Tag Archives: public sector

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

By Tony Collins

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

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

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

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

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

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

Extensions

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

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

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

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

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

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

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

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

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

Open competition?

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

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

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

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

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

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

Comment

For taxpayers there is some good news.

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

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

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

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

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

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

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

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

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

Breaking up is hard to do

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

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

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

Brexit?

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

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

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

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

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

Will anything change?

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

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

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

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

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

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

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

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

By Tony Collins

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

First published in 1999, Crash said,

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

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

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

Says the report,

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

It became clear well into project that

“a virtually fully bespoke system was required”.

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

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

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

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

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

The lessons are clear from the report:

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

Accenture’s response

Accenture said,

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

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

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

Some of what i6 was intended to cover …

Comment

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

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

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

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

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

i6 – a review. Audit Scotland’s report. 

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

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

Birmingham Council to “close down” contract with Capita when it ends in 2021

By Tony Collins

Birmingham City Council has said in a job advert that it plans to “close down” its joint venture contract with Capita when it expires in 2021.

The advert was discovered by Government Computing which has reported the job requirements in detail.

Capita and Birmingham City Council have one of the largest and longest IT-based outsourcing contracts in the public sector.

It began in 2006 when the council and Capita set up a joint venture “Service Birmingham”. The council has spent about £85m to £120m a year on the contract which puts the total cost of the deal so far at more than £1bn.

Government Computing reports that the council is seeking an assistant director ICT and digital services and CIO role. The job will include a task to “oversee the effective closedown of the current Service Birmingham ICT contract”.

This suggests the council is unlikely to renew the existing contract. It could decide to sign a new outsourcing deal but the signs so far are that the council will bring services in-house in 2021.

The council says in the job advert it wants to move to an “increasingly agile state of continuous business transformation”.

Nigel Kletz, director of commissioning and procurement for Birmingham City Council, told Government Computing,  “The current Service Birmingham contract has four years still to run (until 2021), so this role will lead the implementation of the ICT and digital strategy, which includes developing a transition programme to identify and then implement ICT delivery options going forward.

“Decisions on how ICT support is provided from 2021 onwards are yet to be taken.”

Capita did not add to the council’s statement.

Alan Mo, research director at public sector analysis group Kable, is quoted in Government Computing as saying,

“When it comes to ICT, Birmingham is the largest spending council in the UK. Given what’s at stake, we cannot over emphasise the importance of early planning…

“As we know, Service Birmingham has been under a huge amount of scrutiny over the past few years. Given the trends in local government, it would not surprise us if Birmingham prefers to go down the in-sourcing path; the council has already opted to take back contact centre services.”

Projected savings of “£1bn” 

Service Birmingham lists on its website some of the benefits from the joint venture.

  • Projected cost savings of £1bn back to the Council over the initial 10-year term, for reinvestment in services
  • £2m investment in a new server estate
  • Rationalising 550 applications to 150
  • Consolidated 7 service desks into 2
  • 500% improvement in e-mail speed
  • Help desk calls answered within 20 seconds increased from 40% to nearly 90%

Service Birmingham provides Birmingham City Council’s IT, along with a council tax and business rates administration service. The council has discussed taking back in-house the council tax  element of the contract. 

Capita has run into trouble on some of its major contracts, including one with the NHS to supply services to GPs.

Comment

It appears that Capita has served its purpose and put the council into a position where it can take back ICT services now that are in a better state than they were  at the start of the contract 2006.

Austerity is the enemy of such large public sector IT-based outsourcing contracts.  When councils can afford to spend huge sums – via monthly, quarterly and annual service charges – on so-called “transformation”, all may be well for such deals.

Their high costs can be publicly justified on the basis of routine annual efficiency “savings” which do not by law have to be verified.

The downfall for such deals comes when councils have to make large savings that may go well beyond the numbers that go into press releases. It’s known that Birmingham City Council has been in almost continuous negotiation to reduce the annual sums paid to Capita.

Capita is not a charity. How can it continue to transform ICT and other services, pay the increasing salaries of 200 more people than were seconded from the council in 2006, accept large reductions in its service changes and still make a reasonable profit?

It makes economic sense, if Birmingham needs to pay much less for IT, to take back the service.

It’s a pity that austerity has such force in local government but not in central government where IT profligacy is commonplace.

Job spec for senior Birmingham IT post looks towards end of Service Birmingham ICT deal – Government Computing

 

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

By Tony Collins

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

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

These were some of the promises in 2007.

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

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

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

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

Comment

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

The realty is that uncertainties and risks abound.

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

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

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

Or the council may be paying for unneeded software licences.

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

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

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

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

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

**

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

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

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

**

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

**

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

**

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

**

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

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

**

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

Well done to Unite for challenging council’s joint venture “savings” claim

By Tony Collins

When councils make unexplained (and self-congratulatory) claims that they have made savings at the end of a joint venture, it will usually raise a series of questions.

So well done to Nigel Behan of the Unite union for putting a series of FOI questions to Taunton Deane Borough Council about its joint venture with IBM, as part of Southwest One.

In an “Efficiency Plan” published on its website last month, Taunton Deane
Borough Council announced that it was “part of the ground-breaking Southwest
One shared services joint venture partnership, between Somerset County
Council, Avon and Somerset Police and IBM”.

“This ten year partnership, which is now drawing to a close, has delivered significant savings to the Council and has made an important contribution to our finances.”

Unite is not so sure. Its officials believe the joint venture has, for Taunton Deane,  broken even at best. Its FOI questions to the council:

  • Please will you provide the unitary charge payable by TDBC to
    Southwest One/IBM for each financial year from 2007-2008 to date?
  •  For each financial year since 2007-2008 what was the cost of
    letting and managing the contract – including legal costs, procurement costs etc. etc.?
  • Re IT – software, hardware and peripherals. What was the value in 2007 of all IT (Hardware, software, peripherals and infrastructure) and what is the value of these assets now, ie what has been the depreciation on this asset class since 2007? What will cost of replacing these?
  • What are the net savings achieved by Southwest One for Taunton Deane Borough Council for each financial year since 2007-2008? Will you define “significant savings” (provide a measurable test)?

 Comment:

Taunton Deane Borough Council’s claim of savings was imperious, self-serving and unexplained. The council’s Efficiency Plan looks like a glossy commercial brochure that local residents have had no option but to pay for.

Were a newspaper to make a controversial claim without any explanation or justification, its readers would be entitled to question the article’s veracity.

Taunton Deane’s joint venture peripherally involved a costly legal action between the two main parties to the joint venture: IBM and Somerset County Council.

To make a claim of savings in such circumstances is like officials claiming a mission to space was a success even though the spacecraft blew up.

No rational judgement can be made without a detailed weighing up of the costs and benefits.

Even then the costs and benefits may be subjective. What costs have been excluded from the “savings” figure? What were the baseline costs on which the savings have been measured? And were those baseline figures audited as accurate  – or were they intelligent guesses? Have any benefits been double-counted? Are the benefits audited?

Without people like Nigel Behan and Somerset campaigner Dave Orr, and organisations like Unite, councils would get used to saying publicly whatever they liked, possibly without challenge.

 

 

 

Post Office Horizon IT – for Julian Wilson time ran out on justice

By Tony Collins

Julian Wilson was a subpostmaster, one of the founding members of Justice for Subpostmasters Alliance.

He and his wife Karen had their lives turned upside down after the Post Office’s centrally-run Horizon system, which was installed at the local branch they ran, showed unexplained losses.

He was one of more than 150 subpostmasters across the country whom the Post Office has blamed for losses shown on Horizon.

Subpostmasters run smaller post offices under a contract issued by the Post Office. Under their contracts, subpostmasters are personally responsible for deficits at their branches.

MPs and TV documentaries have raised concerns about whether the Post Office has accused subpostmasters of criminal actions when technical faults might have caused the losses.

The concerns of MPs were reinforced by the findings of forensic accountants Second Sight. At the request of MPs, the Post Office brought in Second Sight to investigate each of the subpostmaster complaints.

The Post Office criticised Second Sight’s findings and said there was no evidence that faults with the computer system caused money to go missing. “There is evidence that user actions, including dishonest conduct, were responsible for missing money,” said the Post Office.

Julian Wilson

TV investigative reporter Nick Wallis, who has reported on the Post Office Horizon IT system for the BBC’s The One Show, and has followed the story for many years, has written a moving post on the death of Julian Wilson who fought for justice for as long as he was able.

On his blog, Wallis says of Julian, “He was, I suppose, what we journalists call a contact.

“But his gentle manner, generous spirit and calm good humour made me think of him as more than that.”

Julian was prosecuted by the Post Office for false accounting. He pleaded guilty and went to his grave a near-bankrupt convicted criminal, says Wallis.

When Julian died, his conviction was one of 20 subpostmaster cases being considered by the Criminal Cases Review Commission.

Technical fault or crime?

More than 11,000 post offices have used Fujitsu’s £1bn Horizon system for branch accounting and rarely have had problems. At the close of each day, the system has balanced money coming in from customers and money going out.

If the system showed a shortfall, subpostmasters had few options: make up the deficit out of their own money, sign off the accounts as correct, or refuse to sign off – which might have meant closing the post office (and upsetting customers) while a financial audit took place.

The Post Office prosecuted subpostmasters who signed off the accounts as correct knowing there were unexplained losses; and it prosecuted in some cases for theft.

Dozens of subpostmasters have been jailed, made bankrupt or had their lives ruined after the Post Office took action against them in the light of discrepancies shown on Horizon.

Tears

Julian Wilson was determined to clear his name.

Wallis interviewed him in December 2014 alongside his wife Karen in a village hall in Fenny Compton, where the Justice for Subpostmasters Alliance met for the first time in 2009.

“Karen stood there with tears streaming down her face as Julian explained in his measured, Hampshire burr how problems with the computer system at their Post Office in Astwood Bank had caused their lives to fall apart.”

Wallis says there was never a trace of bitterness about Julian. “He accepted things with great patience even though he was still in danger of losing his house because of the Post Office’s pursuit of him.”

Julian found out he had terminal cancer towards the end of last year. “This summer he deteriorated rapidly,” says Wallis.

One of the comments on Wallis’s blog says of Julian,

“He carried on campaigning against the Post Office until he had no strength left to fight and I made him a promise – in the last few days of his life – that I would keep going along with the JFSA [Justice for Subpostmasters Alliance] until we got our long-overdue justice.

“What an absolute tragedy that such a good man should be taken from his beloved wife Karen and wonderful daughter Emma before his name had been cleared.”

Another said,

“RIP Julian – I am so sorry that we could not let you leave this world with the vindication you will certainly, but now posthumously, receive.”

Comment

Subpostmasters represented by Justice for Subpostmasters Alliance have issued a writ against the Post Office and the legal action is well and truly underway – but Julian Wilson’s untimely death shows that not all the individuals involved in complaints against the Post Office can afford the time to wait for justice.

In some cases, complaints go back at least eight years – so far.

The Post Office’s argument all along has been, in essence, that there is, and never has been, any evidence that Horizon caused the losses.

But neither is there evidence that more than 150 subpostmasters stole the money in question.

Institutional blindness?

In a BBC Panorama documentary on complaints about Horizon, Ian Henderson, a Second Sight investigator, told reporter John Sweeney,

“Horizon works reasonably well if not very well most of the time. In any large IT system it is inevitable that problems will occur.

“What seems to have gone wrong within the Post Office is a failure to investigate properly and in detail cases where those problems occurred. It’s almost like institutional blindness.”

The Post Office denies this and maintains that it has investigated each case thoroughly.

What strikes me, though, is the insularity of the Post Office’s case.

Crashes

Imagine if airlines and aircraft manufacturers were allowed to be the judge of whether pilots were to blame after major incidents.

The RAF’s hierarchy wrongly blamed two pilots for the crash of a Chinook helicopter on the Mull of Kintyre in June 1994. It took 17 years for the families of the dead pilots to win justice for their dead sons.

It was only after numerous independent inquiries, Parliamentary hearings and leaks of a mass of material about problems with the helicopter’s computer systems that the RAF’s finding of gross negligence against the two pilots was quashed.

The case showed that, despite the sincerely-held beliefs of two air marshals that the pilots were, without any doubt, at fault, the RAF was eventually found to have failed to take sufficient account of the possibility of a technical malfunction, or a chain of events involving a technical malfunction.

The restoration of the pilots’ reputation came about not because the RAF’s hierarchy changed its mind about the pilots’ gross negligence, but because there was a change of government in 2010 and setting aside the finding against the pilots was the will of Parliament.

The then Coalition government decided that a technical cause of the crash could not be ruled out.

Of course there was no air crash in the case of the subpostmasters. But there was a similarity: the RAF and Post Office are State institutions that dismissed complaints about their equipment and blamed the system “users”, with devastating consequences for the reputations and lives of the families involved.

There is also a fundamental difference: a regulatory authority always undertakes investigations into air crashes.

Airlines and aircraft manufacturers are not the legal investigating authority. In the UK it is the Air Accidents Investigation Branch. In its investigations into possible equipment failings, the AAIB has powers set out in law [including the Civil Aviation (Investigation of Air Accidents and Incidents) Regulations 1996] to require information from airlines and manufacturers.

In the case of the subpostmasters, the Post Office was the owner of the computer equipment that showed the losses; it was responsible for investigations into that equipment; and it was the prosecuting authority.

Contradictory evidence

There have been numerous commercial air crashes where regulatory investigating authorities have uncovered evidence that contradicted evidence from the airlines or manufacturers.

Sometimes it took regulatory authorities several years to discover the truth. Eventually they found technical faults where manufacturers had said initially there were none.

In the case of the Post Office Horizon controversy, there are no regulatory investigating authorities.

When accused subpostmasters have blamed the system for the losses, they have been unable to rely on an Air Accident Investigation Branch to produce a final report that could not be contested by the airline or manufacturers.

The Post Office could argue (rightly) that it operates under completely different laws, rules and regulations to the legal and regulatory framework that governs investigations of air crashes. In the Post Office cases, no public safety is involved.

But the Post Office has had a succession of serious incidents: the lives of 150 or more subpostmasters and in many cases their spouses have been thrown into turmoil.

Is this not a succession of serious incidents in which none has been the subject of an inquiry backed by a regulatory authority?

It’s a credit to the tenacity of Justice for Subpostmasters Alliance that legal proceedings have been issued. But the wheels of justice turn slowly. With appeals, the case could drag on for years.

More uncertainty and suffering for the families involved?

It’s also obvious that the Post Office has deeper pockets than those of individual subpostmasters.

That’s one reason why, after serious air incidents, the independent investigating authorities have complete control over their inquiries. Air accident investigators recognise that lawyers for airlines and manufacturers may seek to defend their organisations after a serious incident.

Sometimes air accident investigators will conduct parts of their investigations without relying on evidence from the manufacturers.

In the case of the accusations against subpostmasters, what powerful independent organisation exists to challenge the evidence of the Post Office?

The Post Office was able to commission Second Sight and later to discontinue its contract. The Post Office was also able to issue a point-by-point denial of Second Sight’s findings.

Imagine an airline or aircraft manufacturers being able to order independent investigators to discontinue their inquiries after a succession of serious incidents?

The Post Office said in response to Second Sight’s reports that it was “unable to endorse” the findings. After serious air incidents it would not matter if the airline or manufacturers disputed the report of regulatory authorities. The regulator’s report would stand.

Fairness?

The Post Office has a duty to prosecute subpostmasters who steal. But could it also do more to recognise that the imbalance of power and resources puts subpostmasters who have gained nothing – and lost much as a result of losses shown the system – at a severe disadvantage?

As the prosecuting authority, and the investigating authority, the Post Office is not open to serious challenge except through the courts where it has the money and resources to sustain costly and protracted battles.

Is this fair? Is this just?

The Post Office has every legal right to carry on exactly as it is, but could it not instead consider the cases on the basis of “benefit of doubt?”

In other words concede that there is doubt over whether subpostmasters had criminal intent?

Taking into account ordinary fairness and magnanimity in the face of its extraordinary power, the Post Office could settle the cases now, and not put the families of so many subpostmasters through any more suffering.

Nick Wallis’ post on Julian Wilson

Post Office faces group litigation over Horizon IT as subpostmasters fund class action

Justice for Subpostmasters Alliance

Jailed and bankrupt because of “unfit” Post Office IT? What now?

Communication Workers Union warns subpostmasters of flaw in Post Office Horizon accounting system

Horizon not fit for purpose at some branches?

Labelled as criminals – Telegraph

Another NPfIT IT scandal in the making?

By Tony Collins

Jeremy Hunt may have forgotten what he told the FT 2013, as reported in the paper on 2 June 2o13.

Referring to the failed National Programme for IT [NPfIT] in the NHS he said at that time,

“It was a huge disaster . . . It was a project that was so huge in its conception but it got more and more specified and over-specified and in the end became impossible to deliver, but we musn’t let that blind us to the opportunities of technology and I think one of my jobs as health secretary is to say, look, we must learn from that and move on but we must not be scared of technology as a result.”

He added, “I’m not signing any big contracts from behind [my] desk; I am encouraging hospitals and clinical commissioning groups and GP practices to make their own investments in technology at the grassroots level.”

Now the Department of Health (and perhaps some large IT suppliers) have encouraged Hunt to find £4bn for spending on technology that is (again) of questionable immediate need.

Says Computing, “A significant part of the paperless NHS plans will involve enabling patients to book services and order prescriptions online, as well as giving them the choice of speaking to their doctor online or via a video link.”

The £4bn, if that’s what it will cost, is much less than the cost of the NPfIT. But are millions to be wasted again?

[NPfIT was originally due to cost £2.3bn over three years from 2003 but is expected to cost £9.8bn over 21 years, to 2024.]

Yesterday (8 February 2016) the Department of Health announced a “review of information technology in the NHS”. Announcing it Hunt said.

“Improving the standard of care patients receive even further means embracing technology and moving towards a fully digital and paperless NHS.

NHS staff do incredible work every day and we must give them and patients the most up-to-date technology – this review will tell us where we need to go further.”

The NPfIT was supposed to give the NHS up-to-date technology – but is that what’s needed?

A more immediate need is for any new millions of central funding (for the cost would be in the tens of millions, not billions) to be spent on the seemingly mundane objective of getting existing systems to talk to each other, so that patients can be treated in different parts of the NHS and have their electronic records go with them.

This doesn’t need a new national programme for IT. Some technologists working in the NHS say it would cost no more than £150m, a small sum by NHS IT standards, to allow patient data to reside where it is but be accessed by secure links anywhere, much as secure links work on the web.

But the review’s terms of reference make only a passing reference to the need for interoperability.

Instead the review will have terms of reference that are arguably vague – just as the objectives for the NPfIT were.

The Department of Health has asked the review board, when making recommendations, to consider the following points:

  • The experiences of clinicians and Trust leadership teams in the planning, implementation and adoption of digital systems and standards;
  • The current capacity and capability of Trusts in understanding and commissioning of health IT systems and workflow/process changes.
  • The current experiences of a number of Trusts using different systems and at different points in the adoption lifecycle;
  • The impact and potential of digital systems on clinical workflows and on the relationship between patients and their clinicians and carers.

The head of the review board Professor Wachter will report his recommendations to the secretary of state for health and the National Information Board in June 2016.

Members of the National Advisory Group on health IT in England (the review board) are:

  • Robert Wachter, MD, (Chair) Professor and Interim Chairman, Department of Medicine,University of California, San Francisco
  • Julia Adler-Milstein, PhD, Associate Professor, Schools of Information and of Public Health, University of Michigan
  • David Brailer, MD, PhD, CEO, Health Evolution Partners (current); First U.S. National Coordinator for Health IT (2004-6)
  • Sir David Dalton, CEO, Salford Royal NHS Foundation Trust, UK
  • Dave deBronkart, Patient Advocate, known as “e-Patient Dave”
  • Mary Dixon-Woods, MSc, DPhil, Professor of Medical Sociology, University of Leicester, UK
  • Rollin (Terry) Fairbanks, MD, MS, Director, National Center for Human Factors in Healthcare; Emergency Physician, MedStar Health (U.S.)
  • John Halamka, MD, MS, Chief Information Officer, Beth Israel Deaconess Medical Center; Professor, Harvard Medical School
  • Crispin Hebron, Learning Disability Consultant Nurse, NHS Gloucestershire
  • Tim Kelsey, Advisor to UK Government on Health IT
  • Richard Lilford, PhD, MB, Director, Centre for Applied Health Research and Delivery, University of Warwick, UK
  • Christian Nohr, MSc, PhD, Professor, Aalborg University (Denmark)
  • Aziz Sheikh, MD, MSc, Professor of Primary Care Research and Development, University of Edinburgh
  • Christine Sinsky, MD, Vice-President of Professional Satisfaction, AMA; Primary care internist, Dubuque, Iowa
  • Ann Slee, MSc, MRPharmS, ePrescribing Lead for Integrated Digital Care Record and Digital Medicines Strategy, NHS England
  • Lynda Thomas, CEO, MacMillan Cancer Support, UK
  • Wai Keong Wong, MD, PhD, Consultant Haematologist, University College London Hospitals; Inaugural chair, CCIO Leaders Network Advisory Panel
  • Harpreet Sood, MBBS, MPH, Senior Fellow to the Chair and CEO, NHS England and GP Trainee

Comment

Perhaps egged on by one or two major suppliers in behind-the-scenes lobbying, Hunt has apparently found billions to spend on improving NHS IT.

Nobody doubts that NHS IT needs improving.  But nearly all GPs have impressive systems, as do many hospitals.  But the systems don’t talk to each other.

The missing word  from the review board’s terms of reference is interoperability. True, it’s difficult to achieve. And it’s not politically aggrandizing to find money for making existing systems interoperable.

But at present you can have a blood test at the GP, then a separate blood test at the local hospital and the full results won’t go on your electronic record because the GP and hospital are on different systems with no interoperability between them.

If you’re treated at a specialist hospital for one ailment, and at a different hospital 10 to 20 (or say 100) miles away for something else, it may take weeks for your electronic record to reflect your latest treatment.

Separate NHS sites don’t always know what each other is doing to a patient, unless information is faxed or posted between them.

The fax is still one of the NHS’s main modes of cross-county communication. The DoH wants to be rid of the fax machine but it’s indispensable to the smooth running of the NHS, largely because new and existing systems don’t talk to each other.

The trouble with interoperability – apart from the ugliness of the word – is that it is an unattractive concept to some of the major suppliers, and to DoH executives, because it’s cheap, not leading edge and may involve agreements on data sharing.

Getting agreements on anything is not the DoH’s forte. [Unless it’s an agreement to spend more money on new technology, for the sake of having up-to-date technology.]

Last year I broke my ankle in Sussex and went to stay in the West Midlands at a house with a large ground floor and no need to use stairs. There was no communication between my local GP and the NHS in the West Midlands other than  by phone, post or fax, and even then only a summary of healthcare information went on my electronic record.

I had to carry my x-rays on a CD. Then doctors at my local orthopaedic department in Sussex found it difficult to see the PACS images because the hospital’s PCs didn’t have CD players.

A government employee told me this week of a hospital that gave medication to a patient in the hope she would not have an adverse reaction. The hospital did not have access to the patient’s GP records, and the patient was unsure of the name of the medication she’d previously had an allergic reaction to.

Much of the feedback I have had from those who have enjoyed NHS services is that their care and treatment has been impeded by their electronic records not moving with them across different NHS sites.

Mark Leaning, visiting professor, at University College, London, in a paper for health software supplier EMIS, says the NHS is “not doing very well when it comes to delivering a truly connected health system in 2016. That’s bad for patient outcomes.”

That GPs and their local hospital often cannot communicate electronically  is a disgrace given the billions various governments have spent on NHS IT.  It is on interoperability that any new DoH IT money needs to be spent.

Instead,  it seems huge sums will be wasted on the pie-in-the-sky objective of a paperless NHS by 2020. The review board document released today refers to the “ambition of a paper- free health and care system by 2020”.

What’s the point of a paperless NHS if a kaleidoscope of new or existing systems don’t properly communicate?

Congratulations, incidentally, to GP software suppliers TPP and EMIS. They last year announced direct interoperability between their core clinical systems.

Their SystmOne and EMIS Web systems hold the primary care medical records for most of the UK population.

And this month EMIS announced that it has become the first UK clinical systems provider to implement new open standards for interoperability in the NHS.

It says this will enable clinicians using its systems to securely share data with any third party supplier whose systems comply with a published set of open application programme interfaces.

The Department of Health and ministers need to stop announcing things that will never happen such as a paperless NHS and instead focus their attention – and any new IT money – on initiatives that are not subconsciously aimed at either political or commercial gain.

It would be ideal if they, before announcing any new IT initiative, weighed up diligently whether it is any more important, and any more of a priority, than getting existing systems to talk to each other.

Review of information technology in the NHS

EMIS implements open standards

 

DWP fraud and mistakes cost an estimated £3.2bn – despite new HMRC data links

By Tony Collins

The Department for Work and Pensions’ auditors have qualified the department’s latest accounts for the 26th year in a row because of “unacceptably high” fraud and mistakes.

The high level of fraud and error is despite the DWP’s now being able to check every claimant’s benefit entitlements – particularly inconsistencies in earnings – through HMRC’s real-time information [RTI] tax system.

In 2014-15, the DWP carried out a bulk exercise to match RTI data against the DWP’s benefits information. The DWP uses RTI data to provide information on earnings as part of the calculation of claimants’ Universal Credit entitlement.

The National Audit Office, in today’s report on the DWP’s 2014-15 accounts, says that misreporting and incorrect processing of income and are responsible for estimated losses in 2014-15 of £1.12bn

A further £340m is lost through undisclosed and incorrect processing of data on living arrangements.

The DWP is the same department that’s pouring money into a protracted FOI legal battle to stop four reports on Universal Credit being published on the basis that their disclosure could affect the DWP’s “effective management of public affairs”.

The DWP publishes none of the reports on the progress or otherwise of its major projects and programmes.

One question is, in the light of the DWP’s repeatedly qualified accounts, whether the department’s officials are better or worse off running their affairs in an atmosphere of great secrecy.

Would the DWP’s senior management be able to manage the business better – and particularly the Universal Credit IT programme – if they had to publish their commissioned reports on major projects?

The added external scrutiny of business partners – including local authorities – plus MPs, journalists and the public could give extra force to attempts within the department to manage affairs more professionally.

Such is the DWP’s detachment from external scrutiny that its managers are legitimately able to decide to avoid measuring the Personal Independence Payment for fraud and error until 2016-17.

Some may wonder how any major organisation can delay measuring a major part of its business for fraud and error.

Says Amyas Morse, head of the NAO:

“We believe that the absence of up-to-date information on error rates in such a large benefit stream creates a risk that the Department is making decisions based on out-of-date measurements.”

He adds:

“Furthermore, some smaller value benefits have never undergone a (fraud and error) measurement exercise.”

Morse says the accounts DWP’s have been qualified because of the “unacceptably high level of fraud and error in benefit expenditure, other than State Pension where the level of fraud and error is lower”.

He says the accounts of the DWP and those of predecessor departments administering welfare spending, have been similarly qualified each year since 1988-89.

The DWP estimates total overpayments due to fraud and error in 2014-15 to be £3.2bn, which is 1.9%  of the total forecast benefit spending of £168.1bn.

The Department estimates the total underpayments in 2014-15 to be £1.4bn.

Morse says the DWP is not on track to achieve its target to reduce fraud and internal mistakes.

“Furthermore, the Department has reduced the pace of the roll out of Universal Credit. As a result, Universal Credit has not yet realized the £200m annual fraud and error savings originally expected by March 2015…”

This failure to meet savings targets on Universal Credit highlights the speculative nature of central government’s business case estimates of programme and project savings.

Morse said: “Issuing an audit qualification is a serious matter, and the fact that similar qualifications have been in place for such a long period of time does not lessen that seriousness.”

Fraud and error is defined as

– Official error, which arises when a benefit is paid incorrectly due to inaction, delay or a mistaken assessment by the Department, a local authority or HM Revenue and Customs;

– Claimant error, which occurs when claimants make inadvertent mistakes with no fraudulent intent; and

– Fraud, which arises when claimants deliberately seek to mislead the DWP or local authorities which administer benefits on the department’s behalf to claim money to which they are not entitled.

The DWP’s managers say the largest proportion of error enters the benefits system due to changes in claimants’ circumstances after a correct initial award.

 

Are councillors in Somerset ignoring the wisdom of their auditors?

By Tony Collins

It’s good to see auditors in local government doing their job well  – not accepting verbal assurances and seeking proof that all is well with an outsourced system .

But what if councillors apply a lower standard – and accept verbal assurances without checking them?

A  strong report by the South West Audit Partnership [SWAP] went to councillors at Somerset County Council’s Audit Committee on 2 July 2015. The report was about problems with an outsourced system, the Adults Integrated Solution [AIS].

Although not the original supplier, IBM has provided AIS to Somerset County Council under a 10-year outsourcing contract/joint venture – Southwest One –  that was signed in 2007.

The SWAP report said limited progress has been made in implementing the AIS-related recommendations from its 2012-2013 audit report. It added that:

– AIS performance and response times could be “less than adequate for users’ needs”.

– Southwest One was unwilling to develop a service level agreement specifically for the AIS application.

– “Poor response time has led to the disabling of enhanced audit trails/logs that would make it possible to trace and attribute user activity in the system.” SWAP added that this was “worrying” given that the data involved was “sensitive and personal”.

– SWAP had been refused access to the contract between IBM and Northgate, the original supplier of AIS.

Are verbal assurances worth anything?

Having studied AIS from time to time over 2 years, and spoken to its users, SWAP’s auditors have been reluctant, on some of their concerns, to accept verbal assurances that all is well.

When they have sought documentary evidence to support assurances it hasn’t always been forthcoming.

SWAP said in its latest report:

“Verbal assurances were provided that the ToR for AIS Programme Board had been reviewed and that roles and responsibilities in relation to system ownership had been clarified. However, no evidence was provided to support these assurances.”

Now Somerset’s audit committee has done what its auditors wouldn’t do and has accepted verbal assurances that all is well with AIS.

SWAP’s auditors had expressed a multitude of concerns about AIS. But Somerset’s officers verbally assured audit committee councillors that a single upgrade had solved all the problems.

One officer, in a statement, told Dave Orr, a Somerset resident who campaigns for openness over IBM’s relationship with the council:

“I can confirm that all of the fundamental issues raised through the [SWAP] Audit Report [on AIS] have now been addressed…

“The AIS application is one of the top systems used by local authorities for social care services in the UK. The performance issues referred to in the Audit Report were resolved by a system upgrade.”

Comment:

It’s difficult if not impossible to see how a single upgrade could address all the points SWAP made – such as the lack of a service level agreement to cover AIS or the refusal by IBM to supply a copy of its contract with Northgate.

Whenever auditors produce a hard-hitting report there will be 2 opposing sides: defenders of what’s being criticised and the auditors.

It is up to the auditors to cut through any dissimulation, obfuscation and prevarication to identify what’s going well, what isn’t, and what the uncertainties and risks are.

Auditors would not be doing their job if they always accepted verbal assurances at face value.

But what if auditors are undermined by councillors who readily accept verbal assurances from their officers who wish to defend the suppliers?

A supplier that doesn’t have to provide documentary evidence can say anything in defence of its systems and the quality of service.

Somerset’s councillors are lucky to have auditors as independently-minded as SWAP.

It’s unlikely that SWAP would accept at face value the Somerset officer’s suggestion that because AIS is widely used it’s unlikely to be a poor system.

This would be like Ford saying a particular Mondeo is unlikely to be at fault because thousands of people happily own one.

Every IT installation is different, even if the main software package is widely used. The hardware, network configuration, load on the network, facilities and interfaces installed will render every IT installation unique.

It’s conceivable that every council client of AIS could have a trouble-free service except Somerset.

Are the council’s audit committee councillors gullible to accept verbal assurances about the problems with AIS being solved without requiring proof?

Where does this leave the 775 users of Somerset’s AIS, many of whom may be having to do difficult work in managing vulnerable adults while trying to cope with what may be one of the UK’s worst outsourced systems?

Thank you to Dave Orr for providing information that made this post possible.

Pity the 775 users who use this outsourced council system?

SWAP report on AIS for Somerset County Council’s Audit Committee 2 July 2015

SWAP 2012-2013 audit report on AIS

 

 

Is HMRC spending enough for help to replace £10.4bn Aspire contract?

By Tony Collins

Government Computing reports that HM Revenue and Customs is seeking a partner for a two-year contract, worth £5m to £20m, to help the department replace the Aspire deal which expires in 2017.

HMRC is leading the way for central government by seeking to move away from a 13-year monopolistic IT supply contract, Aspire, which is expected to cost £10.4bn up to 2017.

Aspire’s main supplier is Capgemini.  Fujitsu and Accenture are the main subcontractors.

HMRC says it wants its IT services to be designed around taxpayers rather than its own operations. Its plan is to give every UK taxpayer a personalised digital tax account – built on agile principles – that allows interactions in real-time.

This will require major changes in its IT,  new organisational skills and changes to existing jobs.

HMRC’s officials want to comply with the government’s policy of ending large technology contracts in favour of smaller and shorter ones.

Now the department is advertising for a partner to help prepare for the end of the Aspire contract. The partner will need to help bring about a “culture and people transformation”.

The contract will be worth £5m to £20m, the closing date for bids is 6 July, and the contract start date is 1 September.  A “supplier event” will be held next week.

But is £5m to £20m enough for HMRC to spend on help to replace a £10.4bn contract?

This is the HMRC advert:

“HMRC/CDIO [Chief Digital Information Officer, Mark Dearnley] needs an injection of strategic-level experience and capacity to support people and culture transformation.
“The successful Partner must have experience of managing large post-merger work force integrations, and the significant people and cultural issues that arise. HMRC will require the supplier to provide strategic input to the planning of this activity and for support for senior line managers in delivering it.
“HMRC/CDIO needs an injection of strategic level experience and capacity to help manage the exit from a large scale outsourced arrangement that has been in place for 20+ years.
“HMRC is dependent on its IT services to collect £505bn in tax and to administer £43bn in benefits each year. The successful supplier must have proven experience of working in a multi-supplier environment, working with internal and external legal teams and suppliers and must have a proven track record of understanding large IT business operations.
“HMRC/CDIO needs an injection of strategic level experience and capacity to help HMRC Process Re-engineer and ‘Lean’ its IT operation. HMRC/CDIO requires a Programme Management Office (PMO) to undertake the management aspects of the programme.
“It is envisaged that the Lead Transformation Partner will provide leadership of the PMO and work alongside HMRC employees. The leadership must have significant experience of working in large, dynamic, multi-faceted programmes working in organisations that are of national/international scale and importance including major transformation…”

Replacing Aspire with smaller short-term contracts will require a transfer of more than 2,000 Capgemini staff to possibly a variety of SMEs or other companies, as well as big changes in HMRC’s ageing technologies.

It would be much easier for HMRC’s executives to replace Aspire with another long-term costly contract with a major supplier but officials are committed to fundamental change.

The need for change was set out by the National Audit Office in a report “Managing and replacing the Aspire contract”  in 2014. The NAO found that Capgemini has, in general,  kept the tax systems running fairly well and successfully delivered a plethora of projects. But at a cost.

The NAO report said Aspire was “holding back innovation” in HMRC’s business operations”.

Aspire had made it difficult for HMRC to “get direction or control of its ICT; there was little flexibility to get things done with the right supplier quickly or make greater use of cross-government shared infrastructure and services”. And exclusivity clauses “prevented competition and stifled new ideas”.

Capgemini and Fujitsu made a combined profit of £1.2bn, more than double the £500m envisaged in the original business plan. Profit margins averaged 16 per cent to March 2014, also higher than the original 2004 plan.

HMRC was “overly dependent on the technical capability of the Aspire suppliers”. The NAO also found that HMRC competed only 14 contracts outside Aspire, worth £22m, or 3 per cent of Aspire’s cost.

Although generally pleased with Capgemini,  HMRC raised with Capgemini, during a contract renegotiation, several claimed contract breaches for the supplier’s performance and overall responsiveness.

When benchmarking the price of Aspire services and projects on several occasions, HMRC has found that it has often “paid above-market rates”.

HMRC did not consider that its Fujitsu-run data centres were value for money.

Comment

HMRC deserves credit for seeking to replace Aspire with smaller, short-term contracts. But is it possible that HMRC is spending far too little on help with making the switch?

HMRC doesn’t have a reputation for caution when it comes to IT-related spending.  The total cost of Aspire is expected to rise to £10.4bn by 2017 from an original expected spend of £4.1bn. [The £10.4bn includes an extra £2.3bn for a 3-year contract extension.]

Therefore a spend of £5m to £20m for help to replace Aspire seems ridiculously low given the risks of getting it wrong, the complexities, the number of staff changes involved, the changes in IT architecture, and the legal, commercial and technical capabilities required.

The risks are worth taking, for HMRC to regain full control over ICT and performance of its operations.

If all goes wrong with the replacement of Aspire, costs will continue to spiral. The Aspire contract lets both parties extend it by agreement for up to eight years. HMRC says it does not intend to extend Aspire further. But an overrun could force HMRC to negotiate an extension.

As the NAO has said, an extension would not be value for money, since there would continue to be no competitive pressure.

Campaign4Change has never before accused a government department of allocating too little for IT-related change. There’s always a first time.

Government Computing article