Public Accounts Committee's criticism of Libra has lessons for the NHS Spending watchdog slams magistrates IT project as one of worst PFI deals ever seen

Posted:

17:05 07 Nov 2003

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Office Suites | Software Types | Network Infrastructure | Project Management | Software | Application Integration | IT Management | Software Development

As a minister, Geoff Hoon does not always have the Midas touch.

He became deeply unpopular in Parliament when, as defence secretary, he refused to order a new independent inquiry into the crash of a Chinook helicopter on the Mull of Kintyre.

The crash was blamed on the pilots, but Computer Weekly and others pointed out that faulty software might have been a contributory factor.

Now Computer Weekly has learned that Hoon was the minister responsible for approving Libra, an IT contract signed in 1998 that was this week described by Edward Leigh, chairman of the House of Commons Public Accounts Committee, as "one of the worst PFI deals we have seen".

In a speech to the Nottinghamshire Branch of the Magistrates Association on 15 October 1998 Hoon, a barrister, announced details of Libra as an IT project for hundreds of magistrates courts that would "not merely standardise existing systems or plug gaps in them".

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Hoon, the then Home Office minister, said, "The Libra system will mean that a single supplier will take full responsibility for the development of software, the supply of hardware and the work that is necessary to ensure that systems are integrated."

Things did not work out as planned. A 10.5-year contract with Fujitsu that was originally priced by the supplier at £146m turned into an 8.5-year deal at a total cost to the Lord Chancellor's Department of £390m, after the supplier found it was unable to deliver core caseworking software to magistrates courts.

Hoon's expectation of a single national supplier of Libra has also evolved so there are now three suppliers, two of which have been appointed this year, to do the work that was originally assigned to one company, Fujitsu.

One of the three suppliers is STL, a long-established supplier to magistrates courts. Under a contract awarded in January, it will deliver the core national caseworking system that Fujitsu failed to deliver.

The software will help to manage the scheduling of hearings, the results of cases and produce all the case-related documents and the enforcement process. Fujitsu is providing the hardware and infrastructure; and Accenture is delivering the systems integration for Libra.

Originally Fujitsu had been contracted to deliver all of these elements of Libra.

The three contracts, together with the department's internal expenses, bring the total cost of Libra to £390m.

 This is £234m more than Fujitsu's first submitted tender of £146m in May 1998, when the department's internal costs were estimated at a further £10m.

Under Whitehall's original plans, magistrates courts were supposed to have replaced their systems from different manufacturers with standardised systems by 1993.

Today, 10 years later, after three failed projects with a variety of suppliers, magistrates courts still do not have standardised systems to handle cases.

Fujitsu had twice threatened to quit the Libra contract, first in 1999 and again in 2001, when it told the government that it anticipated losses on the contract of £200m by 2013.

The Lord Chancellor's Department, anxious not to lose its main supplier, which was part of the way through delivering networked PCs to magistrates courts, signed a new contract to give Fujitsu more money and absolve it of any responsibility to deliver the core caseworking software.

Fujitsu is now simply delivering the infrastructure, which comprises mainly networked PCs running Microsoft Office. Fujitsu is being paid for its management and other costs, plus a profit and contingency, but will bear none of the major PFI risks it accepted in the original contract.

Fujitsu may get even more than the £232m it is due under the revised Libra contract. The project's risks now lie almost entirely with the taxpayer and a review of the project by a Gateway team from the Office of Government Commerce in February 2002 concluded that Fujitsu may seek additional money at every stage of the integration of the core application (from STL) with the infrastructure.

This week the Public Accounts Committee said in a detailed report on Libra, "ICL [now renamed Fujitsu] did not take responsibility for the risks transferred to it."

The committee concluded that that Fujitsu did not understand the department's requirements, took on excessive risk in the original contract and under-priced its bid. "It performed poorly throughout and could not meet the target dates for delivery of the core application," it said.

As a result of the failures of Fujitsu and the Lord Chancellor's Department, the cost of the project "has more than doubled in just four years to almost £400m and magistrates' courts still not have the IT systems they need to manage their workload properly", the report said.

But the committee's report into the affair, which was based on an investigation by public spending watchdog the National Audit Office, told only part of the story.

Despite a particularly tenacious inquiry by auditors and the Public Accounts Committee, their otherwise penetrating reports do not reveal the full evidence of the warnings that were ignored by the Lord Chancellor's Department.

Nor do the reports fully detail Whitehall's dissemination of misshapen official information about the project, or the bureaucratic secrecy which turned many end-users in magistrates courts into sceptics and even antagonists, even though their co-operation was essential to the project's success.

The secrecy has continued. For several months this year, Richard Bacon, a member of the Public Accounts Committee, has tried exhaustively, with the full support of the all-party committee, to establish from the Lord Chancellor's Department exactly what the taxpayer is getting in return for the £232m that Fujitsu will receive for delivering a new infrastructure for magistrates courts.

Bacon said he has received much information from Fujitsu on the breakdown of the £232m, but believed that he and the committee have not got to the full truth. "I do not think we have had full co-operation from Fujitsu or the department," said Bacon.

Dispelling the notion in Whitehall departments that the Public Accounts Committee can find out anything it wants, the committee's report on Libra said.

"The department used independent consultants [Gartner] to benchmark the price, which was not tested in competition and appears very expensive for what is being provided. The department was nevertheless unable to say how ICL's price for the infrastructure element of the Libra project was constructed."

Fujitsu had provided a note to MPs which gave a breakdown of the £232m costs, but the committee's report said, "This evidence was unconvincing in demonstrating that £232m was not an excessive price to pay for just the infrastructure element project.

"We remain unconvinced that £232m was a fair price to pay."

With truly British understatement the committee's report concluded, "More thorough analysis is needed before departments agree to pay more than twice the tender price."

The lack of accountability in the higher echelons of Whitehall and the ability of mandarins to take risks and spend money without fear of personal consequences, sets the public sector apart from the private sector.

When, for example, a major internet-based project at Prudential Europe collapsed in 2001, an entire layer of senior executives lost their jobs and had to leave the building within minutes of being told.

On the Libra project, the accounts committee's report pointed out that nobody in the public sector has been held accountable for the disaster. "As a result of the failures on the project, some people [at Fujitsu] had their contracts terminated and ICL had bought in new management," the report said.

In contrast, the report also noted that the department transferred staff elsewhere but "no one lost their job".

The report added, "The department believed that people who had made decisions made on the best advice available at the time should not have their careers blighted for having done what seemed to be their duty".

Yet blame for the debacle does not appear to lie with civil servants at the coalface. The National Audit Office reported that within the Lord Chancellor's Department many people regarded the Libra contract as "unworkable" and the Fujitsu team saw it as "something it [Fujitsu] should never have signed up to".

However, the lack of accountability of mandarins, contrasted with the fear of job losses in the private sector, could help explain why victims of IT disasters in the private sector, such as Prudential Europe, take radical steps to pre-empt the collapse of subsequent projects, but government departments, including the Department of Health and the Home Office, have repeated failures.

Compounding this lack of accountability is the unending struggle of MPs, as scrutineers of IT projects, to obtain accurate information about difficulties on important schemes. This week's report of the Public Accounts Committee's has a section on what it terms the "accuracy of evidence" it received.

At a hearing of the accounts committee on 24 June 2002, MPs asked the department's accounting officer whether it was true that the department was not proceeding with that part of the Libra contract which would provide the software for court business.

The official replied, "No that is not my understanding. My understanding is that we are in negotiation with the company ICL, now called Fujitsu Services, about the timescale of the cost of the software package because of the delay, and we intend to bring that to a conclusion just as soon as we can so we know where we are."

However, the department had decided in February 2002 that ICL should not continue with the development of the core software application. ICL itself had learned of this decision made by the department in March 2002.

Explaining the contradiction later, the official told the Public Accounts Committee that he had been trying to protect the commercial negotiation that was still in train. At the time of the hearing in June 2002, the deal with Fujitsu had not been finalised.

"The accounting officer accepted that he could have handled the situation differently by, for example, presenting the information to the committee in confidence," said the Public Accounts Committee's report. It added that the accounting officer "regretted giving incorrect information and stressed that he had not deliberately sought to mislead the committee".

But there have been other departmental or ministerial statements to Parliament which have lacked candidness. In July 2000, Jane Kennedy, the then parliamentary secretary at the Lord Chancellor's Department, was asked by Alan Williams of the Public Accounts Committee about the value of PFI contracts managed by her department.

She gave the cost of Libra as £75m instead of actual costs, which by then had risen from £184m to £319m. It is now known that Kennedy's figure was low because it quoted only the capital and not the revenue sums allocated to the project.

Kennedy also replied "no" when asked whether the contract had been the subject of refinancing. In fact, the cost of Libra had been revised two months earlier, in May 2000, according to a report by the National Audit Office.

In May 2000, the Lord Chancellor's department signed a revised contract for the delivery of Libra. "The value of the contract increased from £184 to £319m," said the National Audit Office.

Magistrates court staff have written to Computer Weekly about their difficulties in obtaining accurate information about Libra. The tenor of the correspondence suggested that secrecy has contributed to the profound disillusionment of end-users.

"The Lord Chancellor's Department has attempted to counter hostility [among end-users] with a series of upbeat seminars and frequent visits to key individuals to give assurances," said one letter.

Another letter, written in 2001, accused the department of being economical with the truth in its rebuttals of an article in Computer Weekly.

There are remarkable parallels between the problems of secrecy and lack of consultation causing disaffection and scepticism among Libra's end-users, and the criticisms of the Department of Health as it approaches the signing of IT contracts with local service providers, worth potentially billions of pounds.

But if senior mandarins cannot be held accountable for their decisions, in part because MPs do not have the full facts with which to challenge statements they are given, one wonders whether IT disasters in the public sector such as Libra will ever cease.