Nats told a Commons committee that all was well with a PFI deal
that was facing serious contractual problems. Last week Bill
Semple, its former chief executive, was questioned in the High
Court about whether he was economical with the truth. Tony Collins
was there.
Outside courtroom number nine at St Dunstan's House, off Fleet
Street in London, last week, Bill Semple, former chief executive of
National Air Traffic Services (Nats), did not look entirely
relaxed.
He knew he would face questions in the High Court about the
accuracy of his evidence to the House of Commons transport select
committee nearly two and half years earlier.
Appearing before the committee on 8 December 1999, Semple had given
an optimistic assessment of progress on a new "Oceanic" air traffic
control system to control North Atlantic flights.
He gave MPs the impression that the system, built for Nats by
Texas-based services supplier EDS under the Government's private
finance initiative, was "first class" and "world-beating". But his
glowing account of what he had seen of the system mentioned nothing
of any serious contractual difficulties.
Much later, internal Nats documents lodged with the High Court
showed that both before and after Semple praised EDS in the
Commons, the Nats board of directors had been warned that the
supplier's system might never be suitable for operational use.
The minutes of a Nats board meeting in August 1999, four months
before the committee hearing, referred to the "current impasse"
with EDS which could "result in the delivery of a system not
suitable for operational use". The same minutes also referred to a
"need to consider options for escaping the private finance
initiative contract with EDS".
By November of the same year, a paper for the Nats board meeting
said, "Enforcement of the current contract would be most likely to
result in the delivery of a system that was inadequate to meet
Nats' needs and could lead to EDS exposing their difficulties with
the contract during the PPP [private public partnership] process.
In December 1999, a week before the committee hearing, Nats wrote
to EDS about the possibility of another supplier taking over the
contract.
After a Nats board meeting on 3 February 2000, its programmes
director, Peter Finch, wrote a memo to his chairman Roy McNulty,
Semple, and finance director Nigel Fotherby. According to court
papers it read, "After the spirited debate at the board meeting we
were left in no doubt regarding the board's intentions. Nats wishes
to be rid of both the PFI [contract] and EDS".
A month later an internal Nats presentation slide with bullet
points said, "Oceanic represents a PPP risk - 14 year PFI locked
into EDS - performance risk with non-ATM [air traffic management]
supplier. HMG [Her Majesty's Government] CSFB [Credit Suisse First
Boston bank] want these uncertainties removed".
In July 2000 Nats terminated the £50m contract with EDS, claiming
that the supplier had failed to meet a vital milestone.
EDS denied that there was any failing on its part that justified
cancelling the 14-year contract 11 years early - 18 months before
the system was due to go into operation. It sued Nats for £42m,
much of which was money EDS had spent on development of the
software.
The court case began in January this year and was expected to
finish by March. But it finished only last Thursday when a
confidential settlement was reached.
Semple, who is still a director of Nats, had been called as a
witness to the High Court's Technology and Construction Court,
partly to explain why he had given the transport committee a rosy
view of the EDS contract if the supplier was failing to perform.
Talking informally outside the courtroom, Semple commented on EDS'
QC, Murray Rosen's gift for cross-examination. "Just answer the
question," Rosen had told one witness. He told another, "I am going
to suggest on this occasion your memory is playing tricks".
Judge Toulmin, too, had been good-naturedly intolerant of any
answers that were unclear, or excessively diplomatic. Peering over
his glasses the judge would ask witnesses, "Would you just answer
the question?" - "Would you please just answer the question? -
"Would you just answer the question first? - "No could you just
answer the question?"
It was against this background that Semple took the witness stand
on Thursday 18 April.
When Rosen said that the evidence given to the transport committee
"beams with optimism", Semple replied, "I was optimistic at that
stage. I had just seen an excellent MMI [man-machine interface]. I
was aware of the contractual problems, but we had a big company
working for us that could build the system, and I had no
information at that time that there were any serious technical
problems with what was being built."
After further questioning Semple said, "I think there is a judgment
to be made about the content of these answers. I think you have to
take a judgment of the effect of what it is you are going to say -
for example, if I can put it in the vernacular, whether or not you
choose to wash your dirty linen in public."
He added, "My Lord I did not think at that time the programme was
in such serious trouble that it justified bringing the contractual
situation that I was aware of to the knowledge of the transport
select committee.
"It did go through my mind that I should tell the select committee
about the contractual situation. I decided that that would simply
not be helpful at that time, and chose not to tell them." He denied
being economical with the truth, and emphasised that he did not
believe that the programme was in serious difficulty.
The following day in court Semple was asked whether, by February
2000, he had changed his view on whether to air dirty linen in
public.
"I had no real objection to telling the select committee," he said.
"But the fact is that everything that happens in the select
committee is in the public forum. I did not, as a matter of course,
think that I should air Nats' difficulties or problems in the
public forum."
Semple is regarded as a man of integrity by those who know him. He
was praised by government-appointed auditors for seeking to reform
the closed culture of Nats, and his comments to the committee
reflected his personal view that the project was not in serious
difficulty and that the contractual problems could be overcome.
Public sector specialists say they have no doubt that other top
civil servants would, in Semple's position, also have taken the
view that dirty linen should not be washed in public.
But memos from several senior executives within Nats made it plain
that they believed the project was in serious trouble and those
concerns were not communicated to the transport select committee,
which raises questions about Parliament's ability to track public
sector IT contracts generally.
Tom Brake, Liberal-Democrat spokesman on transport, said select
committees are important in holding governments and agencies to
account - and can help to prevent IT disasters by providing a
rigorous level of accountability that may not otherwise exist.
"If, when committees ask questions, they are not given all the
facts, warts and all, they cannot do their jobs properly," he said.