 2014, giving a combined profit to Capgemini and Fujitsu of £1.2bn, equal to 16% of the contract value paid to these suppliers.

HMRC considers the contract to have been expensive,  and pressure to find cost savings in the short-term led it to trade away important value for money controls, says the PAC report.

“For example, in a series of disastrous concessions, HMRC  conceded its rights to withdraw activities from Aspire, to benchmark the contract prices against the market to determine whether they were reasonable,” says the report.

“It also gave up  its right to share in any excess profits. In 2007, HMRC negotiated a three-year  extension to the Aspire contract just three years after the contract was let, extending the end of the contract from 2014 to 2017.

“The Department has still not renegotiated the terms of the contract in line with a memorandum of agreement it signed in 2012 designed to separate Capgemini’s role in service provision from its role as service integrator and introduce more competition.”

Big or small IT suppliers?

The Aspire contract between HMRC and Capgemini is the government’s largest
technology contract.  It accounts for for 84% of HMRC’s total spend on ICT.

Today’s report says that Aspire has delivered certainty and continuity over the past decade but HMRC now plans a change in IT strategy in line with the Cabinet Office’s plan to break up monopolistic contracts.

In 2010, the Cabinet Office announced that long-term contracts with one main supplier do not deliver optimal levels of innovation, value for money or pace of change.

In 2014, it announced new rules to limit the value, length and structure of ICT contracts. No contract should exceed £100m and no single supplier should provide both services and systems integration to the same area of government. Existing contracts should not be extended without a compelling case.

The Cabinet Office says that smaller contracts should allow many more companies to bid, including SMEs, and provide an increase in competition.

HMRC agrees. So it doesn’t plan to appoint a single main supplier when Aspire expires in 2017.  But PAC members are worried that the switch to smaller contracts could jeopardize the collection of taxes. Says the PAC report:

“HMRC has made little progress in defining its needs and has still not presented a business case to government. Once funding is agreed, it will have only two years to recruit the skills and procure the services it will need.

“Moreover, HMRC’s record in managing the Aspire contract and other IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.

“HMRC also demonstrates little appreciation of the scale of the challenge it faces or the substantial risks to tax collection if the transition fails. Failure to collect taxes efficiently would create havoc with the public finances.”

The PAC recommends that HMRC “move quickly to develop a coherent business case, setting out the commercial and operational model it intends to put in place to replace the Aspire contract. This should include a robust transition plan and budget”.

Richard Bacon, a long-standing member of the PAC, said HMRC has yet to produce a detailed business case for the change in IT strategy.

“HMRC faces an enormous challenge in moving to a new contracting model by 2017, with many short-duration contracts with multiple suppliers, and appears complacent given the scale of the transformation required.

“Moreover, HMRC’s record in managing IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.”

Comment

The PAC has a duty to express its concerns. HMRC needs stable and proven systems to do its main job of collecting taxes. A switch from a single, safe contract with a big supplier to multiple, smaller contracts could be destablizing.

But it needn’t be. The Department for Work and Pensions is making huge IT – and organisational – changes in bringing in Universal Credit. That is a high-risk programme. And at one time it was badly managed, according to the National Audit Office. But the gradual introduction of new systems hasn’t hit the stability of payments to existing DWP claimants.

This is, perhaps,  because the DWP is doing 4 things at once: running existing benefit systems, building something entirely new (the so-called digital service), introducing hybrid legacy/new systems to pay some new claimants Universal Credit, and is asking its staff to do some things manually to calculate UC payments. Expensive – but safe.

The DWP’s mostly vulnerable claimants should continue to be paid whatever happens with the new IT. So the risks of major change within the department are financial. The DWP has written off tens of millions of pounds on the UC programme so far, says the NAO. Many more tens of millions may yet be wasted.

But many regard the risks as worth taking to simplify the benefits system. It could work out a lot cheaper in the end.

At HMRC the potential benefits of a major change in IT strategy are enormous too. Billions more than expected has already been spent on having one main supplier tied into the long-term Aspire contract (13 years).  Isn’t it worth spending a few tens of millions extra running parallel processes and systems during the transition from Aspire to smaller multiple contracts?

It could end up costing much less in the end. And running parallel new and existing systems and processes should ensure the safe collection of taxes.

If government departments are not prepared to take risks they’ll never change – and monolithic contracts and out-of-control costs will continue. Is there anything more risky than for HMRC to stay as it is, locked into Aspire, or a similar long-term commitment?

HMRC not ready to replace £10bn Aspire contract, MPs warn – Computerworld

Taxpayers face havoc from HMRC computer changes – Telegraph

BT gets termination notice on £300m outsourcing contract

By Tony Collins

Sandwell Council has issued BT with a 30-day termination notice on a 15-year £300m outsourcing contract that has yet to reach its half-way point.

The metropolitan borough council says there are various defaults BT needs to resolve. Based at Oldbury, West Midlands, about five miles from Birmingham, Sandwell has been an outsourcing reference site for BT.

The company quoted Sandwell Council in its presentations that formed part of the bidding for Cornwall Council’s planned outsourcing work.

The “guaranteed” savings in Sandwell’s contract with BT appear to be based on a level of spending the council is not maintaining. One point of contention appears to be the council’s wish for BT to reduce its charges to the council in line with the authority’s lower levels of activity.

In June 2012 Sandwell submitted a change request that asked BT to recalculate the annual service charge because the service volumes delivered through the contract had reduced significantly.

The council wanted the recalculation to be based on a reduction in the workforce from around 7,400 in 2007 when the contract with BT was signed to 4,688 in mid 2012.

Government Computing quotes a council document on the dispute as saying

“A reduction in the workforce should have a corresponding reduction in volumes such as the size of the ICT estate, the payroll, HR support and budget holders. There have been volume reductions in invoices, the number of contracts administered and calls to the contact centre for some services.”

Sandwell’s 30-day termination notice to BT was issued on 16 July so it will expire around that time next month. The council says it is prepared to take back staff.

Sandwell council leader, Councillor Darren Cooper, told Government Computing: “Cabinet has approved a recommendation to start the process of ending our contract with BT. That termination will take effect in 30 days’ time unless BT puts right various defaults we have asked them to resolve.

“If we have to, I am confident we will be able to bring the services BT currently supplies to us back to the council and run them in the most effective way in future.”

Guaranteed

In 2007 BT and its joint bidder, outsourcing provider Liberata, had set out to run the council’s back-office functions at what was announced as a “guaranteed” reduced cost over the lifetime of the contract.

The deal was aimed at cutting costs and improving Sandwell’s IT infrastructure, HR, finance, payroll and customer services functions.

There was some success. The BT-led ‘Transform Sandwell’ team won the UK’s Best Customer Services Management Team at the National Customer Services Awards in December 2010.

BT built a 75,000 square foot office block for Transform Sandwell. It accommodated 400 employees of Transform Sandwell and a 300-strong customer service team working for BT.

Massive mistake?

Independent socialist councillor Mick Davies said “Someone somewhere has obviously made a massive mistake and the taxpayers of Sandwell will have to foot the bill… The writing seemed to be on the wall when BT’s partner in the project, Liberata, was dumped unceremoniously a couple of years ago.”

Sandwell Council’s deputy leader and cabinet member for strategic resources Councillor Steve Eling said: “In view of the current climate and public expenditure reductions, the council is engaging with its partner to determine services that are needed over the medium term and to reduce the overall costs in light of public spending reductions.”

Technologies used in the Transform Sandwell contact centre have included Verint Impact 360, Siebel CRM and Nortel Contact Centre 6.0.

A BT spokesman told the Halesowen News

“BT continually looks at ways to improve the service it provides to its customers. The original contract was signed in 2007 and as is normal with long-term partnerships BT constantly looks at ways to service the changing needs of both the council and citizens of Sandwell.”

BT told Government Computing it “has throughout – and remains – fully committed to delivering the commitments it made through the Transform Sandwell Partnership.”

The European Services Strategy Unit which has carried out detailed research on outsourcing contracts lists some of the terminated and reduced local authority strategic partnership contracts.

Sandwell has 72 councillors, 67 of which represent Labour.

Comment

At some point in a 10 or 15-year outsourcing contract a major dispute seems almost inevitable because a supplier’s business objectives will rarely change when the council’s priorities change.

BT’s deal with Sandwell was signed in 2007 – as was Southwest One’s deal with IBM – at a pre-austerity period.

Now that councils have been making, and continue to make, radical savings, they want the flexibility to cut their outsourcing costs too. But it may not be in the supplier’s interests to take profits that are much lower than expected.

No such thing as a free lunch

How can the business interests of outsourcing providers and their council clients ever completely align and move in time like synchronised swimmers?

The growing number of disputes in local authority outsourcing deals suggests that councils are not properly weighing up the risks when they sign deals.

Perhaps small groups of ruling councillors – such as those at Barnet – are too easily persuaded by the “guaranteed” savings on offer at the start of a contract.

There is no such thing as a free lunch. But try telling that to council Cabinet councillors who have cartoon-character pound signs in their eyes in the Disney period before a big outsourcing contract is well underway.

Let’s hope BT and Sandwell kiss and make up. It looks like the lawyers are already in the middle of them, though; and at whose expense?

Sandwell and BT consider end of strategic partnership – Government Computing

Somerset’s dispute with IBM is “escalating”.

By Tony Collins

Somerset County Council says in a paper due to be discussed next week that its dispute with the IBM-led Southwest One joint venture is “escalating” and that there is a need to “restore a deteriorating relationship with a supplier”.

The poor relationship is in contrast to the mutually content position in 2008, one year after Somerset signed its unique, ground-breaking deal with IBM. At that time Somerset refused a request by Unison for a copy of the business case for Southwest One saying, “We can record, however, that all our cost and performance criteria within the business case were met or exceeded”.

Now Southwest One and the council are in a legal dispute on several fronts. The council’s paper for its cabinet meeting next week says:

“The history of Southwest One [SWo] poor performance is continuing; during 2012 the Client Team have been holding SWo to account; resulting in the serving of 8 contractual notices to SWo.

“Over the past 3 weeks SWo have commenced disputes on several other matters, issuing further financial claims and disputing Somerset County Council’s warning notices.

With a number of escalating disputes, we need to take action to:

• Conduct proceedings

• Respond to these disputes and restore a deteriorating relationship with a strategic supplier.

• Seek to improve value for money and service performance and ensure it is fit for purpose.

• Continue to assertively manage Southwest One to ensure it meets its contractual obligations.

• Maintain Partner relationships

Somerset’s officers recommend to the cabinet that:

“The Leader of the Council authorises the Chief Executive, Deputy County Solicitor, Director of Finance & Performance and other relevant SCC officers to serve and proceed with the defence and any counterclaim, to carry out all subsequent steps in the litigation process and any engagement in connection with the disputes.”

The paper  adds:

“It is also recommended that the Leader of the Council and the Chairman of Scrutiny Committee agree urgency in respect of the above recommendation…

“The Deputy County Solicitor is authorised to institute defend or settle any legal proceedings and to lodge an appeal. This report seeks authorisation to be given to SCC officers to serve and proceed with the Defence and any Counterclaim, to carry out all subsequent steps in the litigation process and any engagement and commit to financial considerations (such as legal costs) in connection with the disputes…

“Due to the contractually binding timetable for resolving disputes SCC officers need a mandate. Risks will be reported and managed through SCC’s governance arrangements.”

A budget exists to support the council’s approach.

The report says that the council is in disagreement with Southwest One over the quality of the procurement service and what payments it is entitled to as a result of savings made by getting better deals through the joint venture. “We had hoped we would be able to settle this through negotiations, but unfortunately that has not been the case.”

Comment:

In mid-2007, about two months before Somerset signed its deal to set up Southwest One with IBM, an external consultancy report on the proposals by consultants “Maana” praised the “immense amount of research and thinking” that went into the IBM bid.

It said that the “whole of the procurement process, from market investigation to preferred bidder selection has been well planned and executed”. Maana added:

“The evaluation process has been more extensive, well thought through and executed than any we have seen before.”

And look what happened to the best laid plans. Many saw at the time that the joint venture was too complicated and put too much responsibility IBM’s way, but the council pushed aside their concerns.

Who now is responsible for the failure of Southwest One? Nobody.

Thank you to Dave Orr whose information made this article possible.

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

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?

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

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

Universal Credit: who’ll be responsible if it goes wrong?

By Tony Collins

When asked whether Universal Credit will work, be on budget and on time, Ian Watmore, Permanent Secretary, Cabinet Office, gave a deft reply. He told Conservative MP Charlie Elphicke on 13 March 2012:

“From where I sit today, I think all the signs are very positive. I am never going to predict that something is going to be on time and on budget until it is.”

If the plans do not fall into place who, if anyone, will be responsible? In theory it’ll be Iain Duncan Smith, the Secretary of State for Work and Pensions. But as Watmore told the Public Administration Committee, there are several other organisations involved. Although the DWP and HMRC are building the IT systems, the success of Universal Credit also relies on local authorities, which are overseen by the Department for Communities and Local Government.

There are also the Cabinet Office and the Treasury whose officials seek to “ensure that what is going on is appropriate” said Watmore.

If Univeral Credit goes awry all the departments may be able to blame the private sector: the employers that must pass PAYE information to HMRC so that the Revenue’s Real-Time Information element of Universal Credit can work.

David Gauke is the minister responsible for HMRC so would he take some of the blame if Real-Time Information didn’t work, or was not on budget, or was delayed?

Or would the main IT suppliers Accenture and IBM take any of the blame? Highly unlikely, whatever the circumstances.

There is also a dependency on the banks.

But nothing is wrong … is it?

All those putatively responsible for Universal Credit continue to say that all is going well.

Duncan Smith told the House of Commons on 5 March 2012:

“We are making good progress towards the delivery of universal credit in 2013, and I have fortnightly progress meetings with officials and weekly reports from my office. I also chair the universal credit senior sponsorship group, which brings together all Government Departments and agencies that are relevant to the delivery of universal credit.

“Design work is well under way and is being continually tested with staff and claimants, and the development of the necessary IT systems will continue in parallel.”

He said that universal credit will reduce complexity by putting together all the benefits that are relevant to people going back to work – though benefit systems that are not relevant to the coalition’s “Work programme” will not be included in the DWP’s Universal Credit IT consolidation.

To reduce risks Universal Credit will be phased in over four years from October 2013, each stage bringing in a different group of claimants.

But …

Campaign4Change has asked the DWP to publish its various reports on the progress of Universal Credit and it has refused, even under the Freedom of Information Act. It seems the DWP’s secretiveness is partly because all of the risks related to Universal Credit have not been mitigated. We will report more on this in the next few days.

Meanwhile to try and answer the question in our headline: who’ll be responsible if Universal Credit goes wrong? The answer is: the private sector probably. Or rather nobody in the public sector.

Can hundreds of millions be spent on Universal Credit in an agile way?

Universal Credit suppliers Accenture and IBM look to India for skills.

Is Universal Credit a brilliant idea that’s bound to fail?

Universal Credit latest

Universal Credit and the banks.

NPfIT Cerner go-live at Bristol – Trust issues apology

By Tony Collins

North Bristol NHS Trust has issued an apology on its website after problems with the implementation of a Cerner Millennium patient record system under the National Programme for IT.

Some Bristol consultants had regarded the software as installed at the Trust as “potentially dangerous”.

The Trust went live on 9 December 2011 with a Cerner patient administration system at Frenchay Hospital and Southmead Hospital that replaced two systems. But the Trust has had to revert to paper in some areas.

On its website the Trust says that its “65 wards and maternity department are all using the new system successfully”.

It accepts that it has “experienced significant problems” in outpatient clinics. It says “These problems have been caused by the incorrect set up of clinic lists, which meant staff could not access the system and errors in the data migration of existing appointments.

“As a result, some patients may have received the wrong appointment dates, no confirmation of appointment or letters being sent out in error.  Again, processes are in place to minimise further disruption to out-patient appointments and ensure patient safety.”

TheTrust says it has engineers and technicians re-building the clinics’ system or they are “in clinics correcting problems as they happen, providing solutions and resolving issues”.

The intention is that 90% of areas will be using Cerner by the end of today [31 January]. “Our aim is that by early February all outpatient clinics will be using Cerner. All other outpatient appointments are being managed via other systems and paper processes.”

The Trust says it is contacting patients by phone or letter to advise them of their current appointment slot. “We have ensured that any urgent referrals including cancer two week waits have been prioritised to ensure they are unaffected.”

It adds “During the process of correcting the issues with outpatient clinics and to support GPs and their patients we have written to them to advise them that all patients who have been referred to us either through Choose & Book, fax or Fast Track are within our appointments system.

“We have advised GPs of a dedicated telephone number, fax number and email address for GPs or their patients to contact for further advice. To provide further reassurance to patients and GPs we will keep the helpline service running until the end of February.”

Apology

The Trust says on its website:

“We apologise and would like to thank the public for their patience and our staff for their hard work and dedication in ensuring that patient safety is not compromised.

“These issues have caused disruption and frustration for our patients and our staff and we recognise that this has not delivered the level of service that we expect, and the public expect, from us.

“It has also placed extra workload on our staff, who nevertheless, remain dedicated to ensuring the best possible patient care during this period, and managing the issues that the Trust faces.

“Our Information Management & Technology Team, supported by our suppliers BT and Cerner, have been working very hard to sort out these initial issues and we are already seeing improvements.

“We remain confident that once the new system is fully implemented, it will significantly improve services for our patients and better equip us to meet future challenges.”

Meanwhile the Bristol Evening Post reports that the Chief Executive of the hospital trust, Ruth Brunt, has called for an independent inquiry into the issues surrounding the implementation of the Cerner system.

She said people who have turned up to appointments and operations that have been cancelled or were not on the system would be compensated.  A hotline has also been set up so that people can check whether their appointments are in the system.

The Bristol Evening Post also reported that reception staff had walked out due to the pressure of dealing with patients who were unhappy to find their appointments not on the new system.

“It is horrendous – what used to take us five or six clicks is currently taking 24 and we cannot access the details,” a staff member said. “The notes have not been available when people turn up.

“We have all worked hard and I am sure if it was anywhere else we would have gone on strike. The people on the ground are struggling. It is really demoralising because we are doing our best. Girls on reception are dealing with queues of people and there has been an occasion where a receptionist has walked out because they were so stressed.

“When patients call up we want to be able to help them, but at the moment we don’t know where to look.”

The employee did not believe the trust’s claims that everything would be sorted out by 13 February.

Halt Cerner implementations says MP

Halt NPfIT Cerner deployments after patient safety problems at 5 hospitals, says MP

By Tony Collins

Conservative MP and member of the Public Accounts Committee Richard Bacon called today for a halt on deployments of the NPfIT Cerner Millennium system after patient safety problems at hospitals in Oxford and North Bristol.

Other hospital deployments underway include Royal Berkshire and Imperial College London.   The BBC has reported that patient-booking software at North Bristol was regarded by some consultants as ‘potentially dangerous’.

The software was installed at the Trust last month under the National Programme for IT [NPfIT].    According to a BBC Points West investigation, the implementation led to some patients missing their operations and, in other cases, the wrong patients being booked for operations.

One consultant told the BBC he had been put down to operate on patients from a completely different speciality.  Patients were also being booked for unlikely appointment times, such as five minutes past midnight, and patients were said to have turned up for phantom appointments on the New Year bank holiday.

Separately the Oxford Mail reported this week that Oxford University Hospitals NHS Trust, which includes Nuffield Orthopaedic, John Radcliffe, Churchill, and the Horton General hospitals, has difficulties booking in patients for treatment.  It deployed the Cerner Millennium software in December.

According to the Oxford Mail, some patients ringing in to book appointments waited up to an hour to have their calls answered and appointments were so delayed the Trust abandoned car parking charges for three days.

Patients reported problems that included ambulances queuing outside of A&E as staff struggled to book in patients.

Pensioner John Woodcock told the Oxford Mail that it took a week of calling the local contact centre to book an appointment for an important stomach examination.

The contact centre gives patients the option of leaving a message for staff to call back, or to join a phone queue. The 75-year-old said “I managed to get an appointment in the end by staying on the phone but it took half an hour almost.”

An Oxford University Hospitals spokesman was unable to say when the system would be able to function without delays but suggested it could be up to three months. Hospital officials blamed the disruption on deployment problems and training issues.

Bacon has long criticised the National Programme for locking the NHS into buying software that was unreliable, subject to serious delays and, even after contract renegotiations, unreasonably expensive.

He disclosed that the costs of a Cerner Millennium deployment at the North Bristol NHS Trust are about £29m over seven years. This is more than three times the reported £8.2m price of a similar system, bought outside the National Programme, at University Hospitals Bristol Foundation Trust.

Bacon said the lessons from major patient safety problems at the Royal Free Hampstead, Barts and The London and Milton Keynes General Hospital had not been learnt.

“We now have two of our leading hospitals brought to their knees by this system.  These deployments need to be stopped until we are sure that they can be managed safely.”

He added “Effective, affordable and robust IT systems are vital to the future of the NHS, but it is clear that the fiasco that is the National Programme cannot deliver them.”

One patient emailed the Oxford Mail to say that the gain will be worth the pain.

“… A word of congratulations to staff. I too had problems with booking an appointment a few days after launch, but sent an email to which I first received an answer in the form of a call-back to fix an appointment and then a personalised apology and explanation…

“Think about the time, effort and accuracy gains of an electronic records system, and not having all those sometimes thick files being ferried round the different departments; think too of the gains in patient confidentiality – now every time someone accceses your records, that will be logged.

“When things have bedded in properly, and I believe this will be sooner rather than later, if the committed and dedicated staff have anything to do with it …  we’ll soon come to be grateful, both for the increase in efficiency and the financial savings – which can then be used on frontline services…”

NPfIT Cerner go-live has “more problems than anticipated”

System still causing chaos – Oxford Mail

London trusts in chaos

 

NPfIT Cerner go-live at Bristol has “more problems than anticipated”

By Tony Collins

The BBC reports that there are “more problems than anticipated” with a patient-booking system at two Bristol hospitals run by North Bristol NHS Trust.

The trust describes the problems as “teething”.  Consultants say the problems are “potentially dangerous”.

Last month North Bristol went live with the Cerner Millennium system under an NPfIT contract with BT. The Trust says problems are due to software being used incorrectly. They have led to some patients missing their operations and the wrong patients being booked for operations, says the BBC.

Emails from executives at Frenchay and Southmead hospitals, seen by the BBC, said staff should be “vigilant” to check lists were “completely accurate”.

BBC Points West’s health correspondent Matthew Hill said emails sent by consultants to hospital bosses claimed operation lists printed by the system were “complete fiction” and “potentially dangerous”.

One consultant told the BBC he had been put down to operate on patients from a completely different speciality.

The trust said there had been “teething problems” and that there had been “more problems than anticipated”.

In an email to staff the trust said the change of system had been “a very big change” so there was “no surprise” there had been difficulties.

A trust spokesman said there were a series of problems around outpatients and the associated clinics and some of the data moved from old systems had not migrated as planned.

“We need to ensure that we rebuild and recreate the clinics to match what people expect them to be on the ground,” he said.

“In theatres we have had some issues but have absolutely ensured from the outset that clinical safety has been at the top and have ensured any risks and issues have been mitigated.”

Conservative MP Richard Bacon, a member of the Public Accounts Committee, has established through a Parliamentary question that the cost of the North Bristol Cerner implementation is much higher than for a non-NPfIT installation in the same city.

Health Minister Simon Burns told Bacon that the costs of a Cerner Millennium deployment at the North Bristol NHS Trust were £15.2m for deployment and an annual service charge of £2m.

This brought the total cost of the Cerner system over seven years to about £29m, which was more than three times the £8.2m price of a similar deployment outside of the NPfIT at University Hospitals Bristol Foundation Trust.

Comment

Several Cerner implementations under the NPfIT have gone awry but the problems have eventually been resolved. The question is whether patient care and treatment is affected in the meantime. The lack of openness over problems with patient care in the NHS mean that the answer will probably never be known, which underlines the need for better regulation of hospital IT implementations.

Does hospital IT need airline-style safety certification?