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Mutualisation, employee engagement and individual empowerment highlighted in services white paper

Posted on 20/06/2011 | 1 comment

By David Bicknell

A wire story in the Independent discussing a report on public services in the Sunday Times yesterday suggests the long-awaited ‘open public services’ white  paper will be circulated to ministers this week ahead of full publication next month.

As well as discussing mutualisation, the paper is likely to echo the recent NHS reforms listening exercise and will offer far greater compass for employee ownership and individual empowerment.

Downing Street  has confirmed that it intends to publish the White Paper before the Parliamentary recess at the end of July.

“It is expected to come before the summer recess. It will look at how we take   forward reform across the public services,” a No 10 spokesman said.

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Wanted – good people to manage contracts in central government

Posted on 17/06/2011 | Leave a comment

 

By Tony Collins

David Pitchford Executive Director of Major Projects Authority at the Cabinet Office, told MPs this week of the need for departments to boost skills in drawing up and managing contracts.

 Unable to offer salary incentives to recruit the best people, and restricted in the hiring of consultants departments may need to “get innovative about it”, said Pitchford.

 This could mean asking suppliers for help in managing supplier contracts.

Pitchford is the antithesis of the circumlocutory, prevaricating and procrastinating Sir Humphrey. He was being questioned by Conservative MP Richard Bacon at a hearing of the Public Accounts Committee on PFI and other projects.

The Major Projects Authority is looking, among other things, at CSC’s £3.1bn contracts on the National Programme for IT in the NHS.   

Bacon said he hoped that Pitchford would be able to do more than spread best practice which the Office of Government Commerce “has been doing for the last 10 years and it hasn’t got us very far”.

Pitchford replied that the “environment here is pretty fraught”. He said:

“We cannot buy in people through salary boost. You can’t hire consultants under the operational construct we have at the moment. We have to get innovative about it.

“We need to have a genuine commercial exchange with suppliers that we engage with in procurement to … provide people to come in and help us…”

He said the public sector needs additional commercial and particularly contract management capability.

“This is fundamental. One of the critical failings, in general, in projects, in projects across the civil service, is a lack of contract capability – to draw up a contract and then manage it.”

He said that government should end up as the “best advantaged party”. Departments needed a better commercial understanding when putting a deal together.

“We are also looking to get much more participation from the civil service at the higher level in review of projects, by going to places we have never gone before: that is to seek out at director general level, and director level, within departments, those people who have got specific capabilities.

“We have also looked at – and this is a new area as well – trading functions in the public sector where there are people that are 100% commercially oriented.”

Pitchford says he hopes to have a pilot signed off next week which will allow 12 people to “come in and start to educate operational capability”.

“My focus is on the projects that are high risk, high value. The skills we are talking about here are applicable particularly at the outset of projects.”  

Public Accounts Committee hearing where Pitchford gave evidence this week.

Any idea how many projects we have and how much they’ll cost?

A princely mess.

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Minister defends NHS IT scheme and praises its suppliers

Posted on 17/06/2011 | 1 comment

 

By Tony Collins

NHS Minister Simon Burns gave MPs a series of statistics this week in defence if the NHS IT scheme – and went further by suggesting that systems installed under the National Programme for IT are more critical to patients than IT installed by the NHS outside of the NPfIT.

The NPfIT statistics he gave to the House of Commons indicate that the Department of Health’s ministers are content to follow the practice of Labour ministers who gave MPs regular updates of statistics on what has been achieved by those running the National Programme for IT.

Burns criticised top-down approach of the NPfIT, said that the Conservatives would not have started such a scheme, and promised that £1.3bn – 18% – would be cut from the “forecast” costs of the programme.

Much of his speech during a debate on the NPfIT in the House of Commons was, however, in praise of what the programme has achieved. He cited some of the achievements of the two main NPfIT suppliers CSC and BT, and was supportive of the controversial Summary Care Record scheme.

Far from being at an end, or dead, as some headlines suggested last year, the NHS IT scheme has the full commitment of the Department of Health’s CIO Christine Connelly, the NHS Chief Executive Sir David Nicholson and the minister. It’s not so clear, though, whether the Prime Minister David Cameron is so enthusiastic; and it’s possible that MP Richard Bacon, a member of the Public Accounts Committee who initiated this week’s debate, will seek to have control of NPfIT contracts transferred from the DH to the Cabinet Office which is now reviewing CSC’s £3.1bn worth of NPfIT contracts.

These are extracts from Burns’ speech this week:

“… Regarding national infrastructure, there is the spine, which is the core service that connects all other systems at both national and local level and handles, among other things, more than 11 million daily queries made on the personal demographics service.

“N3, the secure network that links all NHS organisations to each other, to outside data centres and to the internet, has almost 50,000 connections.

“The NHS internal e-mail service handles 2 million e-mails every day.
As for national applications, every day, choose and book processes about 30,000 appointments, the electronic prescription service sends about 660,000 prescription messages and about 2,000 records are transferred electronically using the GP2GP system.

“On the summary care record, as a result of the two reviews that I commissioned last summer, we now have agreement on the core data to be held and the approach to roll-out. More than 30 million patients have been contacted about the summary care record…”

He said the systems “implemented by the programme are making a difference to patients’ experiences and to clinical efficiency, safety and effectiveness”. He cited as examples of success three NHS trusts that have had particular problems with installations of NPfIT systems:

– University Hospitals of Morecambe Bay NHS Trust [which installed Lorenzo 1.9 from CSC]
– Barts and The London NHS Trust [which installed Cerner Millennium from BT]
– Royal Free Hampstead NHS Trust [which also installed Millennium from BT]

Burns said that at Morecambe Bay infection prevention is “now fully electronic, using the Lorenzo system”.

At St Barts, London, “clinicians are alerted to all patients carrying MRSA through the [Cerner] Millennium system”.

The Royal Free hospital in Hampstead has “also used Millennium to create safety procedure information, including for endoscopy data and bleeding guidelines”.

Burns went on to say that “BT has delivered community and mental health systems to all trusts in London and the south that requested them, and the Cerner Millennium system to “just over half the London trusts that require it”.

CSC, said Burns, has “delivered to 83 acute trusts in the north, midlands and east of England using upgraded interim systems”. CSC has also “delivered iSoft’s Lorenzo e-patient record system to 10 trusts and completed delivery of 137 prison health IT systems across the country”.

And “all but 14 of the more than 8,000 GP practices in England have a system supplied by either the national programme or the GP systems of choice scheme, which has allowed us to maintain several small and medium suppliers in the market”.

In giving MPs the latest statistics on the NPfIT Burns follows Labour ministers who included Lord Warner, Caroline Flint, Lord Hunt, John Reid, Andy Burnham, Ivan Lewis, Liam Byrne, Hazel Blears, David Lammey, Rosie Winterton and Ivan Lewis.

This was what Labour NPfIT minister Caroline Flint told the House of Commons on 6 June 2007:

“Thousands of NHS staff and many thousands more patients are already benefiting from the national programme for IT… Connecting for Health systems are already used by 645 GPs and 335 pharmacists. To date, more than 20,000 direct bookings have been made through choose and book in his area, which is already benefiting from the picture archiving and communications system. Our ambition is that all NHS staff and the public throughout England will gain from the enormous benefits that the national programme for IT is enabling.”

Are NPfIT installations more critical than non-NPfIT sites?

In his support for what the NPfIT has achieved, Burns went further than Labour ministers. He suggested that NPfIT systems are more critical than those installed outside the programme, and so need more money spent on disaster recovery arrangements.

Burns said that “because NHS systems are so critical, they need to be far more robust and stable than those outside the programme”.

He said: “We invest a great deal of money in ensuring that if systems go down, each and every component can be automatically recovered.

“Should a whole system fail, it can be recovered and made available for clinicians to use within two hours. Of course, such a level of disaster recovery does not come cheaply, which helps explain differences in price between some systems in the programme and similar systems procured by some trusts outside the programme.”

But Burns’s Conservative colleague Richard Bacon made the opposite point: that when an NPfIT data centre crashes it can cause more disruption than when a single trust’s systems fail.

Bacon said that when a CSC data centre at Maidstone was hit by a power failure, followed by restarting problems, it was “the largest computer crash in NHS history”.

“The back-up systems did not work, and data held in the centre could not be accessed. That meant that, for four days, 80 NHS trusts could not use their patient administration systems and had to operate as best they could with paper systems,” said Bacon who, in the debate, gave an excoriating critique of the NPfIT and its history.

Bacon remains concerned that trusts with NPfIT systems will face sharply increasing IT costs when the local service provider contracts end in 2014/15.

Nothing Bacon says, however, is likely to dent Burns’ spirited enjoyment of the programme’s achievements and commitment to its future.

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Will private sector involvement in mutuals make for a perfect partnership?

Posted on 16/06/2011 | Leave a comment

Although The Times today has been reporting that the Coalition might be getting some cold feet about its plans for public service reform – the Public Services Reform White Paper now looks as if it may be delayed in the wake of  recent discussions about NHS reform – there is little doubt that the role of the private sector in partnerships is being discussed.

The Guardian recently carried a piece in which Craig Dearden-Phillips, founder and chief executive of Stepping Out, a business helping parts of the public sector become a social enterprise, wondered  whether the marriage between public manager and the private sector will work?

“One concern is the compatibility of each side’s goals,” he says. “So far, public sector mutuals tend to be more focused on social rather than commercial aims. Few appear to have share capital financially worth much to staff. They tend to be defined by a passion for people, place or profession, and they often aspire to stay local and be more personal. Every person I have met who leads a spun-out organisation is motivated by social purpose. They identify strongly with public sector values – albeit ones that see a mutual or social enterprise as the appropriate vehicle for this.

“A private company, however, will, quite rightly, be mostly concerned with its shareholders’ or directors’ interests, and that will include a strong focus on growth, either by merger or acquisition and on cutting costs quickly.

“These are legitimate goals, and, arguably, the only way to create large organisations. But you can see a potential tug-of-war here, with one side driven by a growth agenda and the other living in fear of becoming remote from its community – and of losing control to a private partner.

“Can both sides meet at least somewhere in the middle, with private investors accepting the potential constraints on return introduced by being partly employee-owned and former public managers bowing to some of the commercial imperatives of  investors?

“As someone working every day alongside public managers, I hope we can find ways to bring necessary investment and expertise to the table. Unlike in continental Europe, this is unlikely to come from the state. So we need to examine closely how to do this while ensuring the values we hold close are upheld.”

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Delivering innovation in sustainability through cross-industry and supply-chain collaboration

Posted on 16/06/2011 | Leave a comment

Thanks to the Guardian for putting on an excellent Sustainable Business Quarterly meeting in London last night.

There were some very good speakers: Jonathan Foot, chief environment officer, EDF Energy; Jo Fox, director, the bigger picture, Sky; Dax Lovegrove, head of business and industry, WWF-UK; and Miriam Turner, innovations director, InterfaceFLOR, all focusing on collaboration and innovation. 

We then split into different groups and had a roundtable discussion around sustainability communications and collaborating and innovating in the supply chain.

Thanks to my colleagues around the table: Stuart Singleton-White from The RainForest Alliance, Leigh O’Grady from The Carbon Trust, Toby Robins from Wiles Greenworld, Dr Magda Hercheui from the University of Westminster, Anne Ronan from Zinc, Robyn Kimber from Virgin, Nicole Lawler from Total  Eco Management and Petronella Tyson from the Guardian for an excellent and illuminating discussion.

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Agile can fix failed GovIT says lawyer

Posted on 13/06/2011 | 4 comments


In a guest blog, commercial lawyer Susan Atkinson argues that agile development is not an evangelical fad ill-suited to government IT.

The blog by Alistair Maughan in Computer Weekly in which he argues that ‘Agile will fail GovIT’  is quite extraordinary [1].  It is extraordinary in that it completely overlooks the poor track record of GovIT to date. It also makes a damning attack on the adoption by the Government of agile without explaining the potential benefits.

The state of GovIT

The Government spends about £16bn per year on IT. The spend has been growing steadily in recent years and, without radical intervention, shows no sign of abating. [2]  A compelling number of studies has found that about one quarter of all IT projects (in both the public and private sector) are cancelled and about half are delivered late, over budget or both. [3]   This would suggest that public funds in the order of several billion pounds per year are being invested by the Government in failed IT projects.

In 2005 Edward Leith, Chairman of the Public Accounts Committee, commented that:

“far too often major IT enabled projects in government departments are late, well over budget, or do not work at all – an enormous waste of taxpayers’ money” [4]

The problem is so serious that shortly after coming into power the Coalition Government introduced the ICT Moratorium, under which any new ICT contracts and contract extensions/modifications above a value of £1m could not be entered into without specific agreement by the Treasury.

The waterfall model

Why is the track record of IT projects so dreadful?  Until fairly recently virtually all IT projects have been managed using the waterfall model.  The waterfall model enshrines a sequential development process, in which development is seen as flowing steadily downwards – like a waterfall – through the phases of conception, initiation, analysis, design, construction and testing. The output of each phase provides the input for the next stage.

There are two very significant consequences of the waterfall model.  Firstly, all of the requirements of the customer are specified before the project starts.  However, this fetters the ability of the customer to respond to change and to exploit emergent opportunities over the course of the project.  Secondly, the customer does not receive anything of tangible value until all of the requirements have completed testing at the end of the project.   This means that it can be many months and possibly years before the customer can realise its investment in the project.

The waterfall model has come under increasing criticism for a number of reasons over recent years.  Major studies point to the use of the waterfall model as the cause of failure for many IT projects.

Agile is not “an evangelical fad“

Agile has developed from a grassroots movement in the US in the 1990s as a backlash to the waterfall model, and its influences originate in Japan. The theory of agile is based upon, and supported by, complexity science, systems dynamics, economic theory and behavioural studies, amongst others.

The adoption of agile has steadily increased since 2001 when the Agile Manifesto was created.  Originally agile was largely the premise of the IT departments (even though agile is not necessarily IT-specific), but it is now widely used on an organisational basis, in virtually all industry sectors, and extensively in North America, Japan and the Scandinavian countries.

Some of the most remarkable examples of the use of agile are found in Google, Yahoo! and salesforce.com.  Indeed, salesforce.com has delivered a 41% annual return to shareholders over a sustained period, and it credits this result in no small part to its adoption of Scrum in 2006. [5]

BSkyB v EDS and DeBeers v Atos

The cases of BSkyB v EDS and DeBeers v Atos do not show that “when Agile projects go wrong, they can go spectacularly wrong” .The decision in BSkyB v EDS  doesn’t make any reference to agile.  The project was actually based on the waterfall model and used rapid application development (RAD) – which isn’t agile – for rapid development of prototypes, the feedback from which was fed back in to the requirements.

The project outsourced by DeBeers to Atos began, ostensibly, with an agile approach, but then switched to a more traditional approach after the project began to run into difficulties. However, the parties do not appear to have contracted on an agile basis. It is very difficult to run a project on an agile basis within the constraints of a traditional contract, because the waterfall model and agile model are quite different.  Despite the references by the principle technical architect to DSDM (Dynamic Systems Development Method), which is an agile methodology, it is not clear from the decision how the project was in fact run in an agile way.   For example, it appears to have always been the intention that a sequential model of development would be used, which is wholly inconsistent with an agile approach.

A  general lack of understanding of agile best practice  

Agile is merely an umbrella term for lightweight methodologies, of which Scrum and Extreme Programming (XP) are the most widely used.  Each of the methodologies is quite different.  For example, the Rational Unified Process (RUP) is far more prescriptive than Scrum.  For there to be a sensible debate on agile we need to ensure that the participants share a common understanding of agile best practice.

Agile is compatible with fixed price

Contrary to what is suggested, it is possible to agree a fixed price for an agile contract.  Under an agile contract the project is sub-divided into modules or releases, each of which is initiated by means of a statement of work.  The releases can be charged for on a fixed price basis, or the units of work (often measured by reference to story points) can be charged for on a fixed price basis.

However, “a watertight contract, clear deliverables … with a fixed price and appropriate remedies” is a fallacy.  Any project must be performed and delivered under certain constraints, which have traditionally been identified as:  (i) Scope (features and functionality), (ii) Resources (cost and budget) and (iii) Schedule (time).  These three constraints compete against each other and exist in an ‘unbreakable’ relationship, as illustrated by the ‘Iron Triangle’. [6]

For example, bringing forward the scheduled end date by adding more resources will increase cost, or, adding to the scope will increase time and cost.  So, if all three constraints are fixed, there is no give in any of them if there is any uncertainty or unforeseen events arise during the project, and it has been proven that this will inevitably adversely impact on quality and the project objectives.

Most customers want to fix Resources and Schedule which means that Scope must be allowed to vary.  The question, therefore, is how can the customer derive value if the Scope may change?  Agile solves this problem by prioritising the requirements of the customer on an ongoing basis throughout the project, ensuring that the highest priority requirements are delivered on time and within budget.

In any event, many projects are actually over-specified.  It has been shown that 64% of software features are rarely or never used. [7]  So it may well be the case that the overall needs of the customer can be met without the need to deliver the lowest priority requirements, in which case it may be possible to achieve significant cost-savings by ending the project earlier than originally planned.

This can be contrasted with the traditional waterfall method under which the customer doesn’t receive anything of tangible value until all of the requirements have been delivered.

The Government is right to want to manage its budgets tightly.  However, it has been proven that uncertainty is inherent in the process of software development.

For this reason any estimates regarding price (or, indeed, regarding the amount of effort involved or schedule) are subject to large amounts of uncertainty at the start of the project.  This amount of uncertainty is only reduced as the software definition is refined over the course of the project, as illustrated by the ‘Cone of Uncertainty’. [8]

It is unrealistic to rely on estimates made at the start of the project when the level of uncertainty is at its greatest.  The Government has experienced so many problems with overruns on fixed price contracts that today many of its contracts for software development are no more than a variation of time and materials.

Compliance with public procurement rules

EU public procurement rules require public sector bodies (PSBs) to ensure suppliers are treated on equal terms and to avoid discrimination on the grounds of country of origin.  The contract should be awarded to the most economically advantageous tender, using pre-defined and objective criteria.  Detailed up-front specifications and a fixed price are not a requirement.   Contracts awarded for the provision of consultancy services or, indeed, legal services, are a good example of this.  In any event, in an agile contract the scope of the project is outlined in the form of the objectives of the project, the metrics for success and the constraints.

In Finland, which is also subject to the EU public procurement rules, there are a number of agile contracts that have been awarded by PSBs in full compliance with these rules.

Contractual rights and remedies in an agile contract

I disagree that “Agile contracts lack clear contractual delivery obligations or remedies”.  An agile contract only differs from a traditional contract in terms of how the solution is delivered.  There is no reason why, for example, provisions regarding the treatment of intellectual property rights, data protection, assignment and so on should be treated any differently.

In fact a customer has more remedies under an agile contract than under a traditional one.  Under a traditional contract it is very difficult for a customer to enforce any of its rights before the acceptance date – which can be many months or even years away – because up until then all of the requirements are merely work in progress.  Often it is difficult to determine in the acceptance tests whether the software delivered meets the requirements because there have been so many change requests to the requirements in the intervening period that it is hard to establish what the requirements are.

Under an agile contract there are contractual rights and remedies at the end of each release.   The supplier commits to deliver by each release completion date fully tested and working software that is ready to deploy and which represents an agreed number of completed units of work.  As mentioned above, units of work are often measured by reference to story points.

Equally important is the ability of the customer to plan adaptively throughout the development project, re-focusing the work of the supplier at the start of each iteration based on its findings from the work delivered to date.  Not only does this give the customer much greater flexibility, but it also means that many disputes can be avoided by correcting misunderstandings at an early stage.

The discrete roles of the customer and the supplier

Whilst agile advocates the collaboration of the customer and the supplier, their roles are quite different and – contrary to what is suggested – clearly defined.

The supplier has responsibility for the technical domain and the customer has responsibility for the business domain.  In other words, the customer is responsible for articulating the business processes to be codified, and the supplier is responsible for designing and writing the code.  To that extent the roles are clearly demarcated.

However, input from both parties is essential, as software development is nothing more than the codification of business processes.    It is unrealistic for the customer to transfer all responsibility for delivery to the supplier.

Cross functional teams

The blog states that agile “is not suited to public sector management structures” for the reason that decision-making is centralised in government, whereas “agile decision-making … flows down”.  Arguably, it is not agile that is not suited to public sector management structures, but public sector management structures that are not suited to agile.  The Institute for Government acknowledges that organisational culture within government is a significant barrier to the adoption of agile:

“The existing governance and commercial processes, not to mention the fundamental mindset shift required, pose specific and difficult challenges.” [9]

However, that is not a reason for rejecting the new IT strategy.  There is currently a trend for organisations in many different industries and disciplines to move away from hierarchical and siloed departmental structures and towards decentralised cross functional teams.  This approach is advocated by TQM (total quality management), lean, systems thinking, and in business management books such as ‘The Leader’s Guide to Radical Management: Reinventing the Workplace for the 21st Century’ by Stephen Denning.

Conclusion

 The age of the Internet has made possible collaborative working and joined-up thinking on a scale never previously experienced.  But it has also brought about innovation and a pace of change at a rate that is pushing traditional project methods and contracts to breaking point.  Agile offers a solution for managing projects in this increasingly dynamic environment.

The Government should be applauded for taking the bold step to change its IT strategy to adopt agile.  However, it is inevitable that, like any innovation, such a significant change in strategy will be met with resistance.

It will require changes to be made not only on the part of the government, as highlighted by the Institute for Government, but also on the part of suppliers and supporting partners, including the legal profession.

But there is already evidence that agile can fix failed GovIT.  A number of public sector bodies, including the Ministry of Defence and the Metropolitan Police, are already using agile with great effect.  We now need to move forward the debate to discuss how the challenges to the adoption by government of agile can be overcome.

[1] The blog ‘Agile will fail GovIT, says corporate lawyer’ published by Computer Weekly on 26 April 2011.

[2]   Latest total spend based on the estimate in the ‘Operational Efficiency Programme’ final report published by HM Treasury in April 2009.

[3] ‘Software Estimation: Demystifying the Black Art’by Steve McConnell.

[4] As reported in The Telegraph in 2005.

[5]  The blog ‘Six common mistakes that salesforce.com didn’t make’ by Steve Denning and published on the Forbes website on 18 April 2011.

[6] The ‘Iron Triangle’ was invented by Dr Martin Barnes in 1969 and popularised in the Project Management Body of Knowledge (PMBOK Guide) issued by the Project Management Institute (PMI).

[7] Standish Group study reported at XP 2002 by Jim Jonson, Chairman.

[8] The original conceptual basis of the ‘Cone of Uncertainty’ was developed by Barry Boehm in 1981. The model has since been validated, based on data from a set of software projects at the US Air Force, NASA’s Software Engineering Lab and other sources.

[9] ‘System Error: Fixing the flaws in government IT’ published by the Institute for Government in March 2011.

**

Susan Atkinson is a Legal Director at gallenalliance Solicitors, based in London.  She is a commercial lawyer specialising in IT and with a particular interest in Agile and Lean. She has been advising the Institute for Government on an ad hoc basis on the contractual implications for the government in outsourcing agile projects, and has contributed to the Institute’s report ‘System Error: Fixing the Flaws in Government IT’.

 

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BT doubles the value of its NHS IT business, to £4.1bn, in eight years

Posted on 08/06/2011 | 1 comment

By Tony Collins

BT’s NPfIT business today is worth £4.1bn – nearly double the cost of the original NHS IT contracts, according to a calculation by Campaign4Change.

In December 2003 the Department of Health awarded BT three contracts under the NHS IT programme:

– a ten-year deal, worth £620m to design, deliver and manage the Spine, a national patient record database and transactional messaging service that was essential to the NHS Care Records Service.

– a ten-year deal, worth £996m to become the main IT supplier – local service provider – to all London trusts. The contract was to design, deliver and operate integrated local patient record applications and systems for the NHS in London.

– a seven-year “N3” broadband network deal, worth £530m, to replace the NHS communications network NHSnet.

The three contracts were worth a total of £2.15bn in 2003.

Now BT has confirmed that the total value of its NHS contracts is £4.1bn. This is after change control notices and further NPfIT work, including taking over from Fujitsu at seven NHS sites in the south.  Of this £4.1bn, BT has so far received £2.8bn – about £700m more than the cost of its original contracts; and BT has confirmed it is bidding for further NPfIT work, under NHS Connecting for Health’s Additional Supply Capability and Capacity (ASCC).

On the basis of what they have said in the past, the NPfIT senior responsible owner Sir David Nicholson and officials at the Department of Health and NHS Connecting for Health, will defend all payments to BT as value for money.

Indeed, when Nicholson, the NHS Chief Executive, was asked last month by the chair of the Public Accounts Committee Margaret Hodge whether he was claiming that money spent to date on the NPfIT  had not been wasted and will potentially deliver value for money Nicholson confirmed that he did say this.

“Yes, yes,” replied Nicholson.

However the original NPfIT contracts set down plans for fully-integrated London-wide care Records systems by 2010, which has not happened.

The scale of the increases raises questions of whether officials at the Department of Health are too close to the NPfIT suppliers to be regarded as independent arbiters on contract negotiations and change control notices.

There’s a strong argument for the DH to transfer control of the NPfIT contracts to the Cabinet Office. Nicholson, the DH and CfH will not give up their hold on the NPfIT or the LSP contracts, or disputes. Perhaps David Cameron, who has taken a personal interest in the NPfIT, should order that the Cabinet Office minister Francis Maude take control.

Improvements in the NHS in ways of working, such as the standardising of medical forms for data collection,  and IT-based innovation, are much needed. But not at any cost.

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Cabinet Office publishes SME action plans today – a good start.

Posted on 03/06/2011 | 1 comment

By Tony Collins

The Cabinet Office has today published SME “action plans” for each department.

It says the  reforms are “designed” – which is not the same as a commitment – to   “significantly open-up the public sector marketplace to small businesses”.

The new  plans support what the Cabinet Office calls an “aspiration” for the Government to spend  25% of its budgets on SMEs.

The actions range from:

  • breaking large contracts into smaller lots
  • working with major suppliers to increase SME access to sub-contracting opportunities
  • increasing the amount of information that is available to SMEs about contract opportunities
  • holding “product surgeries” for SMEs to pitch innovative ideas
  • piloting new procurement methods that are more open to SMEs.

Some of the documents published today could be more aptly  described as goodwill gestures to SMEs rather than  action plans.  Indeed, when read carefully, some of the action plans appear to be a civil service response to an unwanted ministerial decree.

HM Revenue and Customs, which is tied into an £8bn IT outsourcing deal with Capgemini, uses phrases in its SME action plan that are vague and non-committal, such as “build on the work done …”

These are some of the promises HMRC is making to SMEs:

– From June 2011, HMRC will develop and maintain information on its website relevant for SMEs. The information will include, but will not be limited to, signposting for SMEs to access relevant procurement details and how they can work with the Department. The Department will provide clear contact points for additional information and queries.

– Work with the 12 largest prime HMRC suppliers (representing c80% of 3rd party spend) to ensure they identify and engage with their own SME supply chains, including 3/4th level suppliers and agree actions (such as advertising suitable sub-contracting opportunities on Contracts Finder) with them to increase value of spend.

– Build on the work done on the recent open procedure procurement for Debt Collection Services …

– HMRC to consider appropriate procurements that are suitable for SME competition.

The Home office’s action plan is better, though.  It says it will:

– review forthcoming procurements and develop standardised processes and procedures to remove barriers to SMEs. “This will ensure the method used is as SME friendly as possible for the contract on offer.”  By June 2011.

Alongside publishing the action plans the Cabinet Office is creating a central team, Government Procurement, which will contract for widely-used goods and services for the whole of Government at a single, better price.

This, says the Cabinet Office, will end the “signing of expensive deals by individual departments” and “end poor value contracts such as those where government departments and agencies paid between £350 and £2,000 for the same laptop and between £85 and £240 for the same printer cartridge from the same supplier”.

Central procurement of common items is expected to save more than £3bn a year by 2015 – 25% of the Government’s current annual spending on these items.

Francis Maude says the Government is on track to have saved more than £1bn from tighter spending on discretionary goods and services including consultants and agency staff in the last year.

“Changes to make Government contracts more accessible to SMEs have already led to one not-for-profit SME successfully undercutting larger competitors and winning a £1.6m contract to provide office support services to HM Revenue and Customs,” says the Cabinet Office.

Maude said:

It is bonkers for different parts of Government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn’t even any proper central data on procurement spending.

“So, as Sir Philip Green found, major efficiencies are to be found in Government buying. The establishment of Government Procurement means that the days when there was no strategy and no coherence to the way the Government bought goods and services are well and truly at an end…

“We are also determined to press ahead with measures to create a more level playing field so that small organisations and businesses can compete fairly with bigger companies for Government contracts. SMEs can provide better value and more innovative solutions for Government and the actions set out today will support their growth as the economy starts to recover.”

The Cabinet Office says that greater use of the ‘open’ procurement procedure  has increased by 12% across the public sector between March and April alone, helping to ensure that all suitable suppliers have their tender proposals considered.

And following the Innovation Launch Pad, five further Dragons’ Den style ‘product surgeries’ are planned so that innovative SMEs can pitch their proposals directly to Government.

The Government bought £66bn  of goods and services in 2009/10. An Efficiency Review by Sir Philip Green, which was published in October 2010, found that the Government had not made the most of its size, buying power or credit rating.

Green wanted the mandation of “centralised procurement for common categories”.

Are officials undermining ministerial plans to boost SME work?

There is some evidence emerging, however, that the civil service is misinterpreting ministerial will and standardising contracts by taking work away from SMEs and putting it with a few large companies. Campaign4Change will be looking at this in coming weeks.

We also hope this will be investigated by the new Government Procurement team which will be headed byGovernment Chief Procurement Officer, John Collington.

Link:

Home Office SME Action Plan.

HMRC SME Action Plan

All departmental action plans.

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CSC’s future in NHS IT – an analysis

Posted on 02/06/2011 | Leave a comment

By Tony Collins

              We trust the Cabinet Office more than the Department of Health to terminate or re-negotiate CSC’s £3.1bn NPfIT contracts.

  •  CSC’s strong position in NHS IT
  • Could CSC claim hundreds of millions from DH?
  • We’d be over a barrel, warns Connelly
  • More expense to cancel CSC’s contract than complete it, says Connelly
  • Are Connelly’s arguments flawed?
  • What happened to the concept of cutting your losses?
  • Remove life support for CSC’s contracts says Techmarketview 
  • CSC sees NHS IT as global reference site
  • CSC MoU is “ready to go”
  • Coalition reviews of CSC contracts a “stamp in the passport”
  • CSC will split Lorenzo into smaller chunks
  • No one NHS trust will dominate requirements

The share price of CSC, one of the biggest NHS IT suppliers, fell by 11% in New York trading this week, after its financial year-end forecast fell short of analysts’ estimates, according to Bloomberg.

Computer Sciences’ share price fell $4.76, or 11 percent, to $39.33 and although today [2 June 2011] the price is up slightly it is far below the 52-week high of $56.61. Bloomberg says that CSC has been hurt by delays in federal contract decisions and is also working to revise its NHS contract in the U.K. CSC has £3.1bn worth of NPfIT contracts.

CSC’s strong position in NHS IT

Despite the temporary knock in confidence for CSC over its share price, in part because of the NHS uncertainties, CSC remains in a strong negotiating position over the future of its work for the UK health service.  

Could CSC claim hundreds of millions from DH?

Christine Connelly, the Department of Health’s CIO, told the Public Accounts Committee on 23 May 2011 that if the DH terminated its contract with CSC for convenience [rather than terminate for breach of contract] CSC could claim hundreds of millions in compensation.

Connelly also said there is the “potential that the supplier may then come to us and seek damages based on the work in progress that they have on their balance sheet today, with a view—not that I am saying at this point that we would share it—that we have impacted their ability to get return on that asset that we were holding.

“So they may come to us and seek damages as a proportion of that balance sheet value. Again, that may be several hundred million pounds”.

Further, by terminating CSC’s contract, the Department of Health would have to support NHS trusts that had bought CSC systems under the NPfIT.

Connelly said:

“I am not talking about what it costs in terms of running those other systems, but there would be a cost if we decided no longer to have Lorenzo or [iSoft’s] IPM or whatever. We would have to take the people who are currently using those systems and move them to something else; that would be a transition cost.

“There then is likely to be a period where we would still be running the systems that we had now terminated. If you look at what happened to us in the South with Fujitsu, Fujitsu increased the cost of supporting the systems. They almost doubled the cost compared to the contract that we had.

We’d be over a barrel, warns Connelly

“So for the period before we had transitioned the systems across, we would expect to pay some premium on that support and obviously we would seek not to do that, but given that we would then be over a barrel, because we are running systems that one supplier has provided and we have now terminated, if we do not manage that well that could be a very difficult position.

More expense to cancel CSC’s contract than complete it, says Connelly

“So potentially, if you ask me about the absolute maximum [the DH is exposed to on its CSC contracts] we could be exposed to a higher cost than the cost to complete the contract as it stands today.”

Are Connelly’s arguments flawed?

But Connelly’s comments appear to make several assumptions namely that:

a) the DH hasn’t a strong legal case against CSC for breach of contract. In fact the DH should be able to credibly contest any claim by CSC for hundreds of millions of pounds in compensation.

b) CSC could withstand a long legal case against the UK government. In fact Fujitsu wants to settle its legal dispute with the Department because the row could damage its relationship with the coalition.  The policies of the coalition mean that suppliers no longer have isolated relationships with departments. Damage to a relationship in one department could affect a supplier’s relationship with government as a whole.

CSC is one of the top 10 suppliers to the UK Government. It will wish to avoid any dispute with the DH that could affect its relationship with the Cabinet Office’s new Crown representatives.

c) it would cost a fortune supporting NHS trusts that had bought NPfIT systems from CSC. In fact there are several healthcare suppliers – other than CSC and BT – that have been supporting and enhancing NHS trust systems outside of, and within, the NPfIT. They could support former CSC trusts at a fraction of the cost of BT [or CSC].

What happened to the concept of cutting your losses?

Anthony Miller, managing partner at market analyst Techmarketview, says it is “utter rubbish” to suggest that cancelling CSC’s contract will cost more than seeing it through to the bitter end. “Has the Government no idea about the concept of ‘cutting your losses’?” asks Miller.

Remove life support for CSC’s contracts says Techmarketview 

He adds:

“It should be clear to everyone involved that CSC’s NHS IT programme has deteriorated from ‘walking wounded’ to ‘do not resuscitate’. The sooner life support is removed, the better for all concerned.”

CSC sees NHS IT as global reference site

CSC, however, continues to see the NPfIT and its NHS IT work as a global reference site for healthcare IT.

Guy Hains, CSC’s President, Global Healthcare, told analysts last month that the NHS component of its business “is still the largest programme globally [and] is the reference point for most of our conversations with other national governments”.

He added: “It’s that experience, the learning points, the good and the bad, that carry forward into most of our development work we are doing elsewhere…”

CSC MoU is “ready to go”

Hains appeared confident that a new memorandum of understanding on its NPfIT work would be signed imminently. “We’ve got government reviews to complete. That’s imminent. We’ve done a lot of work regarding alignment with the NHS, and the MoU in that sense is ready to go”.

Coalition reviews of CSC contracts a “stamp in the passport”

He referred to the reviews of CSC’s NHS contracts as a “stamp in the passport before we go forward”. He said that creating Lorenzo code is “80% done”, adding: “We’ve got some important work to do and it relates to the clinician use and the very much frontline use of the system, and we’ve been learning with the NHS about the better way that we can deliver that”.

CSC will split Lorenzo into smaller chunks

CSC is to release Lorenzo in smaller chunks. “We’re doing it in ten smaller delivery units rather than two major releases. And we’ll be able to deploy those in a separable, incremented way. There’s no question that that will help digestion as it goes into the NHS”. As for working with early adopters, CSC is going through a “radical change in development”.

Hains said that rather than develop the software and then go through extended testing, “we are bringing the engagement of those lead clinicians and lead trusts upstream right into the requirements, refinement and capture stage, so that will allow us to shorten the time to market for the whole programme”.

No one NHS trust will dominate requirements

CSC is putting “governance into the programme” that means that one single trust doesn’t dominate in its requirements. “We’re getting a more common requirement through an expert user group.”

**

Comment:

The Department of Health gives the impression that it is over a barrel, that it cannot afford to fall out with CSC. But it’s clear to others that it is the Department’s commercial lawyers that are cringing before CSC, asking to be forgiven for being a nuisance. In essence the Department is saying to CSC’s lawyers: “Do with us what you will.”

Can public funds be entrusted to the Department of Health in such circumstances?

Richard Bacon, a Conservative MP on the Public Accounts Committee who has followed the NPfIT for many years, told ComputerworldUK that CSC’s contract should be abandoned. He said that the company “should not be rewarded for failure”. He reacted with disbelief to the suggestion that it would cost more to cancel the contract than complete it.

“I find that idea incredible, staggering,” he said. The Department’s comments could be a negotiating ploy to strengthen its arguments around the continuation of the programme, he added.

He said:

“If it’s actually true that it would cost more to cancel, then it’s a scandal. It would be an enormous indictment of [NHS chief executive] David Nicholson as the project’s Senior Responsible Owner, and of Connecting for Health, which allowed such a deal to be signed. “If it’s the truth, then those officials should be dismissed.”

It’s hard to argue with Bacon’s logic. Indeed we are not sure the Department should be taking a lead in any negotiations with CSC or BT. The NPfIT contracts should be in the hands of the Coalition government, via the Cabinet Office, not the Department of Health’s.

The Cabinet Office represents the taxpayer. The Department of Health’s informatics directorate represents a variety of interests including its own. Those interests seem tied to the continuance of the NPfIT.

*Thanks to David Moss for drawing my attention to the Bloomberg article on CSC’s share price.

Links:

Richard Bacon’s views on NHS IT.

NHS urged to turn off life support for £3bn CSC contract.

NPfIT – Our view on what should happen now.

Why did the NPfIT fail?

Health CIO Christine Connelly hits back at National Audit Office.

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Alpha.gov.uk shows how agile can work in government

Posted on 02/06/2011 | 2 comments

By Tony Collins

Harry Metcalfe, managing director of Dextrous Web, has written an excellent article on Alpha.gov.uk.

Alpha.gov.uk is a prototype, built in response to some of the challenges laid down in a report by Martha Lane Fox last year. The two main objectives of Alphagov are to:

– test, in public, a prototype of a new, single UK Government website

– design and build a UK Government website using open, agile, multi-disciplinary product development techniques and technologies, shaped by a preoccupation with user needs.

It’s clear from Metcalfe’s post that he  understands the unbending ways of government. He sees the opportunities too. He says:

“As a technical solution, this [Alphagov] is brilliant. If you’re going to have a single [web] platform, this is the right kind of platform to have, because it embraces change.

“If you want some new functionality, add an app for it. If you need a new department, add a new instance of the department app, add your content, and you’ll have 90% of what you need.

“If you want to run a consultation using someone’s third-party tool, just have them brand it appropriately and write an app that gives you as much integration as you want, or as the tool can support. But this kind of flexibility is powerful. In many respects it’s anathema to the way government works.

“For a start, it requires something government unwisely gave up on long ago: an in-house development team…”

Campaign4Change comment:

Alphagov is not yet handling transactions. Indeed there are no agile-developed systems that handle passport applications or tax self-assessment.

As Metcalfe says: “…transactions are complicated, messy beasts, unavoidably bound up with business processes and legislation; empires, politics and entrenched positions; long contracts and vast sums of money.. it’s not primarily a technological problem. It’s a process problem, and those are much harder to fix.”

It may be a matter of time, though, before agile becomes far more prevalent in public sector IT. Universal Credit is based on agile, in a programme run in part by the redoubtable Joe Harley, the UK Government’s CIO.

Harley told the Public Accounts Committee last month:

“In the waterfall it takes quite a while to do a design – maybe a year or two … By the time we come to execute, things have moved on.

“In the agile world, it is a way of providing rapid solutions very quickly. Normally, and in Universal Credit it is monthly, one designs, develops, implements and produces a product very early on in the cycle. It is particularly useful and appropriate when the users themselves – in the universal credit, citizens themselves – can participate in the creation of it. It is about user-centric, rapid deployment solutions. That is what we hope to achieve.”

Ian Watmore, Chief Operating Officer at the Cabinet Office, told the same committee that the government objective is for the first claims under Universal Credit to be paid by October 2013. He said: “I would have thought that if we achieve that, it will become the precedent and benchmark for Government projects.”

We hope Universal Credit is a timely success and that it becomes a benchmark for government projects. It’s easy to talk down the chances of agile in government on the basis that it ill suits the way government works. But Francis Maude, officials in the Cabinet Office, and Alphagov’s developers want to change the way government works.

To say that agile won’t work in government is like telling someone who’s obese that they need not eat less because history shows they won’t be able to.

Government must spend less. And agile is one way to cut spending. Alphagov is showing the way.

How Alpha.gov.uk came about:

Last year Martha Lane Fox published suggestions on reforming UK Government’s online. At the launch of her report (subtitled “revolution, not evolution”) she recommended:

“…Putting the needs of citizens ahead of those of departments”

She made a strong case for the UK Government to adopt a single web domain, analogous to the BBC’s use of BBC.co.uk, and recommended a radical change in how gov.uk sites are produced:

“Government should take advantage of the more open, agile and cheaper digital technologies to deliver simpler and more effective digital services to users.”

Links:

How Alphagov might change UK government for the better.

Institute for Government: what’s wrong with government IT?

Agile in government IT – don’t knock it.

10 things Alphagov gets right.

10 things Alphagov gets wrong.

Alpha.gov.uk

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