Tag Archives: Cabinet Office

FireControl – should PA Consulting share some responsibility for what happened?

Posted on 01/07/2011 | 4 comments

By Tony Collins

The defence and aerospace supplier EADS is widely regarded as the main supplier of the FireControl project which was cancelled in December 2010, with wasted costs of at least £469m.

But did the project have too many consultants, some of whom were  accountability-free? The question is raised by report published today on FireControl by the National Audit Office.

Says the report:

 “The implementation of FiReControl was heavily reliant on consultants and interim staff, who contributed around half the Department’s [for Communities and Local Government] project team at a cost of £68.6m, over three-quarters of the total spend on the national team supporting the project.

“PA Consulting was contracted to provide consultancy services at a cost of £42m to the end of March 2011. Its staff held key positions throughout the project, including the Project Manager, one of only two senior members of the team who remained on the project throughout its duration.

“Despite the Department’s reliance on consultants, there was no framework to assess their performance until the end of 2008, when the National Audit Office recommended that the Department’s contracts with consultants should include mechanisms to enable regular objective monitoring of performance, such as performance indicators and key milestones.

“Without such mechanisms, the Department was unable to determine whether or not the services provided offered value for money.

“A review of the FiReControl project by the Office of Government Commerce in 2008 similarly found that some consultants in key management roles did not have a level of authority matching their responsibilities, which led to decisions being referred to others.

“Other consultants were found to hold a disproportionate (and accountability-free) amount of authority. In response, the Department reviewed its use of consultants and interims within FiReControl and reduced the number employed, leading to a fall of 24% in consultancy costs between 2008-09 and 2009-10, and a further fall of 26 per cent in the following year.”

The failure of the FireControl project – and many other central government IT-based programmes dating back decades – shows the need for independent challenge as projects progress or otherwise.

Gateway reviews are independent reports on the state of a project but they appear to be ignored if they’re too critical, as in the cases of FireControl and the Rural Payments Agency’s Single Payment Scheme; and the Gateway review reports are secret – even today – so there is no outside pressure on departments to act on them.

What’s to be welcomed is the intervention of the Cabinet Office in major projects. FireControl systems could have been delivered. They could have worked. But there were too many missed deadlines and continuing uncertainties, as the NAO points out in today’s report.

The Cabinet Office’s major Projects Review Group, as it was then, said the FireControl contract should be ended – and it was a few months later, amicably, in December 2010.

All credit to the NAO for naming PA Consulting, as well as the main supplier EADS.

NAO report on FireControl.

What FireControl and NPfIT have in common.

FireControl disaster blasted by unions

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What the FireControl disaster and NPfIT have in common

Posted on 01/07/2011 | 1 comment

By Tony Collins

From today’s National Audit Office report on FireControl project which wasted at least £469m:

“FiReControl was flawed from the outset because it did not have the support of the majority of those essential to its success – its users”

Were the Fire and Rescue Service’s FireControl project and the National Programme for IT in the NHS launched to discover all that can go wrong with a large IT-based project?

One could be forgiven for thinking so. The two projects were conceived in the early part of the new millennium as national, centralised schemes which, in the main, did not have any support from the people who would be using them.

The schemes were launched by civil servants and ministers with good intentions and little or no experience in the many IT-related project disasters that went before.

The projects that had failed since the late 1970s and early 1980s went wrong for similar reasons. As early as 1984 the Public Accounts Committee met to question civil servants on the common factors in a succession of “administrative computing” failures.

Since then every department has come to its IT-based projects and programmes with little understanding – and very little interest – in the lessons from history; and it’s said that those who don’t learn from history are destined to repeat past mistakes.

The FireControl system, which is the subject of an NAO report today, and the NPfIT, had something striking in common: the fact that the system users were the ones with the control of money and decisions on how they spent it – and they did not want technology imposed on them by civil servants in London. That was clear from the start. But it did not stop either the NPfIT or FireControl going ahead.

Indeed a Gateway Review by the Office of Government Commerce in April 2004, after the FireControl project had been approved, found that the “extraordinarily fast pace” of the project was introducing new risks to its delivery, and was escalating the risks already identified. The review concluded that the project was in poor condition overall and at significant risk of failing to deliver.

That review was, at the time, as with similar reviews on the NPfIT, kept secret, so those outside the project, including MPs and the media, were unable to challenge the projects with a credibility that could have influenced decisions on the future of the schemes.

New gateway reviews are still kept secret today, despite the coalition’s promise of openness and transparency.

The good thing about the FireControl project and the NPfIT is that the Cabinet Office has taken control. A Cabinet Office Major Projects Review Group in in July 2010 concluded that negotiations should begin to terminate the FireControl contract – and indeed a settlement with the supplier EADS was reached successfully and amicably in December 2010. The Cabinet Office’s Major Projects Authority is now  reviewing the future of CSC’s £2.9bn worth of NPfIT contracts.

The bad thing is that the FireControl scheme has wasted at least £469m, according to today’s report of the National Audit Office. The NPfIT may have lost a great deal more.

NAO’s conclusion on FireControl

This was the NAO’s conclusion on the FireControl project. Much the same could be said of the NPfIT:

“This is an example of bad value for money. FiReControl will have wasted a minimum of £469m, through its failure to provide any enhancement to the capacity of the control centres of Fire and Rescue Services after seven years.

“At root, this outcome has been reached because the Department, without sufficient mandatory powers, decided to try to centrally impose a national control system on unwilling locally accountable bodies, which prize their distinctiveness from each other and their freedom to choose their own equipment.

“At the same time, it tried to rush through key elements of project initiation and ended up with an inadequate IT contract, under-appreciating its complexity and risk, and then mismanaged problems with the IT contractor’s performance and delivery.”

 Links:

FireControl project a comprehensive failure.

The failure of the FireControl project – NAO report.

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MP questions why IT costs at two nearby hospital trusts are vastly different for similar systems

Posted on 28/06/2011 | 4 comments

By Tony Collins

A Conservative MP has asked the NHS Chief Executive Sir David Nicholson to explain why an NHS trust is deploying a centrally-chosen Cerner patient record system at more than twice the cost of a similar but non-NPfIT system at a nearby Foundation trust.

University Hospitals Bristol NHS Foundation Trust is deploying the Medway system from System C  (now owned by McKesson] at a reported cost of £8.2m over seven years. The acute trust is one of the largest in the country.

With support for less than five years, the nearby North Bristol NHS trust is taking the Cerner Millennium patient record system under the NPfIT at a cost of £21m from BT – and the go-live date in June has slipped to July.

Now Richard Bacon, a member of the Public Accounts Committee, has written to Sir David Nicholson asking for an explanation of why the two trusts are paying vastly different amounts for systems that do similar things. Bacon has also asked Nicholson whether he believes the higher sum is value for money.

The average cost of BT Cerner go-lives under  the NPfIT is £28.3m according to the National Audit Office.

Bacon’s letter is part of evidence which suggests that continuing NPfIT contracts is costing hundreds of millions of pounds more than necessary.

The coalition government, despite its plan to cut public sector IT costs, may spend a further £3bn to 4.bn with the NPfIT’s two major suppliers, BT and CSC, though the Cabinet Office’s Major Projects Authority is reviewing CSC’s £2.9bn worth of contracts.

Bacon’s letter also questions advance payments to CSC, and whether a recent hearing of the Public Accounts Committee was told the full truth.

An unwavering defender of the NPfIT, Nicholson is likely to defend the cost of the North Bristol implementation, and the advance payments to CSC. On costs, he will argue that North Bristol’s systems have better resilience than at non-NPfIT sites.

If that were true – and there is no evidence it is – the extra costs of having a “hot”, or real-time standby data centre, may not justify a doubling of a rival’s prices. 

This is Bacon’s letter to Sir David Nicholson:

Chief Executive, National Health Service, Department of Health, Richmond House, London SW1A 2NS

27 June 2011

Dear Sir David

NATIONAL PROGRAMME FOR IT IN THE NATIONAL HEALTH SERVICE

I am writing following the hearing of the Public Accounts Committee on Monday 23 May 2011, to follow up on two important issues that were raised during your evidence:

ADVANCE PAYMENTS TO SUPPLIERS

In your supplementary memorandum to the PAC following the hearing you gave a total of advance payments made up to 31 March 2011, in respect of all contracts over the whole period of the Programme, of £2,532m of which suppliers have retained £1,328m. You also identified a further £119 million of advance payments to be earned or refunded.  Since the memorandum was received by the PAC, it has been reported that the NHS made an advance payment of £200 million to CSC in April 2011.

I should be most grateful if you would let me know the answers to the following questions:

Is this report accurate?

Why was this payment was not reported to the PAC, either during the hearing or in the subsequent memorandum?

What was the justification for this payment and what value does it represent to the NHS?

What will happen in respect of this payment if a new memorandum of understanding is not in fact signed with CSC?

I would also be grateful if you would comment on the CSC filing with the US Security and Exchange Commission, which states that in the opinion of the company, if the NHS were to terminate the current contract “for convenience” it would owe fees totalling less than the $1 billion asset value CSC now has on its books for the contract.  

How is this consistent with the claim at the PAC  hearing by Ms Connelly that the cost of terminating the CSC deal could “potentially leave us exposed to a higher cost than if we completed as it stands today”?

2. THE COST OF DEPLOYING CERNER MILLENNIUM AT NORTH BRISTOL

Second, I would be grateful if you could comment on the cost of deploying Cerner Millennium at North Bristol, reported in your memorandum as £21 million, including service for 56 months, and on the current expected go-live date.  Specifically:

Can you explain why the delivery date agreed with BT at the contract “reset” was 4th June 2011?

Why it was then revised to 2nd July 2011?

And why it now appears that there is no agreed delivery date at all?

Can you also give your best comparison of the cost of deploying the Cerner Millennium system at North Bristol, with the cost to University Hospitals Bristol of deploying the System C Healthcare Medway system outside the National Programme?  It would appear from media reports that this latter contract includes deployment of functionality including PAS, Accident and Emergency, maternity, theatres, clinical data collection, and a data warehouse and reporting system, as well as integration of third party and current Trust applications.  According to the National Audit Office, the average cost for each new site under the BT South contract is £28.3 million, but the cost of the Medway system to UHB has been reported as £8.2 million over seven years. (http://www.guardian.co.uk/healthcare-network/2011/may/19/university-hospitals-bristol-foundation-trust-awards-e-patient-contract)   What is the justification for this apparent difference?

As the Senior Responsible Owner for the National Programme, can you give your explicit undertaking that the North Bristol contract represents value for money for taxpayers?

I look forward to receiving your reply.

With many thanks

Yours sincerely

Richard Bacon

MP for South Norfolk, Member of the Public Accounts Committee

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Cabinet Office takes on open-source specialist

Posted on 28/06/2011 | 1 comment

By Tony Collins

“Let’s not waste this great opportunity to make British government IT the most effective and least expensive service per head in Western Europe.”

 An open source advocate and critic of the high costs of government IT, Liam Maxwell, is joining the Cabinet Office for 11 months  to provide expertise on how civil servants can use innovative new technology to deliver better, cheaper solutions.

His secondment from Eton College where he is ICT head underlines the determination of Francis Maude, the Cabinet Office minister, to continue bringing in strong people to oversee major changes in the way government works.

What remains unclear, however, is how much influence the Cabinet Office will have on autonomous government departments and their permanent secretaries.

Although David Cameron has given his personal backing to the changes being sought by the Cabinet Office, the PM has  little or no direct control over what departments do or don’t do.

Simon Dickson at Puffbox points out that Liam Maxwell has said all the right things in the past. Maxwell co-wrote a 2008 paper for the Tories on ‘Open Source, Open Standards: Reforming IT procurement in Government’, and also a 2010 paper Better for Less‘ for the Network for the Post-Bureaucratic Age, which said:

“British Government IT is too expensive. Worse, it has been designed badly and built to last. IT must work together across government and deliver a meaningful return on investment. Government must stop believing it is special and use commodity IT services much more widely.

“As we saw with the Open Source policy, the wish is there. However, the one common thread of successive technology leadership in government is a failure to execute policy.

“There is at last a ministerial team in place that “gets it”. The austerity measures that all have to face should act as a powerful dynamic for change. Let’s not waste this great opportunity to make British government IT the most effective and least expensive service per head in Western Europe.” 

In a statement, the Cabinet office said that Maxwell will help to develop ideas for how technology can:

– increase the drive towards open standards and open source software

– help SMEs to enter the government marketplace

– maintain a horizon scan of future technologies and methods

– develop new, more flexible ways of delivery in government

Ian Watmore, the Government’s Chief Operating Officer said: “Liam’s insight and knowledge will make him a valuable source to the team over the coming year. He has a strong track record of delivering success in government ICT and he also brings significant experience of turning the theory into practice.”

Dickson said that Maxwell was a Windsor and Maidenhead councillor who drove the debate a year or so ago on councils switching to Open Document Format, part of OpenOffice.

The Guardian said Maxwell has been an adviser to the  Conservative party on government ICT.  At the Cabinet Office he will advise the Efficiency and Reform Group and Ian Watmore. He will begin the job in September and is taking a sabbatical from Eton.

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Katie Davis for new Health CIO?

Posted on 23/06/2011 | 2 comments

The Cabinet Office’s Katie Davis, who takes over next month, on an interim basis, from Health CIO Christine Connelly,  is ex-Accenture.

But that shouldn’t be held against her.  Accenture left the NPfIT in 2006 with its reputation untarnished.

A profile of Davis appeared in The Telegraph in 2007. The newspaper described her as a yank at the court of King Tony, set on excellence in IT.

Though it could be assumed that Davis has a “big company” approach, and so would welcome the continued dominance of the NPfIT, she told The Telegraph she found her time at Accenture highly satisfying but after a while she stopped having fun.

“The overheads of working for a huge corporation had slightly impaired my ability to deliver. By overheads, I mean travel and the demands of process. My needs and those of the corporation did not overlap so well.”

She also said she worked in the NHS.

“I had worked with the NHS before, and was seconded to work with some of the cleverest and most committed people I’d ever been in a working environment with. It opened my eyes to the challenges and the excitement of working in the public sector.”

Davis has the advantage of having started her career as an engineer (electrical). Which makes it sound as if she’s more practical and realistic than visionary and idealistic. She may make an excellent (permanent) Health CIO.

Telegraph profile of Katie Davis.

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Who’ll support the NPfIT now?

Posted on 23/06/2011 | 5 comments

By Tony Collins

The departure of Christine Connelly as health CIO at the end of this month will leave the NPfIT’s main civil service supporter, Sir David Nicholson, Chief Executive of the NHS and Senior Responsible Owner of the NHS IT scheme,  more isolated.

That Nicholson is a supporter of the continuance of the NPfIT is not in doubt. He spoke about the NHS IT scheme last month in terms of life and death. At a hearing of the public accounts committee on 23 May 2011, Nicholson said:

“We spent about 20% of that resource [the £11.4bn projected total spend on the NPfIT] on the acute sector. The other 80% is providing services that literally mean life and death to patients today, and have done for the last period.

“So the Spine, and all those things, provides really, really important services for our patients. If you are going to talk about the totality of the [NPfIT] system … you have to accept that 80% of that programme has been delivered.”

But without Christine Connelly, who put detailed arguments in favour of continuing with iSoft’s Lorenzo, and who was solidly behind the costly implementations of Cerner by BT, Nicholson may not have the civil service backup he needs to promote the continuance of the NPfIT.

The Cabinet Office’s Major Projects Authority, under the directorship of the independently-minded David Pitchford,  is now reviewing CSC’s £2.9bn worth of NPfIT contracts. It is known that the Authority regards the new proposals worked out between CSC and the Department of Health as poor value for money, even with CSC’s willingness to reduce the value of its contracts by £764m, to about £2.1bn.

That promised reduction comes at a cost. A leaked Cabinet office memo said that the CSC’s proposals would double the cost of each Lorenzo deployment.

The easiest thing for Nicholson and the Department of Health would be for the Major Projects Authority to approve the deal worked out between CSC and the Department of Health, and simply sign a new Memorandum of Understanding which would be, in part, legally binding.

Strong grounds for ending CSC’s NPfIT contracts

The more difficult but more practical alternative is for the Cabinet Office to require the Department of Health to end CSC’s NPfIT contracts, which would leave the NHS more able to decide its own IT-based future.

Indeed the signs are in some trusts that officials are not unhappy about Connelly’s departure in that they perceive it may weaken the centre’s control over NHS IT.

Legally it appears that an end to CSC’s contract would be feasible. The Department of Health has accused CSC of a breach of contract because of its failure to achieve a key milestone; the Department has also notified CSC of “various alleged events of default under the contract” which are “related to  delays and other alleged operational issues”. The Department is considering its position on termination of all or parts of the contract.

But the Department has not taken its claims to arbitration; its allegations are only a formal legal manoeuvre at the moment.

CSC accuses NHS of failures and breaches of contract

CSC has reacted by accusing the NHS of a breach of contract. The company’s formal legal position is that it has cured or is preparing to cure the faults that led to the alleged breach; it says that failures and breaches of contract on the part of NHS have caused delays and issues.

The DH could end CSC’s contract for reasons of convenience which could trigger a request from CSC for a large sum in compensation. But the Department could give strong legal reasons for not paying. Although CSC could pursue its claim for compensation, it may be on soft ground because of its failures. Also, CSC, if it pursues any legal action, could jeopardise its other work for government: some of its other major contracts with the UK government are with the Identity and Passport Service, which is part of the Home Office.

The Coalition is now supervising its major suppliers, including CSC, in the round, which is reason enough for CSC to do all it can to maintain a good relationship with the Cabinet Office.

CSC would support NHS trusts even if its contracts ended

The  Department of Health is concerned that if it ends the NPfIT contracts with CSC, the supplier may leave unsupported many trusts that have CSC’s iSoft software installed. That is highly unlikely, however, because CSC has a $1.03bn investment in the NPfIT contracts according to the regulatory reports to US authorities.

In the NHS CSC has a large customer base. Through its acquisition of iSoft, CSC will want to capitalise on its investment in iSoft’s Lorenzo software by selling it across the globe. That’s its stated plan. So CSC’s continued support for NHS trusts that have installed iSoft software is not in doubt.

What NHS Trusts want

The best outcome of the negotiations with CSC, for NHS trusts that have installed iSoft software, is that they have the:

-choice to continue with CSC if the price is right

– buy support elsewhere, or

– choose a different product.

Will CSC’s NPfIT contracts end by mutual agreement? – it’s possible

The question is: does the Cabinet Office have the courage to end CSC’s contract, freeing up billions of pounds that would otherwise have been spent on the NPfIT without a commensurate return for taxpayers, the NHS or patients?

It seems  so, even if it means paying a relatively painless sum to CSC as compensation for termination.

Leaked memo reveals CSC’s plans.

A sign that coalition reforms will change behaviour of major suppliers.

Health CIO resigns – Cabinet Office executive steps in.

Example of a trust that’s succeeding without the NPfIT – Trafford General Hospital.

Connelly at odds with PM over NPfIT value for money?

NHS CIO in dramatic resignation.

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Health CIO resigns – Cabinet Office executive steps in

Posted on 22/06/2011 | Leave a comment

By Tony Collins

The Health CIO Christine Connelly has resigned. I understand it’s for personal reasons and that she has no new job lined up.

She is being replaced on an interim basis by an executive at the Cabinet Office Katie Davis. It’s likely that Davis will remain Director, Operational Excellence at the Cabinet Office until she replaces Connelly on 1 July 2011.

Connelly says in her statement that the Department of Health faces a major reorganisation of its top structures that will result in fewer Director General posts. “I have been reflecting on whether I would wish to go for one of those roles and decided that I will not.”

The Cabinet Office has indicated in recent months that it wishes to have more control over negotiations of a £3bn contract with CSC under the National Programme for IT, NPfIT.

This was the Department’s statement this morning, in full:

“Christine Connelly, Chief Information Officer for Health, has announced that she will be leaving the Department of Health at the end of the month.

“Christine said: “The Department of Health faces a major reorganisation of its top structures that will result in fewer Director General posts. I have been reflecting on whether I would wish to go for one of those roles and decided that I will not.

“I have had a fascinating and challenging time in this role and I have decided that this is the right time to step back and think about what I might do next.

“I believe that information and technology have the potential to dramatically change the way health services are delivered to patients, and we are already seeing this happen in many parts of the service. I am confident that informatics will have a major role to play in delivering both the quality and efficiency challenge that the NHS faces.”

NHS Chief Executive, Sir David Nicholson, said:

“Christine has made a major contribution to the NHS, in promoting both the sharing and management of information, and as a professional with considerable experience of leading change.

“She has tackled a very difficult set of issues around the National Programme for IT, and moved them forward. I wish her well in her future career.”
Health Secretary Andrew Lansley said:
“Christine has brought a huge amount of experience, talent and technical knowledge to the National Programme for IT. For almost three years, Christine, as the first Chief Information Officer for Health, has worked to deliver the Department’s information strategy. I wish Christine the best of luck with whatever she chooses to do next.”
“Christine will be replaced on an interim basis by Katie Davis. Katie joins us on loan from the Cabinet Office where she has been Executive Director, Operational Excellence, in the Efficiency and Reform Group (ERG) since 2010. Before that, she was Executive Director of Strategy, Identity and Passport Service in the Home Office and Director of the Government IT Profession in the Cabinet Office. Katie will be joining us on 1 July 2011.”
**
Comment: One of Connelly’s strengths is her lack of artifice. She answers the most difficult questions about the NPfIT with openness and honesty. Not everyone will agree with her strong support for the continance of the NHS IT scheme but her arguments are made with a genuine conviction, clarity of thought and explanation, and without distortion of the truth. I wish her well.

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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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