Category Archives: supplier relationships

Whitehall to auto-extend outsourcing deals using Brexit as excuse?

By Tony Collins

Type of government procurement spend 2014-2015. ICT is the top item.
Source: National Audit Office

Under a headline “UK outsourcing deals extended because of Brexit workload”, the Financial Times has reported that “hundreds of government contracts with the private sector that were due to expire are to be automatically extended because civil servants are too busy with Brexit to focus on new and better-value tenders”.

The FT says the decision to roll over the contracts could prove expensive for taxpayers because it limits competition and undermines government efforts to improve procurement.

A “procurement adviser to the government” whom the FT doesn’t name, said more than 250 contracts were either close to expiring or had already expired in 2016-17. The adviser told the FT,

“Brexit has pushed them down the list of priorities so there are lots of extensions and re-extensions of existing deals.”

The adviser added that this was the only way civil servants could prioritise the huge increase in Brexit-related work since the referendum.

Extensions

The FT provides no evidence of automatic contract extensions or the claim that deals will be extended because of the civil service’s Brexit workload.

There is evidence, however, that Whitehall officials tend to extend contracts beyond their original expiry date.

In a report published this year on the Cabinet Office’s Crown Commercial Service, the National Audit Office identified 22 framework contracts that were due to expire in 2016-17. Half of them (eleven) were extended beyond their original expiry date.

[The Crown Commercial Service was set up in 2014 to improve state procurement.]

The NAO also found that Whitehall departments – and the Crown Commercial Service – have been awarding contracts using expired framework deals, even though this contravenes public contracting regulations.

In 2015-16, 21 of the 39 frameworks that were due to expire were extended without competition or market testing, according to the NAO.

One example of an extended contract is a deal between Capita and the Department for Work and Pensions which started in 2010. Capita provides eligibility assessments for the personal independent payment allowance, which supports for people with long-term ill health or disability.

The five-year deal was extended by two years until July 2019.

Capita has also won a three-year extension to a contract with the Pensions Regulator and the BBC has extended a deal with Capita that was signed originally in 2002 to June 2022 – a total of at least 20 years.

Open competition?

The NAO has found that extending ICT contracts may not always be good for taxpayers. In the later years of their government contracts, suppliers tend to make higher margins (though not always).

There are also suggestions that civil servants will sometimes sign contract extensions when the performance of the supplier does not meet expected standards.

On ICT, the Cabinet Office asks central departments to complete a return every six months for each business process outsourcing and facilities management contract above £20m with strategic suppliers.

The survey asks whether the contract is being delivered on time, to scope, to budget, to the appropriate standards, and whether there have been any disputes.

In one study of government contracts with ICT suppliers, the NAO found that, of 259 returns from departments, 42 highlighted problems that included,

  • failure to achieve milestones
  • dissatisfaction with quality of outputs
  • errors and other issues with delivery
  • poor customer engagement and end user dissatisfaction and
  • failure to meet key performance indicators.

Comment

For taxpayers there is some good news.

A break-up of “Aspire”, the biggest IT outsourcing long-term deal of all, between HMRC and Capgemini (and to a lesser extent Fujitsu) – worth about £9bn – is going ahead this June. An HMRC spokesman says,

“HMRC is on track to complete the phased exit from Aspire, as planned, by June 2017.”

And according to Government Computing, Defra’s IT outsourcing contracts with IBM and Capgemini under a £1.6bn contract called “Unity” are due to expire in 2018 and there are no signs the deals will be extended.

But the Department for Work and Pensions’ huge IT outsourcing contracts with the same major suppliers are renewed routinely and not always with open competition. The DWP says on its website,

“DWP contracts are awarded by competition between potential suppliers, unless there are compelling reasons why competition cannot be used.”

The DWP doesn’t define “compelling”. Nor is it clear whether its auditors look at whether the DWP has put up a compelling case for not putting a large IT contract out to open competition.

In 2014 the Public Accounts Committee, after investigating major suppliers to government, concluded,

“Government is clearly failing to manage performance across the board, and to achieve the best for citizens out of the contracts into which they have entered.

“Government needs a far more professional and skilled approach to managing contracts and contractors, and contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs”.

Breaking up is hard to do

The break up of the huge Aspire IT outsourcing contract at HMRC is an exception, not the rule. The NAO has found that civil servants regard their major incumbent suppliers as safe and less risky than hiring a smaller company (that’s not steeped in Whitehall’s culture).

The NAO has also found that in some cases officials don’t know whether their suppliers are performing well or not. On many ICT contracts there is “open book” accounting, but not all departments have the staff or expertise to check regularly on whether their suppliers’ profits are excessive.

If Whitehall, with exceptions, is continuing to roll over contracts whether it’s legal to do so or not, what incentive exists to stick to the rules?

Brexit?

The FT story suggests Brexit is the reason hundreds of contracts are to be extended automatically. There’s probably truth in the automatic extension of some contracts – but it’s unlikely to be because of Brexit.

It’s unlikely that the civil servants involved in Brexit will be the same ones who are handling ICT contract extensions. That said, Brexit will inevitably put a higher workload on lawyers working for government.

If contracts are being extended automatically, it’s probably because that’s the way it has always been, at least within living memory.

While Sir Humphrey and his senior officials remain only nominally accountable to Parliament for how they spend taxpayers’ money, the easiest option of renewing or extending existing contracts will usually be seen as the best option.

It can be justified with “compelling” arguments such as a need to make an urgent decision in difficult circumstances, or the absence of alternative suppliers who have the necessary skills or the financial strength to accept the risks of failure.

Will anything change?

Until departments have to publish contemporaneously their intentions to award contracts without open competition or there is effective accountability within the civil service for major decisions, little is likely to change.

It hasn’t happened yet and there’s no reason to believe it will.  Many politicians including prime ministers have tried to reform the civil service and they haven’t ruffled a single carpet in the corridors of Whitehall.

As Antony Jay, co-writer of Yes Minister,  said in January 2013,

“The central anomaly is that civil servants have years of experience, jobs for life, and a budget of hundreds of billions of pounds, while ministers have, usually, little or no experience of the job and could be kicked out tomorrow.

” After researching and writing 44 episodes and a play, I find government much easier to understand by looking at ministers as public relations consultants to the real government – which is, of course, the Civil Service.”

In short, Brexit is likely to be officialdom’s up-to-date excuse for carrying on much as before.

Thank you to @TimMorton2 for alerting me to the FT article.

Another Whitehall failure: no officials responsible, fluid facts and doubtful ethics. Plus ça change?

By Tony Collins

It’s rare for truth to emerge from the ashes of a failed contract.

The disastrous contract between Siemens and the BBC (the so-called Digital Media Initiative) was a rarity. Various reports provided confidence that the relevant facts had emerged.

It’s more usual for MPs to report that they haven’t got to bottom of what happened after a Whitehall contract failure.

Indeed today’s report by the Public Accounts Committee says of its inquiry into PA Consulting’s contract with the UK Trade and Investment:

“We cannot remember a previous inquiry in which so many witnesses corrected their evidence after a public session.”

UK Trade and Investment, now the Department for International Trade,  helps UK businesses to export more goods and services and encourages overseas organisations to invest in the UK.

It is funded by the Department for Business, Innovation & Skills and the Foreign & Commonwealth Office.

In May 2014, UK Trade and Investment’s  officials entered into a three-year contract with PA Consulting for the supply of consultants in a contract that involved ICT support.

On small example of unclear facts: in its bid, PA stated that cost categories including ICT were “already included in the costings and will not be charged for separately”. This implied that ICT would be included in the consultants’ day rates.  Today’s Public Accounts Committee report says,

“However, there were separate charges in the pricing schedule for HR, ICT,  legal and professional, quality, and knowledge management.”

After the contract had started, officials became concerned about:

  • the way PA had priced the contract
  • PA’s transparency in its communications with Whitehall.

The contractual relationship eventually broke down and officials terminated the contract in January 2016.

The two sides agreed a settlement in which the taxpayer would pay the balance of PA’s outstanding invoices less a £3m reduction. Officials paid £18.8m for the first 11 months of the contract.

Labour MP Meg Hillier, chairman of the Public Accounts Committee, said today (5 April 2017),

“Even now, ten months after the parties reached a settlement and four months after we took oral evidence, our Committee cannot say with confidence that it has got to the bottom of what happened.”

Poor record-keeping

Even the National Audit Office was unable to obtain a full picture. The NAO said in its 2016 report on PA’s contract,

“Understanding exactly what happened in letting and negotiating this contract is difficult due to the lack of proper documentation, the disagreement between parties and, now, the absence of a number of people who were involved on either side.”

MPs on the Public Accounts Committee say that Whitehall officials:

  • did not keep proper records
  • negotiated significant changes to the contract with PA when they should have gone back to the market
  • pushed for a signing of the contract before they had finished negotiations.

For its part, PA “fell well short of the appropriate duty of care that we expect contractors to demonstrate when in receipt of taxpayers’ money”.

According to the Public Accounts Committee, PA

  • took advantage of the department’s poor decision making
  • sold Whitehall a service it is not clear it needed
  • failed to give the fair breakdown of its costs and profit that officials had asked for
  • used the negotiations to pass on costs to Whitehall that it had said in its bid that it would bear
  • increased its profit from the contract while telling officials that its profit had not increased.

PA Consulting obfuscation?

The Committee says in its report,

“PA has not convinced us that it takes full responsibility for its actions. Its many explanations of its charges both at the time and since have been loosely worded, inconsistent and seemingly designed to obfuscate.

“It is unclear to us how such behaviour would be possible in a well managed professional practice.”

The Committee adds,

“Government’s lack of commercial expertise to get the best deals on behalf of the taxpayer has been a regular cause for concern for this Committee.”

In 2015 RSM UK Consulting produced a draft report on the contract. It included a finding that PA had “consistently made incorrect and misleading representations relating to £3.9m of the overheads charged”.

PA disputed RSM’s findings, stating that it had invoiced according to the agreed charging mechanism.

Overly long contract?

The contract was 596 pages – “difficult to read, understand and use, for a relatively simple service”. The Committee adds,

“The contract incorporates the ITT and bid, both of which are focused on the outcomes and how they will be achieved, and not on the way the contract would actually be run and charged for.

“Furthermore, the bid and contract are not clear on important aspects of the pricing and are often self-contradictory.”

[One would have thought that after decades of practice, Whitehall departments would understand how to commission a clear and unambiguous contract.]

Comment:

There is not even any evidence that some key decisions by Whitehall officials were approved by any formal decision-making body.

This and other findings by the National Audit Office and the Public Accounts Committee are astonishing, not because of their momentousness but because of they are almost routine.

There were similar findings after National Audit Office investigations into early spending on the Universal Credit IT programme.

It’s beginning to look as if Whitehall officials can sometimes hand over money to the private sector without any firm controls at all, which could encourage corruption and, at the least, incompetence and waste.

What’s the civil service’s solution?

To make sure that no officials are held responsible. The civil service is all about collective responsibility. In other words no responsibility.

Is the civil service’s message to the private sector now clear: “Get whatever Whitehall business you can because though the terms of the contract may be tough, what we pay you afterwards may be, for us, a matter of indifference.”

PA Consulting’s contract with UK Trade and Investment

 

A classic “waterfall” IT project disaster – yet officials went by the book

By Tony Collins

Some of those who read “Crash – 10 easy ways to avoid a computer disaster” may remember a warning that buying an IT system on the basis that it works well in another country and can therefore be adapted to the UK’s needs, is flirting with disaster.

First published in 1999, Crash said,

“There are graveyards of computer projects that began life as a simple adaptation of a package used elsewhere in the world.”

One example at that time was the failure of the London Stock Exchange’s Taurus project.

Now a report published today by Audit Scotland on the “i6” project goes into forensic – but lucid – detail on what went wrong and the conflicting views of police and the supplier Accenture.

Says the report,

“The belief that most of the i6 system could be based on an existing IT system proved incorrect.”

It became clear well into project that

“a virtually fully bespoke system was required”.

The plan was for i6 to replace 130 paper-based processes and IT systems but on 1 July 2016, after many well-publicised difficulties and delays, the Scottish Police Authority and Accenture agreed to terminate the i6 contract.

Police in Scotland had chosen Accenture’s bid in 2013 largely because it had successfully implemented a system for Spain’s Guardia Civil police service.

To its credit Accenture refunded all the money the police in Scotland had paid for the i6 system, £11.06m, plus a further £13.56m – but Audit Scotland says the failure of the project …

“means that some of the benefits that should have arisen from implementing it, have been, at best, delayed. There was a need to modernise police ICT systems six years ago when the procurement of i6 began. That need has not been met. Police officers and staff continue to struggle with out-of-date, inefficient and poorly integrated systems.

“This also hinders how Police Scotland interacts and shares information and intelligence with the other parts of the justice system. There is an urgent need to determine what the next steps should be…”

The lessons are clear from the report:

  • Don’t buy an overseas system without realising that it’ll need to be built almost from scratch for the UK. The ideal is for the business processes to be greatly simplified and adapted to fit a tried and tested system, not the other way around. Audit Scotland says the police programme team and Accenture believed that the majority of the i6 system could be based on an existing IT system that Accenture had developed for Spain,  with the remainder being bespoke development work.  But there was an “over-reliance” on Accenture’s work for Guardia Civil”.
  • The “waterfall” systems development contributed to the fact that Police Scotland “only discovered the true extent of problems with the system when it was delivered for testing”.  Waterfall meant that Accenture produced the software in distinct phases, in a sequence resembling a waterfall. Once a phase was complete, the process moved to the next phase – and no turning back. “It meant that all of the design, coding and construction of i6 would be completed before Accenture released it to Police Scotland for testing. Police Scotland would pay for each phase when it was completed.” [Agile, on the other hand, is a “test and see” approach and is far more flexible. It can adapted according to what the end-user needs and wants, and changes in those needs and wants.]
  • Don’t trust the demonstration of a waterfall system. The demo may look great but rolling it out successfully across various regions may be a different story. Accenture had demonstrated i6 but much later, after a period of testing, the i6 programme team reported to the programme board in August 2015 that there were: critical errors in the technical coding, flaws that Accenture was unable to resolve as quickly as expected, serious concerns about the criminal justice module, which did not comply with the Integrated Scottish Criminal Justice Information System data standards, errors in the search and audit modules and “problems around the limited functionality in the administration module”.
  • External assurance reports may tell you that you have complied with good practice and they may give you detailed praise for your attention to detail but they probably haven’t looked at the big question: will the systems ever work? Audit Scotland said external assurance reports such as the Scottish Government’s “Gateway reviews” suggested improvements but “raised no major concerns”.  Throughout the course of the i6 programme, most of the external reviews suggested that delivery confidence was either amber or green.
  • If the plan is for a waterfall development, doing everything by the book before a contract is awarded will not guarantee success, or even make it more likely, if you haven’t asked the big question: Is this ever likely to work given the complexities we don’t yet understand? For officials in Scotland, everything went smoothly before the award of contract: there were even 18 months of pre-contract discussions. But within weeks of the contract’s start, Police Scotland and Accenture disagreed about whether the proposed system would deliver the requirements set out in the contract. Soon there was a “breakdown in relationships and a loss of trust between Police Scotland and Accenture that never fully recovered,” said Audit Scotland.
  • The supplier may be just as optimistic as you. “As the design and development of i6 progressed, it became apparent that Accenture would need to develop significantly more than had been originally anticipated. Despite delays and serious problems throughout the lifetime of the programme, Accenture provided regular assurance, in the face of strong challenge, about their confidence in delivering the i6 system. This assurance proved misplaced.”
  • When planning a waterfall system that has complexities and inter-dependencies that are not fully understood at the outset, expect ever-lengthening delays and projected costs to soar. At one point Police Scotland estimated that the level of effort Accenture would require to complete i6 was around eight times greater than the resources Accenture had estimated when signing the original contract. “The i6 programme team believed that the functionality of Accenture’s solution did not meet the requirements it had agreed in the contract. Accenture maintained that Police Scotland had not specified a detailed description of business requirements. This issue had not emerged during months of pre-award dialogue. Accenture also believed that it had set out clearly what its solution would do and maintained that Police Scotland, as part of procurement process, had accepted its qualified solution. A dispute followed about the interpretation of the contract requirements. Police Scotland argued that, after months of competitive dialogue, the requirements of the i6 system were well-defined, and that in line with the contract, these took precedence. Accenture argued its solution had precedence and that Police Scotland was trying to extend the scope of the programme. Accenture stated that, to meet Police Scotland’s interpretation of requirements, it would require more time and money.”
  • As soon as things start going badly awry, stop and have a re-think. Cancel all existing work if necessary rather than plough on simply because failure isn’t an option. Above all, take politics out of the equation. The Scottish Police Authority was anxious about i6 being seen to be a success after the failure of a previous police ICT project in 2012 – the Common Performance Management Platform. At the same time the i6 programme was “extremely important to Accenture at a global level. “This may have led to misplaced optimism about the prospects of success and unwillingness to consider terminating the programme,” says Audit Scotland.
  • When things start to go wrong, the truth is unlikely to emerge publicly. Even those accountable for the project may be kept in the dark. “Police Scotland were cautious of commercial sensitivities when providing assurances on i6 publicly. The Scottish Parliament’s Justice Sub-Committee on Policing held a number of evidence sessions with the Scottish Police Authority and Police Scotland to explore progress with the i6 programme. In March 2014, the Sub-Committee expressed frustration at the lack of information about the problems with the i6 programme that had been ongoing since August 2013. Police Scotland did not disclose the severity of the issues facing the programme, nor was it overly critical of Accenture. This may have reflected a desire to maintain relationships with Accenture to keep the programme on track or to maintain the commercial confidentiality of the contract.”

Accenture’s response

Accenture said,

“As the report acknowledges, the scope and the complexity of the solution for i6 increased significantly during the project.  This was driven by the client.  There were challenges and issues on both sides, but we worked closely with Police Scotland to review the programme and recommend revised plans to successfully deliver i6.

Despite our best efforts, it was not possible to agree the necessary changes and we mutually agreed to end the project.”

In May 2017 Audit Scotland is due to publish a report that summarises the lessons from a number of public sector ICT projects it has investigated.

Some of what i6 was intended to cover …

Comment

Tis a pity officials in Scotland hadn’t read Crash before they embarked on the i6 project – or if they had, taken more notice of the dangers of assuming a system that works overseas can be tweaked to work in the UK.

We commend Audit Scotland for its expert investigation and a fine report.

Clearly the failure of i6 is not entirely Accenture’s fault.  The project was commissioned on the basis of assumption and when things went wrong politics intervened to prevent a complete stop and a fundamental re-think.

Fatally, perhaps, there appears to have been no discussion about simplifying police administration to make the IT more straightforward. If police administration is so enshrined in law that it cannot be simplified, officials would have to accept before awarding the contract that they were buying an entirely new system.

The UK armed services simplified volumes of rules and practices before it introduced pay and personnel administration systems. It was hard, inglorious work. But simplifying ways of working first can make the difference between IT success and failure.

i6 – a review. Audit Scotland’s report. 

Waterfall approach damns £46m Scottish police system – Government Computing

Another public sector IT disaster – but useful if the lessons are learned.

What Google looks for when hiring staff … traits Whitehall’s culture abhors?

By Tony Collins

The contrast between what Google looks for when hiring staff and what Whitehall looks for when making some of its top appointments, could give clues as to why many government IT-based projects and programmes fail.

First, the strengths Google looks for.  These were set out yesterday on BBC R4 by Laszlo Bock,  human resources chief at Google for 10 years.

Google was named “Best Company to Work For” more than 30 times around the world and received over 100 awards as a top employer during Bock’s time.

In 2010, he was named “Human Resources Executive of the Year”. Under him, Google changed its clunky, arduous recruitment processes that relied on gimmicks like maths puzzles to those that helped the company grow to about 60,000 employees in less than two decades.

In 2015 he  published his first book, The New York Times bestseller Work Rules!, a practical guide to help people find meaning in work and improve the way they live and lead. He resigned from Google in 2016.

On the BBC  “Analysis” programme on Monday evening – which looked at intelligence and talent and what they mean, if anything, in job interviews –  Bock said the least important attribute Google screens for is whether someone knows about the job they are taking on. Crunching the data on successful hiring led Google instead to look for these characteristics:

  • Humility
  • Conscientiousness
  • A sense of responsibility not to quit until the job is done well
  • Comfort with ambiguity
  • A sense of fun
  • Courage

Why courage?

Bock said,

“It’s about the importance of people being able to raise their voices in organisations. One of the things that happens is, when organisations get large, people stop raising their voices and really bad things happen as a result. That’s where you get whistleblowing, insider trading, all kinds of things.

“Human beings are evolved, biologically, as social, hierarchy-seeking animals. We tend to conform. So courage is important because the really innovative, creative stuff comes from ‘I got this crazy idea’ and the bad problems get flagged by people who are willing to raise their hand and say ‘I don’t think this is a good thing to do’.

“Without that you can’t do great things.”

Comment

It’s too easy to generalise about the hiring and appointment of senior civil servants. But it’s possible to understand a little about the hiring culture within Whitehall’s biggest department, the Department for Work and Pensions.

An insight into DWP culture and thinking can be gleaned from the many Lever arch folders of documents filed by the DWP as part of an FOI case in which it spent several years fighting to stop the release of documents about the Universal Credit IT programme.

The documents include DWP witness statements on the “harm” that would be caused if the IT documents in question were published.

The judge in the case, Chris Ryan, challenged most of the DWP’s arguments.

In one of his rulings, Judge Ryan described the DWP’s claims as:

  • alarming and surprising
  • overstated
  • unconvincing
  • close to fanciful

He said that public confidence in the Universal Credit IT programme had been maintained for some time “on a false basis”; and he raised the possibility that an “unhealthily collegiate relationship had developed” between the DWP and private sector IT suppliers. [Campaign4Change will publish a separate blog post on this ruling in the next few days.]

As well as the insight into DWP culture that one can gain from the FOI case, it’s possible to gauge culture and thinking within Whitehall departments from the talented, free-thinking IT individualists who have joined the top layer of the civil service, quit and returned to the private sector.

It would be invidious to pick out some names as there are so many.

What all this suggests is that Whitehall’s culture appreciates conformity and consensus and shuns boat-rocking.

When top IT professionals who joined HMRC and the DWP spoke publicly at conferences about institutional problems that needed to be tackled, mandarins reacted quickly – and such disclosures were never repeated.

And after a leak to the Guardian about the results of a DWP staff survey of morale on the Universal Credit IT programme, the department launched a formal leak inquiry headed by a senior member of the security services.

At the same time, Universal Credit IT programme documents were no longer emailed but transferred around in taxis.

This bout of nervous introspection (the judge described the DWP’s arguments in the FOI case as “defensive”) when taken together with what else we know, indicate that Whitehall’s culture is insular, distrustful and inimical to open challenge and problem-solving (though there are some within the senior Whitehall ranks who successfully defy that culture).

When Bock talks of conformity being a danger within large organisations he would not have had the DWP in mind – but he aptly describes its culture.

When he speaks about the “importance of people being able to raise their voices in organisations” he was probably unaware of the extent to which Whitehall culture abhors raised voices.

As Bock says, when people don’t raise their voices “really bad things happen as a result”. Perhaps the lack of internal challenge was one reason the NHS IT programme – NPfIT – lost billions of pounds, and the DWP’s Universal Credit programme went badly awry for several years.

When Bock says the “really innovative, creative stuff comes from ‘I got this crazy idea’, he could have been describing the culture of the Government Digital Service. But that refreshing GDS culture is being slowly choked by the conservatism of traditional Whitehall departments.

As Bock says, “the bad problems get flagged by people who are willing to raise their hand and say ‘I don’t think this is a good thing to do’.”  But bad problems are things senior civil servants avoid talking about, even internally. A Disneyland”good news” culture pervades central departments.

A National Audit Office report on the Universal Credit programme referred to a “fortress mentality” within the DWP.

Maybe the consensus-seeking John Manzoni, head of the civil service, and his colleague Sir Jeremy Heywood, Cabinet Secretary, could seek to employ Bock as an adviser on appointments and recruitment.

Bock’s brief? To turn around the senior civil service’s culture of conformity, groupthink, denial, selective use of “good news” facts and a lack of open challenge.

Recognising the destructiveness within a big organisation of having the wrong culture – as Bock does – could be the start of a genuine Whitehall transformation.

BBC R4 “Analysis” on talent, intelligence and recruitment

Laszlo Bock steps down

Southwest One – a positive postscript

By Tony Collins

somerset county council2IBM-led Southwest One has had a mostly bad press since it was set up in 2007. But the story has a positive postscript.

Officials at Somerset County Council now understand what has long been obvious to ICT professionals: that the bulk of an organisation’s savings come from changing the way people work – and less from the ICT itself.

Now that Somerset County Council has the job of running its own IT again – its IT-based relationship with Southwest One ended prematurely in December 2016 – the council’s officials have realised that technology is not an end in itself but an “enabler” of headcount reductions and improvements in productivity.

A 2017 paper by the county council’s “Programme Management Office”  says the council has begun a “technology and people programme” to “contribute to savings via headcount reduction by improving organisational productivity and process efficiency using technology as the key enabler”.

Outsourcing IT a “bad mistake” 

It was in 2007 that Somerset County Council and IBM launched a joint venture, Southwest One. The new company took over the IT staff and some services from the council.

In the nine years since then the council has concluded that outsourcing ICT – thereby separating it from the council’s general operations – was not a good idea.

The same message – that IT is too integral and important to an organisation  to be outsourced – has also reached Whitehall’s biggest department, the Department for Work and Pensions.

Yesterday (8 February 2017) Lord Freud,  who was the Conservative minister in charge of Universal Credit at the Department for Work and Pensions, told MPs that outsourcing IT across government had proved to be a “bad idea”.  He said,

“What I didn’t know, and I don’t think anyone knew, was how bad a mistake it had been for all of government to have sent out their IT…

“You went to these big firms to build your IT. I think that was a most fundamental mistake, right across government  and probably across government in the western world …

” We talk about IT as something separate but it isn’t. It is part of your operating system. It’s a tool within a much better system. If you get rid of it, and lose control of it, you don’t know how to build these systems.

” So we had an IT department but it was actually an IT commissioning department. It didn’t know how to do the IT.

“What we actually discovered through the (Universal Credit) process was that you had to bring the IT back on board. The department has been rebuilding itself in order to do that. That is a massive job.”

Task facing Somerset officials

Somerset County Council says in its paper that the council now suffers from what it describes as:

  • Duplicated effort
  • Inefficient business processes
  • A reliance on traditional ways of working (paper-based and meeting-focused).
  • Technology that is not sufficient to meet business needs
  • Inadequate data extraction that does not support evidence based decision making.
  • “Significant under-investment in IT”.

To help tackle these problems the council says it needs a shift in culture. This would enable the workforce to change the way it works.  

From January 2017 to 2021, the council plans “organisation and people-led transformational change focused on opportunities arising from targeted systems review outcomes”.

The council’s officers hope this will lead to

  • Less unproductive time in travelling and  attending some statutory duties such as court proceedings.
  • Fewer meetings.
  • Reduced management time because of fewer people to manage e.g. supervision, appraisal, performance and sickness.
  • Reduced infrastructure spend because fewer people will mean cuts in building and office costs, and IT equipment. Also less training would be required.
  • Reduction in business support process and roles.
  • Reduction in hard copy file storage and retention.

 The council has discovered that it could, for instance, with changes in working practices supported by the right technology,  conduct the same number of social services assessments with fewer front- line social workers or increase the level of assessments with the same number of staff.

Southwest One continues to provide outsourced services to Avon and Somerset Police. The contract expires next year.

Comment

Somerset County Council is taking a bold, almost private sector approach to IT.

Its paper on “technology and people” says in essence that the council cannot  save much money by IT change alone.

Genuine savings are to be found in changing ways of working and thus reducing headcount. This will require very close working – and agreement – between IT and the business end-users within the council.

It is an innovative approach for a council.

The downside is that there are major financial risks, such as a big upfront spend with Microsoft that may or may not more than pay for itself.

Does outsourcing IT ever make sense?

Somerset County Council is not an international organisation like BP where outsourcing and standardising IT across many countries can make sense.

The wider implication of Somerset’s experience – and the experience of the Department for Work and Pensions – is that outsourcing IT in the public sector is rarely a good idea.

Thank you to Dave Orr, who worked for Somerset County Council as an IT analyst and who has, since the Southwest One contract was signed in 2007, campaigned for more openness over the implications of the deal.

He has been more effective than any Somerset councillor in holding to account the county council, Taunton Deane Borough Council and Avon and Somerset Police, over the Southwest One deal.  He alerted Campaign4Change to Somerset’s “Technology and People Programme” Somerset paper.

One of Orr’s recent discoveries is that the council’s IT assets at the start of the Southwest One contract were worth about £8m and at hand-back in December 2016 were worth just £0.32m, despite various technology refreshes.

Somerset County Council’s “Technology and People Programme” paper

Whitehall’s outsourcing IT a “bad mistake” – and other Universal Credit lessons, by a former DWP minister

Days from taking back outsourced IT, Somerset Council is unsure what it’ll find

By Tony Collins

Facing the TV cameras, officials at Somerset County Council spoke with confidence about the new joint venture company they had set up with the “world-class” IT supplier IBM.

“The contract has to succeed; we will make it succeed, ” a senior official said at the time. Greater choice for residents, more control, sustained improvement of services, improved efficiency, tens of millions in savings and enhanced job prospects for staff.

These were some of the promises in 2007.

Since then, Somerset County Council has been through a costly legal dispute with IBM; projected savings have become losses, and Somerset is days away from taking back the service early.

Now the council faces new IT-related risks to its reputation and finances, warns a team of auditors.

In several audit reports on the exit arrangements, auditors warn of a series of uncertainties about:

  •  what exactly IT assets the council will own as of 1 December 2016, when the joint venture hands back IT and staff.
  • how much software may not be licensed, therefore being used illicitly.
  • how much software is being paid for without being needed or used, wasting council tax money.
  • whether thousands of pieces of hardware have been disposed of securely over the years of the contract, or whether confidential data could later turn up in the public domain.
  • the accuracy of some supplied information. “… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four” said auditors.

Comment

That Somerset County Council laments setting up the Southwest One joint venture with IBM is not new. What continues to surprise is the extent of the difficulties of ending the joint venture cleanly – despite months, indeed more than a year – of preparatory work.

The realty is that uncertainties and risks abound.

When IT journalists ask leading councillors and officers at the start of outsourcing/joint venture deals whether all the most potentially serious risks have been given proper consideration, the spokespeople inevitably sound supremely confident.

If things go wrong, they are sure the council will be able to take back the service under secure arrangements that have been properly planned and written into the contract.

Yet today some of the most potentially serious risks to Somerset’s finances and reputation come from continuing threats such as the possibility confidential data being found on old hardware not securely disposed of.

Or the council may be paying for unneeded software licences.

In short Somerset County Council is taking back the IT service on 1 December 2016 without being certain what it will find.

In future, therefore, when councillors and officials across the country talk with supreme confidence at the start of an outsourcing deal or joint venture about large savings, sustained efficiencies, and a step-change improvement in services that comes with the benefits of collaborating with a world-class private-sector partner, local residents will have every right to be deeply sceptical.

For the reality is more likely to be that the council and its world-class supplier are about to embark on a journey into the unknown.

Thank you to campaigner Dave Orr for alerting me to the council audit reports that made this post possible.

TV broadcast in 2007 days after the council and IBM signed the Southwest One joint venture deal.

**

Excerpts from reports due to be considered by Somerset County Council’s Audit Committee next week (29 November 2016):

“… laptops, servers, storage devices, networking equipment, etc.) have been disposed of without the correct documentation historically, throughout the term with SWO [Southwest One]. There is a high likelihood that without the documentation to show that SWO were meant to have previously disposed of any specific data baring assets in a compliant manner then subsequent fines and loss of reputation will need to be dealt with by the Council.

“This is being addressed as part of the exit works but initial investigations show an expected lack of documentation.

**

“The quality of asset management and therefore exposure to risk (over and above this inherited risk) is expected to improve significantly once asset management returns to SCC [Somerset County Council).”

**

“Asset locations have been updated and improved though there are still issues regarding all asset details not being recorded accurately in the Asset Register. There is a risk that if wrong details are recorded against an asset then incorrect decisions could be made regarding these assets which may in turn cause the Council financial loss and/or loss of reputation.”

**

“… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four.”

**

“Software assets are now included in the monthly asset register report though the information collected and lack of correlation to meaningful license information means the original risk is not fully mitigated.

“This continued lack of software asset usage information against licensing proof of entitlement as well as the obvious risk of illegally using non licensed software there is also a risk that the Council is wasting public funds and Council officer’s time to manage unnecessary software. This means the Council will not be able to show “Best Value” in these purchases which could lead to fines being imposed by Central Government and loss of reputation by the inefficiencies being reported in the media.”

**

“I cannot though see evidence of the warranty & support arrangements being recorded or accurate recording of end of life assets. Due to a lack of or incorrect detail on the asset information there is the risk of incorrect decisions being made regarding an asset’s usage which could then lead to loss of money or reputation for the Council.”

MPs to debate Capita NHS contract today

By Tony Collins

In the House of Commons today MPs will debate the Capita Primary Care Support Services contract.

It has been secured by Coventry North West MP Geoffrey Robinson, who wants GPs to be compensated for the failures arising from the outsourcing contract.

The debate comes a day after the BBC reported that “more than 9,000 patients’ records in Norfolk, Suffolk and Essex have gone missing” since Capita took on the task of transferring files.

As part of its contract Capita took on the job of transferring patients’ records, when people move from one GP to another.

A BBC survey of 78 GP practices showed that 9,009 records had been missing for more than two months.

Capita told the BBC it did not “recognise these claims”.

An NHS England spokesman said, “We know there have been serious issues with services delivered by Capita which have had an unacceptable impact on practices. We are ensuring Capita takes urgent steps to improve services.”

Patients “at risk”

Paul Conroy, a practice manager in Essex, has started a House of Commons petition on the delays, which has been signed by more than 3,000 people. It calls for an inquiry into the Capita contract and the impact it has had on GP practices.

“GPs rely on that full medical history in order to make key clinical decisions on patient care,” he said.

“If they can’t get hold of that physical record there could be vital information there could be vital information that puts a patient at risk.”

James Dillon, director of Practice Index – an organisation bringing together practice managers – told the BBC,

“GP practices are getting more and more frustrated by the missing patient records.

“Not only is this debacle putting the health of their patients at risk, it is putting added pressure on already stretched practices.”

In a statement, Capita said it had taken on the “challenging initiative” to streamline GP support services and there had been “teething problems”.

“[But] medical records are now being delivered securely up to three times faster than under the previous system,” it said.

“We do not recognise these claims regarding thousands of files being missing whatsoever.

“We request and move on average 100,000 files a week from multiple sites including GP surgeries and also third party run storage facilities which are contracted and managed by NHS England.”

GP magazine Pulse quoted MP Geoffrey Robinson as saying that the secretary of state should intervene directly “as this is extremely dangerous”. Robinson said that some medical records are not being delivered at all, or delivered late or delivered to the wrong practices.

Dr Richard Vautrey, deputy chairman of the British Medical Association’s GP Committee said that the problems arising from the outsourcing contract “are directly impacting on the ability of many GPs to provide safe, effective care to their patients in the area”.

He said, “They are in some cases being left without the essential information they need to know about a new patient and the tools to treat them.”

In August 2016, NHS England published the results of a User Satisfaction Survey of primary care support services over the previous six months. Only 21% of GPs were satisfied with the outsourced service, giving it an average overall score of 2.91 out of 10.

Lunacy?

An anonymous GP told Pulse how the problems are affecting him. He refers to the “performers list” that assures the public that GPs are suitably qualified, have up to date training, have appropriate English language skills and have passed other relevant checks such as with the Disclosure and Barring Service and the NHS Litigation Authority.

Said the GP,

“I moved 12 months ago and still haven’t been able to transfer performers list. I am 6 months late for my appraisal and unemployable except for my current salaried job as a result.

” It would have been easier to emigrate. The department responsible for the performers list at Capita is uncontactable except via a national email that isn’t responded to and a phone line that isn’t able to put you through to anyone.

“… As it is it’s virtually impossible to move region if you a UK GP. I am basically a slave bonded to a geographical region, forbidden to move house and work anywhere else other than short periods. Totally at the mercy of a faceless uninterested bureaucracy incapable of helping. Lunacy and utterly depressing. Why the hell did I become a GP? I curse the day.”

“I urgently need my medical records”

A patient who wrote to Campaign4Change said,

“My medical records were requested at the beginning of June 2016 when I changed to another health centre about 2 miles away.

“[I] phoned Capita today and was told there was no record of this request and to get my solicitor to contact them. Then they put the phone down. I don’t have and cannot afford a solicitor.

“I urgently need my medical records with my new doctor and am feeling helpless and extremely stressed by this.”

Pulse magazine reported yesterday (7 November 2016) the results of a snapshot survey of 281 GP practices carried out by the BMA’s GP Committee. It found:

  • 31% of practices had received incorrect patient records;
  • 28% failed to receive or have records collected from them on the date agreed with Capita;
  • 58% reported that new patient registrations were not processed within the required three days.
  • 81% of urgent requests for records were not actioned within three weeks.

GP practices also noted a reduction in the number of incorrect payments and fewer delays in registrations of the “performers list”.

Comment

It would be a pity if MPs today, in criticising Capita, lost sight of the bigger picture: how such outsourcing deals are considered and awarded.

The root of the problem is that before the contract is awarded officials concentrate their attention on the minutiae of the benefits: exactly how much will be saved, and how this will be achieved.

Pervading the pre-contract literature and discussions are the projected savings. This is understandable but wrong.

It’s understandable because it’s the projected savings that justify the sometimes-exciting time and effort that go into the pre-contract negotiations and discussions.

Large amounts of money are at stake. For officials, the pre-contract work can be a euphoric time – certainly more interesting than the day-to-day routine.

But what happens to negotiation and discussion of risk?

Risk is a table or two at the back of the reports. It’s a dry, uninspiring vaguely technical and points-scoring analysis of the likelihood of adverse events and the seriousness of the consequences materialising.

Sometimes the most serious risks are highlighted in red. But there’s always a juxtaposed “mitigation” strategy that appears to reassure. Indeed it appears to cancel out any reason for concern.

Risk is mentioned at the back of the internal pre-contract because it’s a cultural anathema. It’s the equivalent of visits by Building Regulations inspectors at a theme park under construction.

Who wants to talk about risk when a contract worth hundreds of millions of pounds is about to be awarded?

A bold official may dare to point out the horror stories arising from previous outsourcing contracts. That hapless individual will then be perceived by the outsourcing advisory group to have a cloud over his or her head. Not one of us.

And the horror stories will be dismissed by the officer group as the media getting it wrong as usual. The horror stories, it will be explained, were in fact successes.

Even when big public sector outsourcing deals end in a legal action between the main parties, officials and the supplier will later talk – without explanation or detail or audited accounts –  of the contract’s savings and overall success.

We’re seeing this on the Southwest One outsourcing/joint venture contract.

No doubt some will claim the GP contract support contract is a success. They’ll describe problems as teething. Marginalise them. And later, when it comes to the awarding of future contracts, supporters of the GP outsourcing contract will be believed over the critics.

And so the cycle of pre-contract outsourcing euphoria and post-contract rows over failure will be repeated indefinitely.

It would be of more use if MPs today debated the role of NHS England in the award of the GP support contract.

Blaming Capita will do little good. The supplier will face some minor financial penalties and will continue to receive what it is contractually due.

Countless National Audit Office reports show how contracts between the public and private sectors, when it comes to the crunch, strongly protect the supplier’s interests. The public sector doesn’t usually have a leg to stand on.

A focus today on Capita would be a missed opportunity to do some lasting good.

NHS England letter on Capita contract – September 2016

Capita NHS contract under scrutiny after “teething” problems – June 2016

GPs decry Capita’s privatised services as shambles – The Guardian

Did NHS England consider us in the Capita take-over?

NHS England vows to hold Capita to account

Capita mistakenly flags up to 15% of GP practice patients for removal  

Capita primary care support service performance “unacceptable”

 

 

 

Record one-day fall in Capita share price – will customers care?

By Tony Collins

The share price of outsourcing specialist Capita fell 27% yesterday, a record one-day fall for the company. It was down a further 5% this morning (10.30 am, 30 September 2016).

The company said in a regulatory statement yesterday it is taking immediate steps to reduce the cost base in its underperforming businesses, which should benefit its 2017 results.

Some customers may be entitled to ask whether the transformation-based outsourcing services they are buying from Capita will be affected by any of the company’s financial pressures.

In local government Capita has what it calls “transformational partnerships” with Sheffield City Council, Southampton City Council, London Borough of Barnet, Blackburn with Darwen Council, North Tyneside, West Sussex County Council and Oxfordshire County Council.

Capita also has a joint venture agreement with Birmingham City Council, in a partnership that goes by the name of “Service Birmingham”.

Capita’s regulatory announcement yesterday said “our performance in the second half of the year to date has been below  expectations, as a result of a slow-down in specific trading businesses,  one-off costs incurred on the Transport for London (TfL) congestion charging contract and continued delays in client decision making”.

The company’s trading update said,

“Capita is taking immediate steps to reduce the cost base in the underperforming businesses, which should benefit 2017.”

Capita expects that capital expenditure will be lower than last year.

Outsourcing advocates may see the slow-down as temporary problem for Capita – and indeed the company has announced £949m of “major contract wins in the year to date,  including being recently selected by Three as the preferred bidder for a contract to provide customer management services in the UK, which is expected to start in 2017”.

It added, though, that “revenue from new major sales in the second half of this year is likely to be lower than expected, due to continued delays in decision making and lower conversion of our pipeline”.

Other observers of the outsourcing market may wonder whether major suppliers will always have enough margin to transform a customer’s business, including big new investments in ICT, while continuing to run the client’s operations successfully.

In yesterday’s trading update, Capita referred to problems on two contracts, one with Transport for London and another with the Co-op Bank. It said:

“We have experienced delays on the implementation of new IT systems on the  Transport for London (TfL) congestion charging contract.

“As a result, we expect  to incur between £20m and £25m of one-off costs, which will be included in our  underlying results. The systems have now gone live, the contract is performing  well operationally and these costs will not recur next year.

“Furthermore, we  are in a contractual dispute with the Co-op Bank regarding obligations relating  to the transformation of services.  The ongoing mortgage processing being  undertaken by Capita is performing well.  However, there is a risk of  litigation in respect of the transformation.”

Co-op dispute

Capita’s chief executive Andy Parker was reported in The Telegraph as saying there was a “high” risk of litigation with Co-op Bank over its contract to help administer mortgages.

“Everything’s ready to go and the client is refusing to sign off for one reason only – if they sign off, they have to pay us,” he is quoted s saying. “We’re still hitting targets and delivering for this bank.”

The Co-operative Bank, for its part, suggested it is owed money for delays, and denied it has failed to pay. “The bank strongly refutes Capita’s suggestion that they have delivered an element of the transformation programme which the bank has not paid for,” Co-op Bank was quoted as saying. “In addition, there are amounts which the bank regards as owing to it by Capita.”

Co-op added that it continues to “work through” the issues with the programme.

“The bank continues to work through the issues surrounding this transformation programme with Capita. The existing outsourcing of mortgage processing to Capita both for new and existing bank customers continues to operate in a satisfactory manner and the bank is committed to ensuring that this remains the case going forward,” said the Co-op.

Transport for London

On Capita’s TfL congestion charge contract, Andy Parker said,

“The upgrade proved more complex than we anticipated and the penalties ramped up very quickly.”

At Forbes, which has ranked Capita as one of the world’s most innovative companies, a writer and analyst warned (speculatively) of the possibility of “further profit downgrades in the months to come, allied with the possibility of subdued revenues growth in the years ahead.

Analysts say Capita’s prospects may be dented by uncertainties over Brexit.

The concluding paragraph of Capita’s trading update yesterday said,

“We remain confident of the strength of our business model and aim to return the Group to profit growth next year, excluding the benefit from TfL one-off costs  dropping out.”

Capita is a FTSE 100 company. In 1991 when it was floated its turnover was about £25m. Now it’s close to £5bn. It employs 75,000, about 17,000 of them abroad.

Thank you to campaigner Dave Orr for alerting me to Capita’s announcement yesterday.

Capita trading update

 

Atos pleased after it’s cleared of “sharp practice”

By Tony Collins

atos

A Cabinet Office review of the Whitehall contracts of IT services company Atos following a Public Accounts Committee allegation of “sharp practice” has more than  exonerated the supplier.

After looking at 12 Atos government contracts, the Cabinet Office has written to the Public Accounts Committee praising Atos for going beyond its contractual obligations. Where the company has fallen short, it has taken remedial steps.

Rarely are any government statements on an IT supplier replete with praise.

It’s likely the vindication will take some MPs by surprise after failings in a project to gather and collect in one place data from all the various GP practice systems – the so-called General Practice Extraction Service.

Now Atos may in future be a position to use the statement as evidence, when bidding, of its success in delivering government IT services and projects.

Millions written off

In December 2015 the Public Accounts Committee was highly critical of Atos in its report on the extraction service project.

The NHS Information Centre accepted the system from Atos although it didn’t work properly. The Centre also made public announcements at the time on the system’s success.  In fact the system had “fundamental design flaws” and millions of pounds was written off.

The Committee said,

“Very common mistakes from past projects were repeated, such as failing to adopt the right contracting approach, failing to ensure continuity of key staff on the project, and failing to undertake proper testing before accepting the system.

“GPES [General Practice Extraction Service] started some five years later than planned; it is over-budget; and it still does not provide the full service required.

“Atos, supplier for a key part of the system, may have met the letter of its contractual obligations but took advantage of a weak client by taking the client’s money while knowing full well that the whole system had not been properly tested.”

The Committee said that the NHS official who was chief executive of the Information Centre when it accepted the flawed system was “awarded total emoluments of £470,000 for the financial year 2012–2013 including a redundancy payment of £330,000”.

Tests

The Committee found that in its approach to the project, “Atos did not show an appropriate duty of care to the taxpayer”.

“We are not satisfied Atos provided proper professional support to an inexpert client and are very concerned that it appears to have acted solely with its own short term best interests in mind.

“Atos admitted that end-to-end testing should always be undertaken and that it was supposed to have happened in this case. However, NHS IC and Atos agreed a more limited test of the Atos component due to delays in completing other parts of the system.

“The Atos software passed this test, but after NHS IC accepted the system—and to Atos’s professed surprise—the system as a whole was found not to work. Atos claims it fixed the issues relating to its software at its own expense and that the additional £1.9 million it received while doing so was for additional work related to 15 new features.

“We found that Atos’s chief executive, Mr Adrian Gregory—the company’s witness in our enquiry—appeared rather indifferent to the plight of the client; we expect more from those contracting with government and receiving funds from the taxpayer.”

“Sharp practice”

The Committee recommended that the Cabinet Office undertake a “full review of Atos’s relationships as a supplier to the Crown”.

“We expect the Cabinet Office to note carefully this example of sharp practice when determining what obligations a duty of care on contractors should entail and what sanctions would apply when performance falls short.”

The government agreed to have a review.

Findings of Cabinet Office review of Atos contracts

The Cabinet Office found no “examples of behaviour that might be described as sharp commercial practice in the course of this review”.

The review team looked at 12 Atos contracts worth a total of more than £500m a year – 80% of Atos’s work with central government.

 

No: Department Contract Name
1 Department for Work and Pensions (DWP) Personal Independence Payments (PIP)
2 Department for Work and Pensions (DWP) Government Gateway Agreement
3 Department for Work and Pensions (DWP) ICT in support of medical assessments
4 HM Treasury (HMT) National Savings and Investments (NS&I)
5 Ministry of Justice (MOJ) Development, Innovation and Support Contracts (DISC) Infrastructure Services Agreement
6 Ministry of Justice (MOJ) End User Computing Services (EUCS)
7 Nuclear Decommissioning Authority (NDA) Shared Service Alliance
8 Home Office (HO) IND Procurement of Infrastructure Development and Support (IPIDS) Agreement
9 Home Office (HO) Contain Agreement
10 Department of Health (DH) Information Management Services (IMS 3)
11 Ministry of Defence (MOD) Strategic Partner Framework Defence Core Network Services (DCNS01)
12 Driver and Vehicle Standards Agency (DVSA) ICT Managed Services Agreement (IS2003)

Far from finding examples of sharp practice, the review team found “examples to the contrary”. In some of the contracts, Atos was “working at risk” and going “beyond their contractual obligations to act in the client’s interests”.

“Specific examples include expediting change control notices at the client’s request in advance of formal approval, taking financial risk ahead of contract extensions and proactively supporting the redeployment of resource to assist in the avoidance of client cost. On one contract, a notice period for a number of major decommissioning events lapsed and Atos continued to deliver the services flexibly to the client’s requirements until the service could be safely decommissioned.”

Where Atos did not meet monthly performance targets, service penalties were incurred and charged to Atos. “It was evident that when operational performance fell short appropriate sanctions were applied.”

Commitment

The Cabinet Office went on to say that Atos proactively and constructively engaged in the review and provided information as requested, “sometimes over and above their contractual commitments”.

The review team added,

“It is clear that Atos values its relationship as a supplier to the Crown; it has a comprehensive approach to the governance of all the contracts reviewed and the Atos leadership team shows commitment to its customers.

“In response to the PAC [Public Accounts Committee] hearing Atos has undertaken a number of initiatives to address PAC’s concerns.

“The Atos corporate programme ‘Client at the Heart’ aims to deepen the client-focussed culture within the organisation by embedding a set of values and action plans to deliver improved service for each contract they run, including all government contracts.

“In addition, whilst employees have always been recognised for achievement in quantitative and qualitative objectives, financial targets vary but typically account for only a small proportion of total reward packages.

“We see this as evidence that Atos client executives are incentivised to provide the appropriate professional support.”

An Atos spokesman told civilserviceworld that the company was “proud to be a trusted supplier” and had welcomed the review as an opportunity to demonstrate the quality of its services.

“We are pleased that the Cabinet Office has concluded that we deliver the appropriate level of professional support to our government clients,” he said.

Comment

It’s clear that Atos deserves credit for going beyond the call of duty on some contracts. It is also clear that those departmental officials the Cabinet Office spoke to as part of the review were happy with Atos.

What’s not so clear is the extent to which civil servants in general are in a position to know how well their major IT suppliers are performing.

Evidence from National Audit Office reports is that departments may not always have comprehensive, accurate and up-to-date information – and enough staff time – to give sound judgements on how well a major IT supplier is performing on a complex contract.

Indeed the National Audit Office can be scathing about the quality of contract management within departments.

In 2013 the Audit Office, in its report “Universal Credit: early progress” identified a series of astonishing failings that, taken together,  suggested that the DWP had little understanding of what its major IT suppliers were charging for, or why, let alone what their performance was like.

The DWP is the largest central government department – which leaves one to wonder whether some other departments, which have smaller budgets and fewer staff, are better or worse off in terms of understanding their IT contracts.

These were some of the contract management weaknesses at the DWP as identified by the National Audit Office in 2013:

  • Over-reliance on performance information that was provided by suppliers without Department validation.
  • Inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.
  • Weak contractual relationships with supplier
  • The Department did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account.
  • Limited line of sight on cost of delivery, in particular between expenditure incurred and progress made in delivering outputs.
  • Poorly managed and documented financial governance, including for delegated financial authorities and approvals; for example 94 per cent of spending was approved by just four people but there is limited evidence that this was reviewed and challenged.
  • Limited IT capability and ‘intelligent client’ function leading to a risk of supplier self-review.
  • Insufficient review of contractor performance before making payments – on average six project leads were given three days to check 1,500 individual timesheets, with payments only stopped if a challenge was raised.
  • Ministers had insufficient information to assess the value for money of contracts before approving them.
  • Insufficient challenge of supplier-driven changes in costs and forecasts because the programme team did not fully understand the assumptions driving changes.

The Cabinet Office, in its review of Atos, found “inconsistencies” in departmental compliance with guidelines on contract management. It said,

“Where the evidence suggests that contract management is inconsistent [with National Audit Office guidelines on contract management] the Cabinet Office is discussing improvements with the contract owners in the Departments concerned.”

Praise where praise is due and Atos may well be a good – and perhaps outstanding – IT supplier to central government.

But if departments don’t have enough solid information on how well their major IT suppliers are performing, to what extent is any Cabinet Office statement praising an IT supplier likely to be a hopeful panegyric, based on what officials in departments believe they are expected to say?

Cabinet Office statement on Atos to the Public Accounts Committee – 8 September 2016

Public Accounts Committee report on Atos and the General Practice Extraction Service – December 2015

 

Excellent reports on lessons from Universal Credit IT project published today – but who’s listening?

By Tony Collins

“People burst into tears, so relieved were they that they could tell someone what was happening.”

The Institute for Government has today published one of the most incisive – and revelatory – reports ever produced on a big government IT project.

It concludes that the Universal Credit IT programme may now be in recovery after a disastrous start, but recovery does not mean recovered. Much could yet floor the programme, which is due to be complete in 2022.

The Institute’s main report is written by Nick Timmins, a former Financial Times journalist, who has written many articles on failed publicly-funded IT-based projects.

His invaluable report, “Universal Credit – from disaster to recovery?” – includes interviews with David Pitchford, a key figure in the Universal Credit programme, and Howard Shiplee who led the Universal Credit project.

Timmins also spoke to insiders, including DWP directors, who are not named, and the former secretary of state at the Department for Work and Pensions Iain Duncan Smith and the DWP’s welfare reform minster Lord Freud.

Separately the Institute has published a shorter report “Learning the lessons from Universal Credit which picks out from Timmins’ findings five “critical” lessons for future government projects. This report, too, is clear and jargon-free.

Much of the information on the Universal Credit IT programme in the Timmins report is new. It gives insights, for instance, into the positions of Universal Credit’s major suppliers HP, IBM, Accenture.

It also unearths what can be seen, in retrospect, to be a series of self-destructive decisions and manoeuvres by the Department for Work and Pensions.

But the main lessons in the report – such as an institutional and political inability to face up to or hear bad news – are not new, which raises the question of whether any of the lessons will be heeded by future government leaders – ministers and civil servants – given that Whitehall departments have been making the same mistakes, or similar ones, for decades?

DWP culture of suppressing any bad news continues

Indeed, even as the reports lament a lack of honesty over discussing or even mentioning problems – a “culture of denial” – Lord Freud, the minister in charge of welfare reform, is endorsing FOI refusals to publish the latest risk registers, project assessment reviews and other Universal Credit reports kept by the Department for Work and Pensions.

More than once Timmins expresses his surprise at the lack of information about the programme that is in the public domain. In the “acknowledgements” section at the back of his report Timmins says,

“Drafts of this study were read at various stages by many of the interviewees, and there remained disputes not just about interpretation but also, from some of them, about facts.

“Some of that might be resolvable by access to the huge welter of documents around Universal Credit that are not in the public domain. But that, by definition, is not possible at this stage.”

Churn of project leaders continues

Timmins and the Institute warn about the “churn” of project leaders, and the need for stable top jobs.

But even as the Institute’s reports were being finalised HMRC was losing its much respected chief digital officer Mark Dearnley, who has been in charge of what is arguably the department’s riskiest-ever IT-related programme, to transfer of legacy systems to multiple suppliers as part of the dismantling of the £8bn “Aspire” outourcing venture with Capgemini.

Single biggest cause of Universal Credit’s bad start?

Insiders told Timmins that the fraught start of Universal Credit might have been avoided if Terry Moran had been left as a “star” senior responsible owner of the programme. But Moran was given two jobs and ended up having a breakdown.

In January 2011, as the design and build on Universal Credit started, Terry Moran was given the job of senior responsible owner of the project but a few months later the DWP’s permanent secretary Robert Devereux took the “odd” decision to make Moran chief operating officer for the entire department as well. One director within the DWP told Timmins:

“Terry was a star. A real ‘can do’ civil servant. But he couldn’t say no to the twin posts. And the job was overwhelming.”

The director claimed that Iain Duncan Smith told Moran – a point denied by IDS – that if Universal Credit were to fail that would be a personal humiliation and one he was not prepared to contemplate. “That was very different from the usual ministerial joke that ‘failure is not an option’. The underlying message was that ‘I don’t want bad news’, almost in words of one syllable. And this was in a department whose default mode is not to bring bad news to the top. ‘We will handle ministers’ is the way the department operates…”

According to an insider, “Terry Moran being given the two jobs was against Iain’s instructions. Iain repeatedly asked Robert [Devereux] not to do this and Robert repeatedly gave him assurances that this would be okay” – an account IDS confirms. In September 2012, Moran was to have a breakdown that led to early retirement in March 2013. He recorded later for the mental health charity Time to Talk that “eventually, I took on more and more until the weight of my responsibilities and my ability to discharge them just grew too much for me”.

Timmins was told, “You cannot have someone running the biggest operational part of government [paying out £160bn of benefits a year] and devising Universal Credit. That was simply unsustainable,”

Timmins says in his report, “There remains a view among some former and current DWP civil servants that had that not happened (Moran being given two jobs), the programme would not have hit the trouble it did. ‘Had he been left solely with responsibility for UC [Universal Credit], I and others believe he could have delivered it, notwithstanding the huge challenges of the task,’ one says.”

Reviews of Universal IT “failed”

Timmins makes the point that reviews of Universal Credit by the Major Projects Authority failed to convey in clear enough language that the Universal Credit programme was in deep trouble.

“The [Major Projects Authority] report highlighted a lack of sufficient substantive action on the points raised in the March study. It raised ‘high’ levels of concern about much of the programme – ‘high’ being a lower level of concern than ‘critical’. But according to those who have seen the report, it did not yet say in words of one syllable that the programme was in deep trouble.”

Iain Duncan Smith told Timmins that the the Major Projects review process “failed me” by not warning early enough of fundamental problems. It was the ‘red team’ report that did that, he says, and its contents made grim reading when it landed at the end of July in 2012.

Train crash on the way

The MPA [Cabinet Office’s Major Projects Authority] reviewed the programme in March 2011. “MPA reports are not in the public domain. But it is clear that the first of these flagged up a string of issues that needed to be tackled …

” In June a member of the team developing the new government’s pan-government website – gov.uk – was invited up to Warrington [base for the Universal Credit IT team] to give a presentation on how it was using an agile approach to do that.

“At the end of the presentation, according to one insider, a small number from the audience stayed behind, eyeing each other warily, but all wanting to talk. Most of them were freelancers working for the suppliers. ‘Their message,’ the insider says, ‘was that this was a train crash on the way’ – a message that was duly reported back to the Cabinet Office, but not, apparently, to the DWP and IDS.”

Scared to tell the truth

On another occasion when the Major Projects Authority visited the IT team at Warrington for the purposes of its review, the review team members decided that “to get to the truth they had to make people not scared to tell the truth”. So the MPA “did a lot of one-on-one interviews, assuring people that what they said would not be attributable. And under nearly every stone was chaos.

“People burst into tears, so relieved were they that they could tell someone what was happening.

” There was one young lad from one of the suppliers who said: ‘Just don’t put this thing [Universal Credit] online. I am a public servant at heart. It is a complete security disaster.’

IBM, Accenture and HP

“Among those starting to be worried were the major suppliers – Accenture, HP and IBM. They started writing formal letters to the department.

‘Our message,’ according to one supplier, ‘was: ‘Look, this isn’t working. We’ll go on taking your money. But it isn’t going to work’.’ Stephen Brien [then expert adviser to IDS] says of those letters: ‘I don’t think Iain saw them at that time, and I certainly didn’t see them at the time.”

At one point “serious consideration was given to suing the suppliers but they had written their warning letters and it rapidly became clear that that was not an option”.

Howard Shiplee, former head of the project, told Timmins that he had asked himself ‘how it could be that a very large group of clever people drawn from the DWP IT department with deep experience of the development and operation of their own massive IT systems and leading industry IT suppliers had combined to get the entire process so very wrong? Equally, ‘how could another group of clever people [the GDS team] pass such damning judgement on this earlier work and at the stroke of a pen seek to write off millions of pounds of taxpayers’ money?’

Shiplee commissioned a review from PwC on the work carried out to date and discovered that the major suppliers “were genuinely concerned to have their work done properly, support DWP and recover their reputations”.

In addition, when funding had been blocked at the end of 2012, the suppliers “had not simply downed tools but had carried on development work for almost three months” as they ran down the large teams that had been working on it.

“As a result, they had completed the development for single claimants that was being used in the pathfinder and made considerable progress on claims for couples and families. And their work, the PwC evaluation said, was of good quality.”

On time?

When alarm bells finally started ringing around Whitehall that Universal Credit was in trouble,  IDS found himself under siege. Stephen Brien says IDS was having to battle with the Treasury to keep the funding going for the project. He had to demonstrate that the programme was on time and on budget.

‘The department wanted to support him in that, and didn’t tell him all the things that were going wrong. I found out about some of them, but I didn’t push as hard as I should have. And looking back, the MPA [Major Projects Authority] meetings and the MPA reports were all handled with a siege mentality. We all felt we had to stand shoulder to shoulder defending where we were and not really using them to ask: ‘Are we where we should be?’

‘As a result we were not helping ourselves, and we certainly were not helping others, including the MPA. But we did get to the stage between the end of 2011 and the spring of 2012 where we said: ‘Okay, let’s get a red team in with the time and space to do our own challenge.’”

The DWP’s “caste” system

A new IT team was created in Victoria Street, London – away from Warrington but outside the DWP’s Caxton Street headquarters. It started to take a genuinely agile approach to the new system. One of those involved told Timmins:

“It had all been hampered by this caste system in the department where there is a policy elite, then the operational people, and then the technical people below that.

“And you would say to the operational people: ‘Why have you not been screaming that this will never work?’ And they’d say: ‘Well, we’re being handed this piece of sh** and we are just going to have to make it work with workarounds, to deal with the fact that we don’t want people to starve. So we will have to work out our own processes, which the policy people will never see, and we will find a way to make it work.’

Twin-track approach

IBM, HP and Accenture built what’s now known as the “live” system which enabled Universal Credit to get underway, and claims to be made in jobcentres.

It uses, in part, the traditional “waterfall” approach and has cost hundreds of millions of pounds. In contrast there’s a separate in-house “digital” system that has cost less than £10m and is an “agile” project.

A key issue, Shiplee told Timmins, was that the new digital team “would not even discuss the preceding work done by the DWP and its IT suppliers”. The digital team had, he says, “a messiah-like approach that they were going to rebuild everything from scratch”.

Rather than write everything off, Shiplee wanted ideally to marry the “front-end” apps that the GDS/DWP team in Victoria Street was developing with the work already done. But “entrenched attitudes” made that impossible. The only sensible solution, he decided, was a “twin-track” approach.

“The Cabinet Office remained adamant that the DWP should simply switch to the new digital version – which it had now become clear, by late summer, would take far longer to build than they anticipated – telling the DWP that the problem was that using the original software would mean ‘creating a temporary service, and temporary will become permanent’.

“All of which led to the next big decision, which, to date, has been one of the defining ones. In November 2013, a mighty and fraught meeting of ministers and officials was convened. Pretty much everyone was there. The DWP ministers, Francis Maude (Cabinet Office minister), Oliver Letwin who was Cameron’s policy overlord, Sir Jeremy Heywood, the Cabinet Secretary, Sir Bob Kerslake, the head of the home civil service, plus a clutch of DWP officials including Robert Devereux and Howard Shiplee as the senior responsible owner along with Danny Alexander and Treasury representatives.

“The decision was whether to give up on the original build, or run a twin-track approach: in other words, to extend the use of the original build that was by now being used in just over a dozen offices – what became dubbed the ‘live’ service – before the new, and hopefully much more effective, digital approach was finished and on stream.

“It was a tough and far from pleasant meeting that is etched in the memories of those who were there…

“One of those present who favoured the twin-track approach says: There were voices for writing the whole of the original off. But that would have been too much for Robert Devereux [the DWP’s Permanent Secretary] and IDS.

” So the twin-track approach was settled on – writing a lot of the original IT down rather than simply writing it off. That, in fact, has had some advantages even if technically it was probably the wrong decision…

“It has, however, seen parts of the culture change that Universal Credit involves being rolled out into DWP offices as more have adopted Universal Credit, even if the IT still requires big workarounds.

“More and more offices, for example, have been using the new claimant commitment, which is itself an important part of Universal Credit. So it has been possible to train thousands of staff in that, and get more and more claimants used to it, while also providing feedback for the new build.”

Francis Maude was among those who objected to the twin-track approach, according to leaked minutes of the project oversight board at around this time.

Lord Freud told Timmins,

‘Francis was adamant that we should not go with the live system [that is, the original build]. He wanted to kill it. But we, the DWP, did not believe that the digital system would be ready on anything like the timescales they were talking about then …But I knew that if you killed the live system, you killed Universal Credit…”

In the end the twin-track approach was agreed by a majority. But the development of the ‘agile’ digital service was immediately hampered by a spat over how quickly staff from the GDS were to be withdrawn from the project.

Fury over National Audit Office report

In 2013 the National Audit Office published a report Universal Credit – early progress –  that, for the first time, brought details of the problems on the Universal Credit programme into the public domain. Timmins’ report says that IDS and Lord Freud were furious.

“IDS and, to an only slightly lesser extent, Lord Freud were furious about the NAO report; and thus highly defensive.”

IDS tried to present the findings of the National Audit Office as purely historical.

In November 2014, the NAO reported again on Universal Credit. It once more disclosed something that ministers had not announced – that the timetable had again been put back two years (which raises further questions about why Lord Freud continues to refuse FOI requests that would put into the public domain – and inform MPs – about project problems, risks and delays without waiting for an NAO report to be published)..

Danny Alexander “cut through” bureaucracy

During one period, the Treasury approval of cash became particularly acute. Lord Freud told Timmins:

“We faced double approvals. We had approval about any contract variation from the Cabinet Office and then approvals for the money separately from the Treasury.

“The Government Digital Service got impatient because they wanted to make sure that the department had the ability to build internally rather than going out to Accenture and IBM, who (sic) they hate.

“The approvals were ricocheting between the Cabinet Office and the Treasury and when we were trying to do rapid iteration. That was producing huge delays, which were undermining everything. So in the end Danny Alexander [Lib-dem MP who was chief secretary to the Treasury] said: ‘I will clear this on my own authority.’ And that was crucial. Danny cut through all of that.”

Optimism bias

So-called optimism bias – over-optimism – is “such a common cause of failure in both public and private projects that it seems quite remarkable that it needs restating. But it does – endlessly”.

Timmins says the original Universal Credit white paper – written long before the start of the programme – stated that it would involve “an IT development of moderate scale, which the Department for Work and Pensions and its suppliers are confident of handling within budget and timescale”.

David Pitchford told Timmins,

“One of the greatest adages I have been taught and have learnt over the years in terms of major projects is that hope is not a management tool. Hoping it is all going to come out all right doesn’t cut it with something of this magnitude.

“The importance of having a genuine diagnostic machine that creates recommendations that are mandatory just can’t be overstated. It just changes the whole outcome completely. As opposed to obfuscation and optimism bias being the basis of the reporting framework. It goes to a genuine understanding and knowledge of what is going on and what is going wrong.”

Sir Bob Kerslake, who also identified the ‘good news culture’ of the DWP as being a problem, told Timmins,

“All organisations should have that ability to be very tough about what is and isn’t working. The people at the top have rose-tinted specs. They always do. It goes with the territory.

And unless you are prepared to embrace people saying that ‘really, this is in a bad place’… I can think of points where I have done big projects where it was incredibly important that we delivered the unwelcome news of where we were on that project. But it saved me, and saved my career.”

Recovery?

Timmins makes good arguments for his claim that the Universal Credit programme may be in recovery – but not recovered – and that improvements have been made in governance to allow for decisions to be properly questioned.

But there is no evidence the DWP’s “good news” culture has changed. For instance the DWP says that more than 300,000 people are claiming Universal Credit but the figure has not been audited and it’s unclear whether claimants who have come off the benefit and returned to it – perhaps several times – are being double counted.

Timmins points out the many uncertainties that cloud the future of the Universal Credit programme  – how well the IT will work, whether policy changes will hit the programme, whether enough staff will remain in jobcentres, and whether the DWP will have good relations with local authorities that are key to the delivery of Universal Credit but are under their own stresses and strains with resourcing.

There are also concerns about what changes the Scots and Northern Irish may want under their devolved powers, and the risk that any ‘economic shock’ post the referendum pushes up the volume of claimants with which the DWP has to deal.

 Could Universal Credit fail for non-IT reasons?

Timmins says,

“In seeking to drive people to higher earnings and more independence from the benefits system, there will be more intrusion into and control over the lives of people who are in work than under the current benefits system. And there are those who believe that such an approach – sanctioning people who are already working – will prove to be political dynamite.”

The dire consequences of IT-related failure

It is also worth noting that Universal Credit raises the stakes for the DWP in terms of its payment performance, says Timmins.

“If a tax credit or a Jobseeker’s Allowance payment or any of the others in the group of six go awry, claimants are rarely left penniless in the sense that other payments – for example, Housing Benefit in the case of Jobseeker’s Allowance or tax credits, – continue.

“If a Universal Credit payment fails, then all the support from the state, other than Child Benefit or disability benefits not included within Universal Credit, disappears.”

This happened recently in Scotland when an IT failure left hundreds of families penniless. The DWP’s public response was to describe the failure in Scotland as “small-scale”.

Comment

What a report.

It is easy to see how much work has gone into it. Timmins has coupled his own knowledge of IT-related failure with a thorough investigation into what has gone wrong and what lessons can be learned.

That said it may make no difference. The Institute in its “lessons” report uses phrases such as “government needs to make sure…”. But governments change and new administrations have an abundance – usually a superfluity – of confidence and ambition. They regard learning lessons from the past as putting on brakes or “nay saying”. You have to get with the programme, or quit.

Lessons are always the same

There will always be top-level changes within the DWP. Austerity will always be a factor.  The culture of denial of bad news, over-optimism about what can be achieved by when and how easily it can be achieved, over-expectations of internal capability, over-expectation of what suppliers can deliver, embarking on a huge project without clearly or fully understanding what it will involve, not listening diligently to potential users and ridiculously short timescales are all well-known lessons.

So why do new governments keep repeating them?

When Universal Credit’s successor is started in say 2032, the same mistakes will probably be repeated and the Institute for Government, or its successor, will write another similar report on the lessons to be learned.

When Campaign4Change commented in 2013 that Universal Credit would probably not be delivered before 2020 at the earliest, it was an isolated voice. At the time, the DWP press office – and its ministers – were saying the project was on budget and “on time”.

NPfIT

The National Audit Office has highlighted similar lessons to those in the Timmins report, for example in NAO reports on the NPfIT – the NHS IT programme that was the world’s largest non-military IT scheme until it was dismantled in 2011. It was one of the world’s biggest IT disasters – and none of its lessons was learned on the Universal Credit programme.

The NPfIT had an anti-bad news culture. It did not talk enough to end users. It had ludicrous deadlines and ambitions. The politicians in charge kept changing, as did some of programme leaders. There was little if any effective internal or external challenge. By the time it was dismantled the NPfIT had lost billions.

What the Institute for Government could ask now is, with the emasculation of the Government Digital Service and the absence of a powerful Francis Maude figure, what will stop government departments including the DWP making exactly the mistakes the IfG identifies on big future IT-enabled programmes?

In future somebody needs the power to say that unless there is adequate internal and external challenge this programme must STOP – even if this means contradicting a secretary of state or a permanent secretary who have too much personal and emotional equity in the project to allow it to stop. That “somebody” used to be Francis Maude. Now he has no effective replacement.

Victims

It’s also worth noting in the Timmins report that everyone seems to be a victim, including the ministers. But who are perpetrators? Timmins tries to identify them. IDS does not come out the report smelling of roses. His passion for success proved a good and bad thing.

Whether the direction was forwards or backwards IDS  was the fuel that kept Universal Credit going.  On the other hand his passion made it impossible for civil servants to give him bad news – though Timmins raises questions about whether officials would have imparted bad news to any secretary of state, given the DWP’s culture.

Neither does the DWP’s permanent secretary Robert Devereux emerge particularly well from the report.

How it is possible for things to go so badly wrong with there being nobody to blame? The irony is that the only people to have suffered are the genuine innocents – the middle and senior managers who have most contributed to Universal Credit apparent recovery – people like Terry Moran.

Perhaps the Timmins report should be required reading among all involved in future major projects. Competence cannot be made mandatory. An understanding of the common mistakes can.

Thank you to FOI campaigner Dave Orr for alerting me to the Institute’s Universal Credit reports.

Thanks also to IT projects professional John Slater – @AmateurFOI – who has kept me informed of his FOI requests for Universal Credit IT reports that the DWP habitually refuse. 

Update 18.00 6 September 2016

In a tweet today John Slater ( @AmateurFOI ) makes the important point that he asked the DWP and MPA whether either had held a “lessons learned” exercise in the light of the “reset” of the Universal Credit IT programme. The answer was no.

This perhaps reinforces the impression that the DWP is irredeemably complacent, which is not a good position from which to lead major IT projects in future.

Universal Credit – from disaster to recovery?

Learning the lessons from Universal Credit