Tag Archives: Coalition

MP contacts Cabinet Office and No. 10 on future of NPfIT

Posted on 08/08/2011 | 3 comments

By Tony Collins

A Conservative MP has sent detailed suggestions to the Cabinet Office and No.10 on what should happen with the NHS contracts, mainly CSC’s.

Richard Bacon, a member of the Public Accounts Committee, has proved to be an important influence in the Parliamentary debate over the future of the NPfIT. He has now sent to the Cabinet Office and Downing Street a recommendation that CSC’s NPfIT contracts should be cancelled and trusts left to buy systems of choice with a small amount of central subsidy.

His email reveals that NHS Connecting for Health, which is a part of the Department of Health that is responsible for delivering the NPfIT, is rehiring contractors and that the arbitration proceedings between the DH and Fujitsu over the supplier’s £700m legal claim are scheduled to continue until the end of next year. He also says that the DH failed to minute all meetings correctly, which could put the Department at a disadvantage in any legal action against CSC.

It’s possible that Bacon’s suggestions on CSC’s contracts will be considered by David Cameron who may be asked to intervene in any disagreement between the Cabinet Office’s Major Projects Authority and the Department of Health.

The DH’s position is clear. The Health Secretary  Andrew Lansley and the NHS’s Chief Executive Sir David Nicholson are on record as expressing support for continuing CSC’s NHS IT contracts, although in a revised form.

The Cabinet Office’s Major Projects Authority under David Pitchford appears not to share the DH’s equanimity over CSC’s contracts. The recommendations of the Major Projects Authority have now gone to Downing Street.

Into the melting pot will go Bacon’s email to Pitchford, copied to No. 10, which is as follows:

Subject: Dealing with NHS IT’s Local Service Providers

“… As discussed, here are some comments on a possible way forward in dealing with Local Service Providers within the National Programme for IT in the NHS.

The LSP contracts have failed to deliver.  Fujitsu has been terminated.   The CSC contract needs to be terminated.  The BT contract has been renegotiated by reducing its delivery requirement by over 50% in return for a reduction in price of less than 10% (though it’s probably not worth terminating this now).

This would leave half of London acute Trusts, all but 11 Trusts in the South, and all Trusts in the North, Midlands and East outside of the Programme.

The simple answer is to have systems of choice for Trusts with small amounts of central subsidy.  Trusts would select and procure whatever system they wanted.  The NHS would make a contribution of, say, £2 million for every acute Trust purchasing a system within, say, 4 years (total cost for 166 Trusts is £332 million).  In return, the Trusts would allow regular reviews of progress and lessons-learned.  This is what the NHS did with primary care over ten years ago and it resulted in virtually all GP Practices computerising over that period.

GETTING OUT OF THE CONTRACTS

All Local Service Providers clearly failed to do what they promised:

All acute Trusts were to have Patient Administration Systems in place by 2006.

All clinical systems were to have been completed at all Trusts by 2010.

Lorenzo was supposed to ship in 2004.

The interim systems were not supposed to happen at all.

The problem is that in a legal dispute over something this complex, lawyers will be able to claim mitigating circumstances of every type and the NHS is likely to end up paying severance, even when terminating for clear non-delivery.  Problems for the NHS include:

CONTRACTS:  The contracts and deliveries are very complex.  It is easy to drown in the detail –  i.e. we couldn’t deliver ‘x’ because of ‘y’.  One could be arguing for ever.

MANAGEMENT:  CfH managed badly.  Records of Correspondence are poor.  Many meetings were not minuted correctly.  Governance was unclear.

PEOPLE:  Lots of different NHS people and contractors worked on the programme and many have since left.  The NHS made CfH fire the majority of its contractors in April 2010.  CfH has been reduced to writing to ex-employees and contractors and asking them if they will come in for interview.

CHANGE:  The NHS has been in constant change with the introduction of major initiatives such as 18 week wait and the current restructuring.  The LSPs will claim ‘moving targets’.

In truth, the LSPs have been paid a lot and delivered little.  The factors above are convenient mitigation for them, but made no difference to whether or not they delivered.  iSoft (now CSC) is supposed to have delivered Lorenzo in every year for the last decade and even claimed to have done so in annual reports when it was a public company.  However, in 2006 a joint report by CSC and Accenture stated that there was “no believable plan” for delivery and in 2011 we still only have one large acute Trust using it.

The Fujitsu case is in arbitration and this is due to run until the end of 2012.  At the end of that period, the waters will have been so muddied that – although they didn’t deliver – it will be obvious that there were many “mitigating” circumstances and the final compromise will end up with the NHS paying half of what Fujitsu is demanding – say £300 million, plus enormous legal fees.

The same scenario will apply to CSC if the NHS tries to terminate them.  CSC’s defence is very well organised.  Morally, the NHS is completely in the right – i.e. there has not been “delivery” – but no matter how clear cut the moral case, it will not be so clear cut legally speaking; the contracts won’t really help the NHS “win” convincingly because it is so complex.  We shouldn’t spend more than a year and a lot more taxpayers’ money fannying around with this.  It will just end up with arbitration followed by some sort of 50 per cent deal plus £100 million to the lawyers. The only way of avoiding this is getting the right people in a room and applying a big stick.  In my view, the only way to terminate is to use the line from the PAC report  i.e. :

You haven’t delivered.  We know that this is so complex and badly documented that we could end up paying you for that non-delivery.  We want to can the arbitration, and save the legal fees and settle.  We are prepared to pay something.  But be aware that the outcome of this settlement and how you behave will have a direct impact on all other business you do now or in the future with the UK government.

The Cabinet Office’s emphasis on a Whole-of-Relationship-with-the-Crown approach to suppliers is vital here.

Avoid being over a barrel by including as part of the settlement a two or three year contract to CSC for the ongoing maintenance of the interim systems already installed (at Acute Trusts and also the others), so that the NHS does not end up in the position that the South ended up in when Fujitsu was terminated (i.e. paying hundreds of millions to maintain a handful of systems). This will give Trusts the time to make and implement alternative plans.

You could take the same approach in order to can the Fujitsu arbitration.”

Will CSC’s £3bn NHS IT contracts be cancelled?

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Posted in legal disputes, managing change, NHS, npfit, outsourcing, public sector, public services, supplier relationships, Uncategorized

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DH puts case against cancelling NPfIT contracts

Posted on 03/08/2011 | 2 comments

By Tony Collins

The Department of Health has put a detailed case to MPs for not cancelling £4bn worth of NPfIT contracts with local service providers CSC and BT.

Among the points the DH makes is that “the NHS cannot continue without replacing the systems now covered by these contracts” – which refers to the NPfIT contracts with BT and CSC.

The DH also says that CSC and BT “have been clear that they are not willing simply to talk away”. Legal advice to the DH is of a “significant” risk that BT and CSC may, if their contracts are ended, work with Fujitsu in a unified legal action against the Department. Fujitsu and the DH are in a protracted legal dispute after the Department terminated Fujitsu’s NPfIT contract in 2008.

The Department’s memo to the Public Accounts Committee is published today in the PAC’s report entitled “The  National Programme for IT in the NHS: an update on the delivery of detailed care records systems”.

The report is highly critical of all the main parties to the NPfIT including:

– CSC which the report says has delivered only 10 of 166 of its ‘Lorenzo’ systems in the North, Midland and East. The PAC report calls on the Government to give “serious consideration to whether CSC has proved itself fit to tender for other Government work”.

– BT, the other main supplier to the NPfIT, which has “proved unable to deliver against its original contract”, says the report.

– Sir David Nicholson, the Chief Executive of the NHS who is senior responsible owner of the NPfIT, who is criticised by name. It’s rare for the committee’s MPs to personalise their criticism. It says there has been “weak programme management”  and adds: “We are concerned that, given his significant other responsibilities, David Nicholson has not fully discharged his responsibilities as the Senior Responsible Owner for this project. This has resulted in poor accountability for project performance…”

– The Department of Health and NHS Connecting for Health which cannot be trusted to give reliable or complete information on the NPfIT, even to government auditors.  The report says: “Basic information provided by the Department to the National Audit Office was late, inconsistent and contradictory… This occurred despite the fact that Connecting for Health, the NHS organisation responsible for managing the Programme nationally, has 1,300 staff and has spent £820m on central programme management.”

– The Department of Health over its poor ability to re-negotiate contracts with BT and CSC. The report says that the Department ended up “clearly overpaying BT to implement systems …BT is paid £9m to implement [RiO] systems at each NHS site, even though the same systems have been purchased for under £2m by NHS organisations outside the Programme.”  This “casts the Department’s negotiating capability in a very poor light”. The report adds: “We are worried that the Department will fare no better in its current negotiations with CSC …”

– The Department of Health for leaving NHS trusts in a mist of uncertainties. Trusts with NPfIT systems will not know the costs of supporting them after the BT and CSC contracts expire in 2014/15. It’s also uncertain how individual trusts will manage CSC and BT NPfIT contracts when the supplier agreements are held by the Secretary of State for Health.

– The Department of Health for leaving CSC in a controlling position to supply trusts with upgraded interim iSoft systems that were not part of the original contract. Says the PAC report: “It is important that CSC, particularly given its proposed purchase of iSoft, does not acquire an effective monopoly in the provision of care records systems in the North, Eastern and Midland clusters.

“This could result in the Lorenzo system effectively being dropped as the system of choice and many Trusts being left with little choice but to continue with out-dated interim systems that could be very expensive to maintain and to upgrade, or to accept a system of CSC’s choice.

“CSC should not be given minimum quantity guarantees or a licence to sell a product other than that procured and selected by the Programme within the Local Service Provider contract.”

But in its memo to the Committee the Department is unrepentant. Indeed the self-justifying detail and tone of the DH memos, which include selective, apparently corroborating quotations from a KPMG consultancy report that the Department has never published, suggest that, while the NPfIT has changed, the zeal with which DH officials defend the scheme, whatever its problems, has changed little since the programme was announced in 2002.

The DH’s case for not cancelling the contracts with CSC and BT was prompted by a written question from Richard Bacon, a Conservative MP and long-standing member of the Public Accounts Committee who has taken a close interest in the NPfIT.

Bacon asked:

What are the maximum payments to which NPFIT would be exposed for contract cancellation of the detailed care records systems, for each of the LSP providers [CSC and BT]?

The DH said that if the contracts were cancelled for convenience the maximum payments could be [DH italics] in excess of the currently anticipated costs to complete the BT and CSC contracts. If the DH were to cancel contracts for acute hospitals only, the maximum payments may reduce by 50%, said the DH.

The DH adds:

“These costs do not include the deployment or operational costs of any new systems that the NHS would need to procure. The NHS cannot continue without replacing the systems now covered by these contracts.”

Cancellation costs 

Cancellation costs could involve, said the DH:

– Contractual costs: The minimum amount the supplier is allowed to receive under the contract.

– Damages This would include covering some of the suppliers’ unrecovered costs to date and pre-accrued claims at the point of termination

– The costs of providing the ongoing services after termination. It is likely that suppliers will seek to increase these ongoing costs in an attempt to improve their financial position. The Department claims that Fujitsu increased its service charges and claimed it would turn systems off if outstanding sums were not paid.

– Costs of replacing systems, plus support and development of live services.

– Legal and professional fees for terminating, transferring work and investigating the facts around termination.

But the DH makes no mention that the Department would have a strong negotiating position if contracts were terminated because any dispute could cause the Cabinet Office to lose confidence in that supplier, which may affect the ability of the company to win further government work.

Would any major supplier want to fall out with government as a whole, rather than just one department?

Coalition changes mean that government considers itself as a single customer when reviewing the reputation and credibility of individual suppliers.

MPs don’t trust the DH’s information

Many of the points made by the DH in 15 pages of memos appear to have been largely discounted by the committee, partly because MPs did not trust what the Department said.

Comment

The Department of Health has a history of quoting selectively from consultancy and legal reports to support the argument it is making.  This is what tabloids do at times. Indeed the DH  never publishes the consultancy and legal reports it quotes from, so should we trust its arguments that point to keeping the NPfIT contracts with CSC and BT?

There may be good arguments for cancelling the contracts that have not, and are unlikely to be, mentioned by the DH.

Some benefits of cancelling NPfIT contracts

Cancelling could end the uncertainties for trusts that would otherwise be pressured to take NPfIT systems. It could also end the uncertainties for trusts that have yet to buy NPfIT systems and may face punishing costs to keep them running, and in step  with changes within the NHS, after the contracts with BT and CSC expire in 2014-2015.

If Campaign4Change were advising the coalition we would suggest it commission a genuinely independent review of the pros and cons of cancelling the NPfIT contracts.  The review  should not be commissioned by the DH or Connecting for Health because their lawyers and consultants will tend to tell the department what they think it  wants to hear.

One of the messages that comes loud and clear from today’s report of the Public Accounts Committee is that the DH cannot be trusted to make the right decisions on behalf of taxpayers and the NHS. The DH cannot even be trusted to tell the truth to judge from the PAC report.

The Cabinet Office needs to take control of major DH IT spending. Perhaps the sooner the better.

Public Accounts Committee report on NPfIT detailed care records systems.

NHS must consider scrapping NPfIT – MPs.

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Posted in Campaign4Change, legal disputes, managing change, NHS, npfit, outsourcing, public sector, public services, reforms, supplier relationships

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A standard cloud-based ERP for central govt?

Posted on 31/07/2011 | 1 comment

By Tony Collins

 The Cabinet Office has published “Government Shared Services: A Strategic Vision – July 2011″ which suggests a  “cloud- based ERP standard platform which Departments could buy into and from”.

The idea is part of the coalition’s plans to standardise IT systems within government. Standardising could save money – but, as the Public Administration Select Committee warned last week, not if standardising means giving even more control of government IT to a few large, monopolistic suppliers.

The Cabinet Office says that a number of Departments are due to upgrade their supporting IT systems for back office corporate services in the coming years.

 “A co-ordinated management approach by Government will lower the cost of reinvestment whilst enabling a rationalisation of the current landscape,” says the Cabinet Office.

“For example, a number of large Departments who have implemented and operate an Enterprise Resource Platform (ERP) solution need to plan for the expiration of support to the current instance by 2013.

 “This presents an opportunity for UK Government to source a “vertical” solution for a “cloud based” ERP standard platform which Departments could buy into and from.”

On Shared Services, the plan is to 

“reform how Central Government procures and manages consolidated back office corporate services – by establishing an equitable market of a small number of accredited Independent Shared Service Centres and enabling Departments and their ALBs [arm’s-length bodies] to choose between these – in order to drive up quality and reduce costs of these services, in support of Governments cost reduction targets.”

The Cabinet office says that approved shared services centres will “provide outcome based services, using standardised simplified processes, with the expectation to regularly publish performance data against established benchmarks”.

They will be able to make use of different business models – such as mutualisation – to “leverage capability and the financial investment needed to deliver this service and may operate virtually or from a small number of fully integrated delivery centres”.

Government shared services – a strategic vision. July 2011

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Excerpts from report on GovIT: Recipe for rip-offs – time for a new approach

Posted on 28/07/2011 | 3 comments

By Tony Collins

Today’s comprehensive report on the government’s use of IT is replete with strong and important messages, particularly on the domination of government IT by a small number of large suppliers, so-called systems integrators.

That said, Techmarketview, which tracks developments in the IT supplier market, has today attacked the report of the Public Administration Select Committee.  Techmarketview’s analyst Georgina O’Toole concedes she has not looked carefully at the full report but says she is irritated by the summary’s sensationalism.

It may be worth remembering that Parliamentary committees compete with each other for media attention. A bland report will be pointless: it won’t be read. Today’s report of the PASC, though, seeks more often than not to give the balacing view whenever it says something tendentious.  

For ease of explanation the Committee’s report “Recipe for rip-offs – time for a new approach” refers to government as if it were a single entity.

But government is, to some extent, at war with itself. The Cabinet Office is trying to have more influence over departments, in encouraging them to use SMEs,  adopt agile methods, simplify working practices and cut costs; and while the Cabinet Office has a mandate from David Cameron to enforce its wishes, in practice departments are giving strong reasons for not acting:

-long-term contracts are already in force

– EC procurement rules mean that SMEs cannot be preferred over other suppliers

– SMEs give insufficient financial assurances and could go bust at any time

– there are not enough internal staff and skills to manage a plethora of smaller companies

– existing (large) suppliers employ hundreds of SME as subcontractors.

There’s a particularly telling passage in the PASC report. It gave details of an exchange between the Department of Work and Pensions and Erudine, an SME. The Committee was given details of the exchange during a private session.

Erudine had given the department a way of migrating a legacy system onto a more modern, cheaper platform, which could generate potential savings of around £4m a year.

A senior DWP IT official rejected the proposal and suggested that the department was maintaining an interest in SMEs for political reasons – the government’s wish for 25% of contracts to be given to SMEs. This was part of what the DWP official said to Erudine:

“.. we have as you know an ‘interest’ in having SMEs present and working in the department for good political reasons. So you have other value to us … purely political.

“You guys need to be realistic. I will be very candid with you […] it is a huge amount of bother to deal with smaller organisations. Huge. And we wouldn’t necessarily do that because it doesn’t make our lives simpler.”

The Department declined to comment on the exchange and said the views expressed did not represent its own. It told the Committee that in 2009/10 SMEs made up 29.3% of their supplier base, either as a prime contractor or a subcontractor.

The Committee welcomed this assurance from the Department but added:

“… this account does suggest that attitudes at official level risk undermining ministers’ ambitions to increase the number of SMEs Government contracts with directly”.

These are other extracts from the PASC report:

Overcharging by large suppliers – an obscene waste of public money?

They [SMEs] also alleged that a lack of benchmarking data enabled large systems integrators (SIs) to charge between seven  to ten  times more than their standard commercial costs.

**

Having described the situation as an “oligopoly” it is clear the Government is not happy with the current arrangements. Whether or not this constitutes a cartel in legal terms, it has led to the perverse situation in which the governments have wasted an obscene amount of public money.

The Government should urgently commission an independent, external investigation to determine whether there is substance to these serious allegations of anti-competitive behaviour and collusion. The Government should also provide a trusted and independent escalation route to enable SMEs confidentially to raise allegations of malpractice.

Vested interests suppress innovation?

We received suggestions from some SMEs that the major systems integrators used legacy systems as leverage to maintain their dominance. Some SMEs reported that there were solutions that could easily transfer data from old platforms, but that a combination of risk aversion and vested interests prevented these solutions being adopted

Large IT contractors are “not performing well”

The Government’s analysis has shown that its large IT contractors are not performing well. A Cabinet Office review in September 2010 of the performance of the 14 largest IT suppliers found that none of them were performing to a “good” or “excellent” level, with average performance being a middling “satisfactory with some strengths”. Some were performing significantly worse.

Openness would help to cut costs

Making detailed information on IT expenditure publicly available for scrutiny would enhance the Government’s ability to generate savings, by allowing external challenge of its spending decisions.

The Government has already taken steps to provide more information about IT projects and expenditure in general, especially through the work of the Transparency Board and its publication of contracts on Contract Finder. To realise the full benefits of transparency, this is not sufficient. More information should be made public by default.

It should publish as much information as possible about how it runs its IT to enable effective benchmarking and to allow external experts to suggest different and more economical and effective ways of running its systems

Will government objectives be achieved?

We received numerous reports from SMEs about poor treatment by both Government departments and large companies who sub-contract government work to SMEs. There is a strong suspicion that the Government will be diverted from its stated policy and that its objective will not be achieved.

The drawbacks of using SMEs as subcontractors to large suppliers

“… subcontracting could lead to the Government paying a high price as it had to cover the margin of both the sub and prime contractor.

**

SMEs approached us informally to express concerns based on their own experiences of subcontracting. We heard of cases where systems integrators [large IT suppliers] had involved SMEs in the bidding process so they could demonstrate innovation, only for the SME to be dropped after award of contract.

In some of these cases SMEs felt that they have provided innovative ideas which had then been exploited by the larger systems integrators. We were also told by SMEs that by subcontracting with an SI they were barred from approaching government directly with ideas that might allow it to radically transform its services and reduce costs. This was because systems integrators did not want the Government to be provided with ideas that could result in them losing business, or having to reduce costs.

“… When we put these [SME] concerns to the Government we were told that their contracting arrangements did not stop subcontractors speaking directly to Departments…However, during our private seminar with SMEs, we were told that this did not reflect their experiences. SMEs reported that they were instructed to approach the systems integrator first in order to obtain permission to talk to a Department and that some Departments refused to deal with them directly.

**

We take seriously the concerns expressed by many SMEs that by speaking openly to the Government about innovative ideas they risk losing future business particularly if they are already in a sub-contracting relationship with a systems integator.

Government should deal directly with SMEs

The Government should reiterate its willingness to speak to SMEs directly, and commit to meeting SMEs in private where this is requested. We recommend that the Government establish a permanent mechanism that enables SMEs to bring innovative ideas directly to government in confidence, thereby minimising the risk of losing business with prime contractors.

Is government policy shutting out SMEs even more?

“…the Government has been moving to act as a single buyer to obtain economies of scale… This approach can be counter-productive. The effect of demand aggregation can be to aggregate supply, further concentrating contracts in the hands of a few large systems integrators.

Departments are following instructions from the Cabinet Office Efficiency and Reform Group to switch away from their existing direct SME contracting arrangements in favour of centralised procurement models. This would mean that SMEs would become tier 2 suppliers behind selected large suppliers, preventing SMEs from contracting directly with departments. The Cabinet Office has confirmed that:

Spend is being channelled into three current channels: a) existing framework contracts where spot buying is undertaken centrally (this is known as Home Office Cix), b) department-specific arrangements based on their unique needs (such as FCO’s arrangements with Hays) and c) an existing contract with Capita, owned and managed by DWP and available to all government departments.

It is unclear to us how narrowing the supply channels will create a more open and competitive market. The nature of this supply-side aggregation of SMEs under large contracts appears to be in direct contradiction of the policy articulated by the Minister when he indicated his desire to encourage Departments to secure more direct contracting with SMEs.

“… the Government’s plan to act as a single buyer appears to be leading to a consolidation towards a few large suppliers. This could act against its intention to reduce the size of contracts and increase the number of SMEs that it contracts with directly. We are particularly concerned with plans to move SME suppliers to an “arm’s length” relationship with Government. The Government needs to explain how it will reconcile its intentions to act as a single buyer, secure value for money and reduce contract size to create more opportunities for SMEs.

Procurement barriers for SMEs

The way procurement currently operates favours large companies that can afford to commit the staff and resources to navigate the convoluted processes. It also encourages the Government to confine discussions to as few potential contractors as possible.

If the Government is serious about increasing the amount of work it awards to SMEs it must simplify the existing processes

**

We recommend that the Government investigate the practices which seem unintentionally to disadvantage SMEs. When contracts and pre-qualifying questions are drawn up thought must be given to what impact they could have on the eligibility and ability of SMEs to apply for work, and whether separate provision should be made for SMEs. We believe it would be preferable if the default procurement and contractual approach were designed for SMEs, with more detailed and bespoke negotiation being required only for more complex and large scale procurements.

Have Departments the people and skills to handle more SMEs?

Increasing the use of SMEs will place extra pressure on departments. The management of smaller organisations is currently outsourced to the large systems integrators.

For example the Aspire framework provides HMRC with access to over 200 IT suppliers. Mr Pavitt, HMRC Chief Information Officer said that:

“managing those individually would be quite a heavy bandwidth for a Government department”.

It is not clear that Departments are willing to take on the additional work that contracting directly with SMEs implies even where this could yield significant savings…

Ministers need to ensure their officials have the skills, capacity and above all the willingness to deliver on ministerial commitments to SMEs.

On agile methods:

“… greater use of agile development is likely to necessitate behaviour changes within Government. As agile methodology requires increased participation from the business to provide feedback on different iterations of the solution, departments will need to release their staff, particularly senior staff with overall responsibility of the project, to allow them to participate in these exercises.

Agile development is a powerful tool to enhance the effectiveness and improve the outcomes of Government change programmes. We welcome the Government’s enthusiasm and willingness to experiment with this method. The Government should be careful not to dismiss the very real barriers in the existing system that could prevent the wider use of agile development.

We therefore invite the Government to outline in its response how it will adapt its existing programme model to enable agile development to work as envisaged and how new flagship programmes will utilise improved approaches to help ensure their successful delivery….

The Government will have to bear in mind the need to facilitate agile development as it renegotiates the EU procurement directive and revises the associated guidance.

Need for more people with the right skills to manage suppliers

Managing suppliers is as important as deciding who to contract with in the first place. To be able to perform both of these functions government needs the capacity to act as an intelligent customer. This involves having a small group within government with the skills to both procure and manage a contract in partnership with its suppliers.

Currently the Government seems unable to strike the right balance between allowing contractors enough freedom to operate and ensuring there are appropriate controls and monitoring in-house.

The Government needs to develop the skills necessary to fill this gap. This should involve recruiting more IT professionals with experience of the SME sector to help deliver the objective of greater SME involvement.

When disaster strikes is anyone responsible?

We are concerned that despite the catalogue of costly project failures rarely does anyone – suppliers, officials or ministers – seem to be held to account. It is therefore important that, when SROs do move on they should remain accountable for those decisions taken on their watch, and that Ministers should be held accountable when this does not happen.

Open source and open standards

Recent initiatives such as the Skunkworks team, dotgovlabs, data.gov.uk, and the Alphagov project suggest that the Government is moving in this direction

Government should omit references to proprietary products and formats in procurement notices, stipulating business requirements based on open standards. The Government should also ensure that new projects, programmes and contracts, and where possible existing projects and contracts, mandate open public data and open interfaces to access such data by default..

Report’s conclusion

“… The last 10 years have seen several failed attempts at reform. The current Government seems determined to succeed where others have failed and we are greatly encouraged by its progress to date.

“Numerous challenges remain and fundamentally transforming how Government uses IT will require departments to engage more directly with innovative firms, to integrate technology into policy-making and reform how they develop their systems.

“The fundamental requirement is that Government needs the right skills, knowledge and capacity in-house to deliver these changes. Without the ability to engage with IT suppliers as an intelligent customer – able to secure the most efficient deal and benchmark its costs – and to understand the role technology can play in the delivery of public services, Government is doomed to repeat the mistakes of the past.”

Links:

Jerry Fishenden, adviser to the PASC, gives his view of the report.

Today’s Public Administration Committee report: Recipe for rip-offs – time for a new approach

Government reliance on large IT suppliers is recipe for rip-offs.

Government IT rip-offs – surely time for a new approach – my view of the report

Techmarketview on the report

Good analysis of PASC report – Centre for Technology Policy Research.

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MPs to publish report on Govt IT rip-offs – “time for a new approach”

Posted on 26/07/2011 | 2 comments

By Tony Collins

On Thursday the Public Administration Select Committee will publish “Government and IT— a recipe for rip-offs: time for a new approach”.

The report is the culmination of months of investigation by the Committee and its advisers into the way government buys and uses IT.

The Committee’s witnesses included representatives of SMEs who suggested that government IT is dominated by a few large suppliers that charge too much and suppress innovation.

One of the SME representatives, Martin Rice, said the IT industry should apologise.  He told the Committee: “I think the IT industry should  publicly apologise to the citizen for the rip-offs of the last 10 or 20 years.”

He added:
“We are reinventing the wheel and it should not be allowed.  As a taxpayer, I am very angry about this … A lot of these problems have been solved; they are not being brought to the Government because of the oligarchy.  It is not in a profitable interest to bring you these paradigms.  That is why I feel the oligarchy has to stop…”
In written evidence Rice said that prime contractors, being the gatekeepers for some projects, “can and do prevent deployment of innovation that can make subsequent change requests cheap or quick to do as they threaten their lucrative revenue streams”.
Lawyer Susan Atkinson was among those who argued in their written evidence that agile methods can be usefully adopted by departments.

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Firecontrol shows how much Major Projects Authority is needed

Posted on 07/07/2011 | Leave a comment

When an investigative team from BBC File on 4 went to a business estate near Taunton, they saw an empty “hi-tech fortress” that looked like a NASA control room.

Nobody was working there. Nearly an entire wall of the control room was fitted with 50-inch monitors – 20 of them. They were blank.

That centre – and a further eight purpose-built buildings like it – remain empty because control room software has yet to be installed.

The £469m wasted on the centres and the failed IT project to support them – together called Firecontrol – was the subject yesterday of a hearing of the Public Accounts Committee.

Mistaken recommendation

At the hearing Sir Bob Kerslake, Permanent Secretary, Department for Communities and Local Government, said that officials made a “mistaken” recommendation to go-ahead of a new IT and control centres for fire services.  

Kerslake accepted points made the Committee’s chair Margaret Hodge that officials recommended the go-ahead of the Firecontrol IT project without reliable figures on likely costs, savings or benefits

No finalised business case or project plan 

Also absent when the IT procurement went ahead was a finalised project plan or business case, MPs heard yesterday. The full business case for Firecontrol wasn’t published until June 2007, three years after the start of the IT project. A revised business case was published in 2009, the year before the project was cancelled. 

Rush to buy new systems – as with the NHS IT scheme

The Committee was told that procurement of new systems was underway by May 2004, amid a deep level of ignorance, because officials were in a rush.

It was a similar story on the NPfIT: officials were in a hurry to complete the procurement of new systems. And as with the NPfIT, there was no local buy-in. “Firecontrol was flawed from the outset because it did not have the support of the majority of those essential to its success – its users,” said the NAO.

Local fire services were under no statutory duty to use the regional control centres. As with the NPfIT, central government officials thought they could persuade local services to use the centres. They failed.

Firecontrol has lost a minimum of £469m, according to the NAO. The Department cancelled the scheme in December 2010 because of continued uncertainties. The coalition has approved a new project due to cost about £84m – which prompted MPs to ask yesterday why the original scheme could not have been done much cheaper.

What about the officials who made the flawed recommendation to go ahead?

Margaret Hodge, chair of the committee, asked Kerslake why his department did not seek a “ministerial direction” before embarking on a project that was so flawed. Ministerial directions are issued by departments’ most senior civil servants when they disagree with their minister’s decision so strongly that they refuse to be accountable for it.

Kerslake replied that no ministerial direction was issued because it was officials who were recommending the project’s go-ahead.

Said Kerslake: 

“I don’t think it came to that [Ministerial Direction] because the view of officials was to recommend, with some of issues identified as concerns, that the scheme went ahead. This was not a case where a Direction would have applied because the recommendation from officials, as I understand it, was to go ahead with the scheme.”

MPs heard that Kerslake was a non-executive director at the department when the decision was taken to go ahead with Firecontrol. Didn’t he object to the scheme’s approval?

Kerslake said he raised concerns to the board about the large scale of the investment compared to the problem. “The concern I had at the time, whether fire and rescue services were willing to take on this technology, were all points that were discussed. The view of the officials on balance at the time was that the benefits of doing the scheme outweighed the risks and costs.”

Kerslake said that as a non-executive he was on the board in an advisory role.

Conservative MP Richard Bacon, a long-standing member of the committee, asked Kerslake if his scepticism as a non-executive was recorded.

“It was clearly part of the discussion. I have not gone back and checked every note of the meetings.”

Comment:

MP Richard Bacon suggested yesterday that the only accountability for the failure of the project was Sir Robert Kerslake’s having an uncomfortable two hours before the Public Accounts Committee.

As for his officials, the only accountability for the waste of £469m was to sit in seats behind him, periodically passing him notes. An observer at the hearing said public seats in the committee room “seemed to be packed full of advisers passing notes to the four people hauled before the committee”.

It’s a civil service tradition that officials are not generally held responsible for recommendations because the final decision on major projects is taken by the department’s minister; yet ministers will tend to know only what they are told by department’s civil servants. 

If the officials are incompetent in drawing up their recommendations, they may be incompetent in the briefings they give their ministers.

Even so it would be a brave minister who rejected the recommendation of permanent and supposedly expert staff.

That’s why the coalition’s setting up of the Cabinet Office’s Major Projects Authority is such a good move: it will challenge departmental complacency and over-confidence in its own abilities and decisions. 

Cabinet Office Francis Maude announced on 31 March 2011 that “from today all major projects will be scrutinised by the new Major Projects Authority”. 

Most importantly it has powers from the Prime Minister to oversee and direct the effective management of all large-scale projects. Though there are still uncertainties among Cabinet Office officials about the extent to which the Major Projects Authority can intervene in major projects, it has an enforceable mandate from Cameron to scrutinise proposals for major projects; and the Authority is run by the redoubtable Australian David Pitchford who reports to the Cabinet Office’s Chief Operating Officer Ian Watmore whose brief includes making efficiency savings.

With the Major Projects Authority central government has the chance to stop flawed projects such as Firecontrol going ahead. Yesterday’s PAC hearing showed how badly the Authority is needed as an independent challenge. The existence of the Authority is one of the most important developments in government IT for decades – provided it makes effective use of the PM’s mandate. 

Firecontrol chiefs list reasons for project’s collapse.

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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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Leaked memo confirms Fujitsu “keen” to settle NHS IT dispute

Posted on 25/05/2011 | Leave a comment

By Tony Collins

On 5 May I wrote on Campaign4Change that there are signs that a long-running £700m dispute between Fujitsu and the Department of Health over the NHS IT programme will reach a settlement without a court hearing.

Now a leaked Cabinet Office memo confirms that the Cabinet Office minister Francis Maude has met a representative of Fujitsu who is “keen to find a way through this issue [a dispute over its NHS IT contract] outside the legal/arbitration route currently being pursued”.

The memo says the when the Cabinet Office agreed a pan-Government memorandum of understanding with major suppliers including Fujitsu “it became apparent that the [NHS IT] dispute is material to:

– the quality of the relationship between central government, now acting as a single customer, and the company; and

– the financial and operational health of Fujitsu UK, which affects its ability to fulfil a number of business-critical contracts across central government.

The memo says that a Fujitsu representative had indicated to the Cabinet Office that the company wanted to improve its overall relationship with government.

To see whether a resolution to the NHS dispute could be reached, Fujitsu executives were willing to meet a group of officials.

The memo makes the point that relationships between suppliers and the government have changed. Coalition reforms of central government mean that the Cabinet Office is managing the Crown relationships with 19 strategic suppliers including CSC and Fujitsu. So a dispute with one department may affect a supplier’s relationship with the government in general.

HM Treasury has issued “delegated authority” letters that  give the Cabinet Office the ability to be involved and, if appropriate, lead the resolution of legal disputes within departments. The aim of this, says the memo, is to “provide objectivity and seek an optimum outcome for Government”.

The memo is also revelatory in suggesting that the Department of Health is not cooperating with the Cabinet Office over dispute resolution.

When a contract for Fujitsu to supply desktops at the Department for Work and Pensions ran into trouble, the DWP “actively” sought support from the Cabinet Office, given the Crown initiative to see contracts in the round.  In contrast, says the memo, the Department of Health has not involved the Cabinet Office.

The memo also refers to the dispute between the DH and CSC.

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There’s Always an Alternative View on Climate Change…..

Posted on 17/05/2011 | Leave a comment

I suppose that on the day the Government outlines new targets for addressing climate change, it’s inevitable that there would be an alternative view – and there is: from Lord Turnbull in the Daily Telegraph today.

We’ve heard many of these arguments before, but Lord Turnbull discusses them like this:

“First, the science is nowhere near as conclusive as it is presented. Though there is no disagreement that CO₂ is a greenhouse gas, there is no consensus on the relationship between CO2 and temperature. Many scientists also challenge the dominant role assigned to man-made CO2, arguing that other variables such as the sun, cosmic rays, oceans and clouds have been underplayed. Given this, it is unwise of the Government to have placed such heavy bets on just one interpretation of the evidence

Second, there have been failings in the governance of science. Senior figures in our scientific establishment, rather than promoting challenge, have sought to close the debate down and tell us the science is settled. The gap between the IPCC’s huge responsibilities to advise on one of the biggest issues of the day, and its competence to do so, is now so vast that it should be scrapped and replaced.

Third, the framework provided by the Climate Change Act takes no account of what other nations are doing. For a country like the UK, which produces only 2-3 per cent of global man-made emissions, this makes no sense. If we push too hard on decarbonisation, we will suffer double jeopardy: our energy-using industries will migrate and we may still need to invest heavily in adapting our infrastructure.

Fourth, the way in which the policy responses are being prioritised makes no sense. In a logical world, one would start with those technologies that are most effective in terms of cost per ton of CO₂ abated. But the EU renewables policy denies this logic. One set of technologies – in particular, wind – is guaranteed a market share and an indexed price regardless of how competitive it really is. Taking account of wind’s intermittency, its cost per kilowatt hour (kwh) exceeds that of other low carbon sources. Wind capacity should not be confused with output.

Fifth, current policies are hugely unfair. Those with large properties or landholdings on which to install solar panels or wind turbines can earn 30p-40p per kwh, which is retailed at around 11p. The loss is paid for by a levy on all households and businesses. If you live in a tower block in Lambeth, you don’t have much opportunity to share in this.

Finally, policies are failing to adapt to change, notably the impact of shale gas, which can make a huge contribution to carbon reduction with little extra cost.”

Lord Turnbull suggests that “in responding to the advice from the Committee on Climate Change on the next set of targets, the Government has an opportunity for a rethink. Instead, it seems likely that the requirements of keeping the Coalition together will take precedence.”

I don’t agree with Lord Turnbull’s analysis on climate change, though I do agree that there are probably some Coalition politics involved in today’s announcement. It will be interesting to see how the Coalition puts its argument later today.

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