Tag Archives: Cabinet Office

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

Posted on 06/12/2012 | Leave a comment

By Tony Collins

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

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

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

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

Secret risks

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

Secret appendix 

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

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

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

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

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

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

Also missing  

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

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

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

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

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

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

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

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

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

Analysis of other parts of latest Cornwall report

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

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

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

Health partners

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

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

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

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

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

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

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

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

Comment:

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

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

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

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

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

Cornwall’s joint venture procurement costs escalate

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

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Are HMRC’s IT costs under firm control?

Posted on 20/11/2012 | 1 comment

By Tony Collins

 The costs of IT outsourcing at HMRC have soared despite a well-written contract that promised large savings. When, as Inland Revenue, the department first outsourced IT in 1994, annual IT costs were around £100m.  Now it has emerged that HMRC’s  annual IT spending was running at more than  £1bn between April 2011 and March 2012.  Only some of the 10-fold increase is explained by new work.

Are there lessons for Barnet, Cornwall and other public authorities as they ponder large-scale outsourcing, given that HMRC did almost everything right and still faces a costly contractual lock-in to major IT suppliers until 2017 – a 13-year outsourcing contract?

HMRC has made some extraordinary payments to its outsourcing suppliers since 2011  – more than mid-way through a 13-year contract.

HMRC figures collated by former Inland Revenue IT employee and now payroll specialist Matt Boyle of Research4paye show that HMRC paid its “Aspire” IT partners £964.2m in a single year, between April 2011 and March 2012.

HMRC paid a further £42.6m of invoices from Serco for one year of website development and support. These figures do not include all of HMRC’s IT costs between April 2011 and March 2012, such as invoices from Accenture for maintenance fees and for work relating to Customs.

IT costs soar

1994. £100 annual IT costs. Inland Revenue first outsources its 2,000-strong IT department to EDS. The annual cost of the 10-year contract is about £100m a year according to the National Audit Office.

2004.  £250m annual IT costs. The end of the EDS contract. HMRC’s annual IT costs have risen to about £250m a year (National Audit Office figure).

2004. £280m annual IT costs. Capgemini wins from EDS a new 10-year HMRC outsourcing deal called Aspire (Acquiring Strategic Partners for the Inland Revenue). Capgemini’s main subcontractors are Fujitsu and Accenture. Capgemini’s bid is for £2.8bn, an average of £280m a year.

2005. £539m annual IT cost.  Inland Revenue merges with Customs and Excise to form HMRC which takes on £1bn Fujitsu IT contract from Customs. The first year of the Aspire contract costs £539m, nearly double the expected amount. The NAO blames most of the increase on new work.

2007. In return for promised savings of £70m a year from 2010/11, HMRC extends Capgemini’s contract by three years to 2017. There’s an option to extend for a further five years.

2010. £700m annual IT costs. Under FOI, HMRC releases a statement saying that the Aspire annual contract costs are running at about £700m.

2011/12. £964.2m annual IT cost. HMRC’s list of invoices from its Aspire suppliers for one year between April 2011 and March 2012 add up to £964.2m. A further £42.6m is invoiced by Serco for website development and support.  This puts HMRC’s IT annual outsourcing costs at 10 times higher than they were when Inland Revenue let its first outsourcing deal in 1994. Some of today’s HMRC systems pre-date 1994 [BROCS/CODA].

Aspire – a good contract?

It appears that HMRC did everything right in its Aspire contract. Indeed the National Audit Office has found little to criticise. Aspire is committed to “open book”, so Capgemini, Fujitsu and Accenture must account for their costs and profit margins.

The contract has some innovations. The suppliers’ margin is retained by HMRC until trials are successfully passed. Even then 50% of the margin is retained until the final Post Implementation Trial about six months after implementation.

Charges under Aspire are split into two categories: “S” and “P”.  The former is mainly a commodity pricing arrangement with unit prices being charged for all service elements at a commodity level (e.g. per Workstation, volumes of printed output etc). The charge to HMRC will vary by volume of demand for each service line.

The ‘’P’’ series charge lines are charged on a man-day basis. Application development and delivery is charged mainly on what HMRC calls an “output basis utilising function points“.

Where IT spending goes

There are more than 800 invoices from Aspire covering the year from April 2011 to March 2012. Some of the invoices are, individually, for tens of millions of pounds and cover a single month’s work.

The invoices cover services such as data centre output, data centre operations, systems software maintenance, software coding changes, licences, IT hardware and data storage.

For some of the Aspire invoices HMRC gives a brief explanation such as £57.6m – “June monthly payment for development and support”. But some of the biggest invoices have little explanation:

May 2011:  invoice for £24.7m – IT Software. A further invoice of £61.7m – “data output prod”.

June 2011: invoice for £55.8m – “data output prod”. A further invoice £56.8m – “data output prod”.

On top of these payments HMRC paid about 24 invoices of management fees in the year. Typical monthly invoice amounts for Aspire management fees ranged from about £390,000 to £2.9m.

There are dozens of Aspire invoices in the year for IT software changes to support day-to-day HMRC’s business. Quite a few of those invoices for software changes are each for tens of thousands of pounds but more than 30 invoices for IT changes in the year 2011/12 each bill more than £100,000. The biggest single invoice in the same year for software changes to support day-to-day HMRC business is  £469, 964 in December 2011.

Transparency

Matt Boyle collated the figures on HMRC’s IT spending from spreadsheets published by HMRC . All credit to Francis Maude, the Cabinet Office minister, for making government departments publish details of their invoices over £25,000.

And credit is due to Matt Boyle for collating and totalling HMRC’s IT-related invoices. Boyle says he is surprised at the high costs of Aspire. He is also surprised that the contract excludes web development and support.

Comment:

HMRC appears to have done nearly everything right and still its IT outsourcing costs are soaring, apparently uncontrollably.

It is hard to avoid the conclusion that the department and taxpayers would have been much better off if Inland Revenue had not outsourced and instead spent the millions it pays annually on, say,  management fees, to building up an in-house IT force and expertise.

Central government seems now to shun big outsourcing deals but local authorities including Barnet and Cornwall are at the stage Inland Revenue was in 1994: they are considering saving money by outsourcing major IT and other services to one main supplier.

If they learn from HMRC’s experiences – and the sums it has had to pay to outsourcing partners – it may take a little of the sting out of HMRC’s enforced prodigality.

[It may also be worth mentioning that some including Boyle ask how it is possible to credibly justify a spend of £46m in one year on a website.]

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Posted in Campaign4Change, Fujitsu, governance, Government IT, HMRC, managing change, outsourcing, Real-Time Information, Universal Credit

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We spend more on IT per capita than any other government – Maude

Posted on 08/11/2012 | 3 comments

By Tony Collins

Cabinet Office minister Francis Maude, in a speech at the FT Innovate Conference on 6 November 2012, said:

“In the last decade our IT costs have gone up – while our services remained patchy. According to some estimates, we spend more on IT per capita than any other government.” Estimated annual IT spend in the public sector is between £14bn and £20bn.

And is the spend worthwhile?

“The same people who do their shopping, banking and social networking online are still interacting with Government on the phone, in person or on paper at less convenience to them and more cost to us…

“Government provides more than 650 transactional services, used about 1 billion times every year – but presently there are only a handful where a large majority of people who could use the online option do so.

“Half don’t offer a digital option at all – and apart from a handful of services, if there is a digital option few people use it because it’s not a sufficiently fast or convenient option.

Car tax online – under-used

“In some cases users try online and then have to revert back to other channels – in 2011 around 150 million calls coming into government were self-reported as avoidable.

This leaves us with a situation where, for example, three-quarters of people use the internet for car insurance, but only half buy car tax online.

“This is simply not good enough …”

GOV.UK

He praised the agile-based GOV.UK government website as easier to use and faster than Directgov and Businesslink which it replaces.

Mosquitoes

The Cabinet Office is also reducing the “incomprehensibly large number of Government websites”  – down from 424 to 350 in the last year.

“We closed a site dedicated to British mosquitoes – no doubt mosquitoes is a serious issue. We just didn’t feel it warranted a whole website.”

£15,000 to change a line of web code

“Departments can be asked to pay £15,000 to change a single word on a website because they are locked into legacy contracts negotiated at a time when the digital capacity lay almost entirely outside government.

“This is changing. We are moving away from legacy IT and our reliance on a few large System integrators. And introducing smaller contracts; shorter terms; a more diverse supplier community that is welcoming to SMEs; open standards; open source; more use of commodity. These are the new parameters.”

Francis Maude’s speech in full.

 

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Posted in change, change management, cost reduction, Government IT, managing change, private sector lessons for the public sector

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Outsourcing costs in Cornwall escalate – and no deal signed yet

Posted on 16/10/2012 | 3 comments

By Tony Collins

The estimated procurement costs of a mega-outsourcing project in Cornwall have risen sharply, not necessarily under the full control of the county council’s cabinet, and before any deal with BT or CSC is signed.

Meanwhile councillors are due to be told, in confidential briefings, that BT and CSC may claim back their costs so far, and are prepared to legally enforce that claim,  if no outsourcing deal is signed.

Such a legal claim, of potential suppliers suing a potential client, would be highly unusual perhaps unprecedented. 

Is Cornwall’s  cabinet using FUD – fear, uncertainty and doubt – to make councillors fearful of not  agreeing a deal with CSC or BT at a full council vote next week?

Papers published by Cornwall County Council show that a mega-outsourcing deal proposed by the authority’s ruling cabinet will be worth between £210m and £800m.

The full  council will vote on whether to proceed with a contract with BT or CSC on 23 October.

Before that vote the cabinet is expected to give confidential briefings to individual councillors. The briefings will focus on the promised benefits of signing a deal,  and the disadvantages of not going ahead.

The cabinet may tell councillors approximately how much money BT and CSC will claim, and if necessary take legal action to recover, if a deal is not signed, according to an interview the council leader Alec Robertson gave to thisiscornwall.co.uk

“The two bidding companies have spent a lot of money over the past couple of years and they will have a legal claim against the council for changing direction,” Robertson is quoted as saying.

“Councillors need to know the consequences. There is a lot of commercial confidentiality, but we wouldn’t be talking about small amounts of money.”

The council’s own budget for the outsourcing project so far has escalated. An independent panel set up as a “critical friend” to scrutinise the council’s plans for outsourcing has learned that the costs to Cornwall’s taxpayers of planning for the scheme were £375,000 in July 2011.

In March this year the “Single Issue Panel” members were told that the costs for the project would need to be increased from £650,000 to £800,000.

“The current estimate of the cost of the procurement process at the time of writing this report is £1.8m,” says the panel in its July 2012 report.

The £1.8m will be met from existing budget, says the cabinet in council documents.

On top of this, potential NHS partners in the deal have their legal costs.

The cabinet says in its written reply to the panel that the increase in costs is due in part to a “significant  increase in external support drawn in to support the procurement”, including specialist legal support and costs for consultancy KPMG, which has advised on the finance and client side support.

There has also been an “extension of scope” due to the proposed inclusion of telehealth/telecare. In addition there have been “project delays”.

Comment:

With the outsourcing-related costs to Cornwall’s taxpayers escalating before any deal with CSC or BT is signed, what will happen after the council is contractually committed to a long-term deal with one of the companies?

One reason there is no clear answer to this question is that so much of the council’s plans are based on assumptions that BT or CSC will commit contractually to providing up to 500 new jobs, saving money and achieving an IT-led transformation of services (while making a profit from the deal and recovering bid costs).

Cornwall’s cabinet seems confident that BT or CSC will enshrine all its promises in a contract free of caveats and ambiguities, and that the sort of legal dispute that has broken out in Somerset over the IBM/Somerset County Council joint venture Southwest One is unlikely to happen in Cornwall.

But isn’t Cornwall repeating Somerset’s mistake of not seeing that, behind the promises, assumptions, hopes and so-called contractual commitments,  the reality of withheld payments for poor service and the subsequent threat of legal action by the supplier is always there.

If Cornwall’s cabinet is already concerned about possible legal action from the bidders to recover their costs,  will the council be more confident about avoiding a legal action once the chosen suppliers’ lawyers have agreed a long and very carefully-worded outsourcing contract – a contract that may be different from the council’s proposed draft contract?

The Cabinet Office’s Major Projects Authority, under the enlightened David Pitchford, has a guiding principle that sets the coalition apart from previous administrations when it comes to avoiding disasters. That principle is to stop a deeply-flawed project cheaply before much more is spent and at risk of being wasted.  Ian Watmore, when permanent secretary at the Cabinet Office, put it well: “Fail early, fail cheaply.”

Will council leader be asked to stand down?

Cornwall outsourcing/partnership debate.

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Posted in BT, Campaign4Change, CSC, IT-related failures, KPMG, legal disputes, local government, Major Projects Authority, managing outsourced services, procurement, project management, public sector

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Government Digital Service sets an example on cloud

Posted on 18/09/2012 | Leave a comment

By Tony Collins

The Government Digital Service is putting its money where its mouth is. A leading public sector advocate of the cloud, GDS says that the first cloud hosting provider it is working with is Skyscape.

Mark O’Neill, Head of Service Delivery and Innovation at GDS, which is a team of innovators based at the Cabinet Office, writes that GDS is building GOV.UK, currently in beta at http://www.gov.uk.

“In the past, we might have looked at dedicated servers or possibly even our own rack in a datacentre somewhere. We would then have had to decide if we wanted to own the servers or if we should rent them some time to break out amortisation tables and spreadsheets.

“We would have to make sure that we were not locked in if we needed to move servers, so it would be necessary to negotiate break clauses in contracts; we would need to arrange access to server rooms for security accreditation; we would need to… well, the list goes on and on.

“The cloud has transformed all of this. Through the G-Cloud framework we are able to simply and rapidly buy highly reliable, highly cost-effective hosting services.

“Colleagues in GDS put together a statement of our requirements based on the experience we had gained during the alpha and the ongoing beta releases of GOV.UK and experience from the delivery of other major online services, both public and private sector.

“We then tested that statement of requirements against the list of suppliers on the G-Cloud framework. This allowed us to sift the number of potential providers down to four who met the statement of requirements.

“We then invited each of the suppliers in and used a consistent set of questions to explore their ability to meet our needs, their approach to operational service delivery and how they could provide flexible, scalable services through the cloud.

“To meet the needs of GOV.UK, we are planning to work with a number of different Infrastructure as a Service providers. We are happy to announce that the first cloud hosting provider we are working with is Skyscape.

“We have used G-Cloud previously for a number of small projects covering services like hosting and operations. We were very happy to discover that letting a major service contract for our flagship platform, GOV.UK, was equally straightforward and quick.

“Whilst the GOV.UK contract is the largest we have let so far, it is one of an increasing number we are letting through G-Cloud, which is now our standard way of procuring infrastructure services… If you have not used G-Cloud before then take a look, you will be pleasantly surprised. In the words of a song of my youth, ‘It was easy. It was cheap. Go and do it!'”

Introducing a new supplier – Skyscape

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Posted in Campaign4Change, Cloud, cost reduction, efficiency savings, Government IT, IT projects, private sector lessons for the public sector, procurement, public sector, public services, reducing cost strategically

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Fujitsu on blacklist? Cabinet Office issues statement

Posted on 14/09/2012 | Leave a comment

By Tony Collins

The Cabinet Office has denied it is operating a blacklist of poorly-performing suppliers – but says that suppliers deemed high risk may find it “more difficult to secure new work with HMG”.

In its statements to Kable’s Government Computing, the Cabinet Office also made it clear that suppliers deemed high risk can redeem themselves.

“Mechanisms exist to remove suppliers from the High Risk classification when performance improves dramatically.”

This suggests that Fujitsu would no longer be deemed high risk if it settled its dispute with the government over the NPfIT. Fujitsu has been seeking £700m after the failure of its NPfIT contract. A settlement has proved elusive and the case may go to court.

The FT said on Tuesday that Fujitsu has “in essence” been blacklisted. Neither Fujitsu nor the Cabinet Office are denying that Fujitsu has been put in the high-risk classification.

A Cabinet Office spokesman told Government Computing:

“We cannot comment on the status of individual suppliers, but we are absolutely clear that this Government will not tolerate poor supplier performance.

“We want to strengthen our contract management by reporting on suppliers’ performance against criteria and sharing the information across Government. This means that information on a supplier’s performance will be available and taken into consideration at the start of and during the procurement process (pre-contract). Suppliers with poor performance may therefore find it more difficult to secure new work with HMG.

“This policy will include the identification of any high-risk suppliers so that performance issues are properly taken into account before any new contracts are given.

“High-risk classification is based on material performance concerns. Suppliers deemed high risk will be subject to particularly close scrutiny when awarding new work.

“Overall, this is simply good commercial practice and in line with how we are improving the way government does business and emulating the best of the private sector.”

The spokesman said that contract extensions are within scope of the poor-performance policy but will be tackled in a proportional way – depending on the overall cost of the contract, the relative cost of extending it, and how critical the extension is.

The high-risk classification “applies to strategic suppliers who do business across Government, and is not limited to any specific sector”. Frameworks are also included.

“Our performance policy will apply to central government departments, where we have direct control of spending,” said the spokesman. But it is still unclear what direct control the Cabinet Office has of departmental spending.

That said, the Cabinet Office announced in June spending controls on central government that “allow government to act strategically in a way it never could before”. It added that there were “strict controls on ICT expenditure”.

That means that large ICT contracts to be awarded by departments must go to the Cabinet Office for approval; and the Cabinet Office has introduced a single point of contact for major suppliers, which means that the performance of strategic suppliers will be viewed in the round.

In the past suppliers have been able to tell departments that were about to award contracts that rumours of alleged poor performance in other departments were incorrect.

Comment

While not a blacklist the high-risk classification seems a good idea. Francis Maude, the Cabinet Office minister, is sending a message to suppliers that if they take legal action against a department it could stop them getting business across Whitehall.

But he’s also saying in effect: settle and we’ll remove you from the high-risk list.

Is there a danger that the power could swing too much in the government’s favour, allowing departments to poorly manage contracts with impunity? Probably not. Suppliers will have to take the high-risk list into account when signing deals.

They know that, in the insurance industry for example, if they mess up one contract word will soon get around.

Poorly-performing suppliers risk being frozen out of Government business – Government Computing

Fujitsu banned from goovernment contracts?

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Posted in Campaign4Change, cost reduction, Fujitsu, Government IT, innovation, legal disputes, Major Projects Authority, operational issues, private sector lessons for the public sector, procurement, supplier relationships

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Fujitsu banned from Whitehall contracts?

Posted on 11/09/2012 | 6 comments

By Tony Collins

The FT reports today that Fujitsu has been deemed for the time being too high risk to take on new public sector deals, along with another unnamed IT services contractor.

The newspaper quotes “people close to the situation”.

It’s likely the article is correct in naming Fujitsu as a supplier that is deemed by the Cabinet Office to be high risk. It is unclear, though, whether being categorised as “high risk” by the Cabinet Office amounts to a ban for the time being on future government contracts.

The FT says that Fujitsu has “in essence” been blacklisted.  “The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted,” says the FT.

It is also unclear whether the Cabinet Office could exclude a supplier from shortlists even if it wanted to. The Cabinet Office awards few large IT contracts of its own; contracts are awarded by departments, and the Cabinet Office has no unambiguous power to exclude particular suppliers from shortlists drawn up by autonomous departments that take their own decisions on which companies to award contracts to.

Mega-contracts to be awarded by central departments must, however, must go to the Cabinet Office’s Major Projects Authority for approval.  The Authority could in theory require that Fujitsu be excluded from a shortlist before it gives approval.  This blacklisting would require Francis Maude, the Cabinet Office minister, and the minister signing the mega-contract to be in agreement.

If a departmental minister refused to exclude  a supplier from a bid or shortlist because of its past performance what could the Cabinet Office do, especially if the minister argued that the supplier’s continued work , in the form of a renewed contract, was not just desirable but essential?

The FT says that the latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture.

He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. He is quoted in the FT as saying that his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Comment

The idea of a blacklist is a good one; indeed it would be the most important innovation in government IT since the general election. For decades MPs and others have said that under-performing suppliers should not be awarded new contracts. Now at last that may be happening.

After Fujitsu sued the Department for Health for about £700m over the NPfIT a settlement has been elusive, despite the intervention of the Cabinet Office. It is likely that Fujitsu UK’s hands will have been controlled by its parent in Japan.

Fujitsu’s performance on the “Libra” contract for IT in magistrates’ courts was strongly criticised by MPs and the National Audit Office which exposed repeated threats by the supplier to withdraw from the contract unless its terms were met.

Fujitsu could circumvent any blacklisting by becoming a subcontractor on a mega-contract, as it is at HMRC on the “ASPIRE” contract and at the DWP where its hardware runs benefit systems. Or a department could ignore the Cabinet Office and award non mega-contracts to Fujitsu.

We hope the Cabinet Office finds a way to make its blacklist – if that is what it is – stick. A  private sector company would not award a new contract to a supplier that had bitten in the past. Why would the public sector?

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Posted in EU procurement, Fujitsu, Government IT, IT-related failures, legal disputes, Major Projects Authority, private sector lessons for the public sector, procurement, project management, public sector, supplier relationships

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Ex Govt CIO speaks – having left the public sector

Posted on 22/08/2012 | 3 comments

By Tony Collins

In November last year we asked “Where is the Government CIO?”

We said that the then Government CIO Joe Harley – amiable, straight-talking and influential – could be the civil service’s ambassador for change.

Like his predecessor John Suffolk he could have used conferences and public events to talk inspirationally about the dystopian costs of government IT and what to do about them.  Why hasn’t he, we asked.

“If the Government CIO has much to say, it is not for the public ear. While there has been talk in recent weeks of how five corporations control GovIT, and how it can cost up to £50,000 to change a line of code, Harley has been silent.

“Where does the Government CIO stand on the need for major reform of the machinery of government, on the sensible risks that could save billions? Is the top man in Government IT inspiring his colleagues and officials in other departments to do things differently?”

Now it’s good to hear Joe Harley has speaking publicly about government IT, and what needs to be done. He has left the public sector though.

He suggested to Computing that there needs to be less strategising and more action.

“The whole emphasis now needs to be on implementation and delivery. There has been enough strategising and there really needs to be execution… [The government must] deliver on the implementation plan that we created and grow the talent with capability for the future.

“When it starts to deliver, we’ll start to see government ICT getting a [better] reputation,” he said.

Comment

Who will do less strategising and focus more on delivery?

As Harley now says, there needs to be individual accountability for decisions rather than a generalised blaming of committees.

“I think we need to be more light-footed and make people more accountable for their decisions and actions rather than [blaming] committees and programme boards,” he said.

No individual in government is going to make the changes that Harley recommends. Any real changes will be effected by committees and programme boards. Which is probably why material change in government administration and IT will happen in geologic periods. Unless an individual with charisma and leadership abilities – and who doesn’t mind talking in public while still in the public sector – is prepared to make the difference.

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Posted in Campaign4Change, CIO, excessive secrecy, Government IT, improving communications

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Could CSC use 200 jobs as lever in NPfIT talks?

Posted on 15/08/2012 | Leave a comment

By Tony Collins

In a blog post on ComputerworldUK.com I have asked whether CSC could use 200 UK jobs as a lever in its talks with the Department of Health and the Cabinet Office on a new NPfIT deal (towards end of the blog post).

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Posted in CSC, e-health, Government IT, health, health records, IT-related failures, Major Projects Authority, NHS, npfit

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Will coalition sign a new NPfIT deal with CSC?

Posted on 14/08/2012 | 1 comment

By Tony Collins

CSC has told investors that its discussions with the UK government on an interim agreement for deploying Lorenzo to the NHS are “continuing positively”.

CSC says that an agreement could commit a certain number of NHS trusts to take Lorenzo. Some of those trusts would be named in the interim agreement and the remainder within six months. CSC refers to them as “committed named trusts”.

[Such a legal commitment for named NHS trusts to take Lorenzo may run counter to the post-NPfIT coalition philosophy of giving trusts the freedom to buy what they want, when they want, and from whom they want. The named trusts might have indicated on a  DH questionnaire a wish to take Lorenzo but an agreement between the government and CSC would commit the trusts irrevocably, or the DH could have to pay CSC compensation for non-deployment.]

CSC says the deployed product would be categorized as “base product” or “additional product” for pricing purposes. The DH would commit money to the base product. Other funds would be available centrally available for “additional products,  supplemental trust activity and local configuration”.

The DH would give CSC a structured set of payments following certain product deliveries, as well as additional payments to cover various deployments for the named trusts and payments for work already performed.

If the government does not sign a new deal, and allows CSC’s existing contracts to run down until they expire formally in 2015, this could keep further NPfIT-related costs to the taxpayer to a minimum.  But it risks legal action from CSC, which says the NHS contract is enforceable and that the NHS has no existing right to terminate the contract, unless for convenience (which is unlikely).

If the government had terminated CSC’s contracts for its convenience (as opposed to alleged breach of contract) it would have had to pay CSC a termination fee capped at £329m as of 29 June 2012. CSC would also have been entitled to compensation for the profit it would have earned for the 12 months after the contract was terminated.

If the contract is not terminated, a new deal not signed, and no legal action is taken by either side, the amounts the UK government would have to pay CSC are likely to be minimised.  It is in CSC’s interests to maintain and enhance Lorenzo for those NHS sites that have deployed it.

So will the government sign a new deal with CSC at least to reduce the risks of CSC legal action? Or could the government hold out not signing any agreement until expiry of the contracts in 2015 on the basis that CSC has not delivered all it promised?

If a new deal is signed – and CSC indicates that an agreement is likely – the government may face accusations that it has broken its undertaking to dismantle the NPfIT.

David Camerson intervened personally to have the Cabinet Office’s Major Projects Authority look closely at NPfIT commitments.  His “efficiency” minister Francis Maude is likely to resist the signing of any new agreement

But will CSC accept the government’s refusal to sign a new deal, when such a deal could enable CSC to recover at least some of the $1.485bn (£0.95bn) it recorded as an NPfIT contract charge in the third quarter of 2012?

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Posted in CSC, e-health, Government IT, health, health records, NHS, npfit, supplier relationships

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