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HMRC rethinks £8.5bn megadeal as large suppliers resist flagship IT reforms

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HMRC Coat of Arms on wall.pngHM Revenue & Customs has begun reassessing its £8.5bn IT deal with Capgemini in advance of it expiring in 2017.

The rethink will shed light on how tough it is proving for the government to push through its flagship IT reforms, which include a pledge to curtail contracts worth more than £100m - a fraction of the cost of deals typically done by the the large departments of state - departments that show no sign of quelling their appetite for large deals.

The first hints of possible sanctions against large suppliers have meanwhile begun leaking out of the Cabinet Office as it becomes apparent they are not accommodating the aims of its ICT strategy without a struggle.

But government has officially adopted a less "adversarial" approach than it took over cost-cutting contract renegotiations Cabinet Office held with suppliers in 2010 because it is ill-equipped to carry out its reforms by doing its own systems integration for its £17bn annual programme of IT work. It has taken a conciliatory tone into talks it has begun with suppliers in follow-up to the memorandums of understanding it signed with them on concluding the 2010 negotiations.

HMRC CIO Phil Pavitt has submitted a proposal to the departmental board for reforming its IT outsourcing contract when its 13-year-old deal with Capgemini concludes in 2017, two years after the government that pledged to bring such deals to an end will have finished its term in office.

Pavitt told Computer Weekly a renewed deal would conform with government ICT strategy, but it would not open the door to any more SMEs than were already subcontracted to work for HMRC by Capgemini.

"You can sense the mood of the current strategy. I can't tell you what will happen. It will be more in line with government strategy today than perhaps this contract that was let seven years ago.

"If you are asking if SMEs will have a higher value of the contract. Then yes I can assure that will be the case. Will the volume of SMEs go up, probably not," he said.


That was the measure by which the government said it should be judged: that 25 per cent of public expenditure must be placed with SMEs. Pavitt said HMRC would strive to meet the target.

But Cabinet Office dispensed with the value target when last week it sought applause for its efforts to bring more innovative, small IT companies in on government business. Chief procurement officer John Collington said the volume of contracts awarded to SMEs had gone up from 5 to 44 per cent between January and September 2011. He claimed this a triumph but did not divulge the proportion of SME contracts by value when he bragged to suppliers about it at a Cabinet Office conference.

Stephen Allot, crown representative for SMEs, told a side-meeting at the same conference that "as far as we can tell", government did only 7 per cent of its business direct with SMEs. This figure was from 2009/10.

Government didn't know how much business it did indirectly with SMEs - through those systems integrators that held its large IT contracts, though this figure would contribute to its 25 per cent target. It had moreover not considered whether profit margins SIs made on subcontracting (a controversial issue) would be separated from any indirect SME business total it counted towards the 25 per cent.

The problem was that large suppliers were not supplying the data - they didn't even collect it. Cabinet Office intended to tackle large suppliers over the matter. An official request was on its way. And the terms by which they subcontracted to SMEs were unacceptable to government.

Threat to systems integrators

"I've seen some unimpressive contract terms from the major contractors," said Allot. "I won't say any more than that. Some of the SMEs send them to me. Do have a look at your contract conditions and be a bit more thoughtful.

"'Please behave', I think is the best way to put it. We haven't worked out a severe sanctions method yet, but we are thinking about it," he said.

Collington later told the same conference it would make data reporting a contractual requirement after a lone systems integrator - who did not reveal his name - complained that government was asking too much of large suppliers.

Bill Crothers, Home Office commercial director who led MOU talks with six suppliers, said relations between suppliers had "felt a little bit adversarial". The MOU talks had been "a blunt instrument" that just cut back some excess margin.

"We are starting to see some examples of a much more thoughtful process but frankly if we could see more engagement from the suppliers it would be better.

"A much more considered approach would be to reduce cost, not to reduce your margin. The amount of the cost we spend on some of these major SI situations is excessive," he said.

Pavitt told the same conference large SI contracts did give value for money but they had not been well draughted.

"We have to make sure we readjust those contracts. If we can - with our partners. If we can't - against our partners.

"Our intention is to get SI contracts the right side of the line. We gave away too much seven or eight years ago in HMRC. We intend to readjust it so we can take better control, where we can. Sometimes, giving away commercial responsibility has turned out to be wrong in engaging SMEs," said Pavitt.

Universal Credit possible if politicians don't interfere, says IT chief

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Benefits sign.pngDWP can manage the massive reorganisation of computer systems demanded by Universal Credit as long as politicians don't move the goalposts and over-complicate matters for departmental techies, said a senior departmental techie.

The department has meanwhile concluded after an audit of the shanty town of benefits systems on which it has to build Universal Credit, some of which are genuine antiques, that it must scrap some of them because it would be impossible to adapt them in the time given.

The project, which involves merging six different benefits systems into one in five years, has also thrust DWP into a close partnership with HMRC that will involve building a unified system from components consolidated across their two computing infrastructures.

Steve Riley, IT director at Job Centre Plus, told Computer Weekly the two departments were already working to consolidate their systems into core components to be incorporated into a unified Universal Credit system, under the eye of programme director Terry Moran, former chief executive of pensions.

But an ongoing review of DWP systems was determining whether the strategy would indeed deliver UC and another two major policy reforms the coalition government had requested be implemented simultaneously: replacing disability living allowance with an independent living payment and introducing a single tier pension.

"Our part for the politicians is that if they keep the benefits simple, we can do this," said Riley.

"One of the projects I worked on was pension credit, which was supposed to have been a simplification of pensions. It ended up being more complicated than what we had. So there is a partnership with politicians that they keep it nice and simple as well," he said.

Scrapping VME

Riley described the systems strategy at a recent Inside Government conference, where he said the DWP had concluded that it must scrap some of its oldest computer systems to get the job done.

"What we are building with Universal Credit, we are hoping to re-use a lot of what we've already got. [But] Our big systems are really difficult to change. The testing of them is three or four months alone

Old VME system compressed.png"We've got a large number of outdated, inflexible IT systems - VME systems," he said. "Changes take about 18 months in the lifecycle of a VME application."

"We can't manage it with those VME systems. We will have to replace those with systems that are componentised."

DWP hoped it could extend the consolidation and reuse programme beyond UC, so that it could build its other major reform projects using the same systems components. The matter was being reviewed to see if reuse would allow the systems to be delivered simultaneously.

It was certain, however, that UC would reuse core components consolidated across numerous existing systems.

It was a vast project, but DWP hoped it would be made simpler by delivering it in smaller chunks, in the agile fashion promoted in the Cabinet Office ICT Strategy.


DWP had bought into a rules engine called OPA it hoped would cut months from the time it would take to systemize the rules for UC.

It had also identified the core activities that would be consolidated from all its existing benefits systems: things like collecting evidence, calculating payments, making payments, maintaining accounts.

Citizens were meanwhile expecting things to be done in an online. Job Centres were no longer like miserable betting shops. But the VME systems were holding back DWP's rejuvenation.

It took 26 weeks to train DWP staffers to use the systems. There were 11 different systems employers used to put information online. It aimed to handle 80 per cent of claims online.

It's new policy was self-service and digital by default as long as it didn't exclude people with accessibility issues. It had cut its use of paper 50 per cent and aimed to automate 75 per cent of its processes. But about 30 per cent of people who relied on the DWP were digitally excluded in one form or another.

HMRC orders supply chain to heel

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HMRC building.png
HM Revenue and Customs has ordered ICT suppliers to step in line as it tries to cut costs from one of the UK's largest computing infrastructures and fix the perceived failures of one of the government's largest outsourcing contracts.

The initiative has seen HMRC take steps to address a problem Cabinet Office has sworn to tackle as part of its ICT Strategy: the exclusion of SMEs from government business and the tight control the UK's public sector ICT oligopoly has over government contracts.

In close collaboration with Cabinet Office, HMRC has told Capgemini to include SMEs in project meetings in Whitehall, indicating the extent to which the 240 suppliers to whom Capgemini subcontracts work its £8.5bn Aspire contract have been excluded to date.

HMRC has also ordered suppliers to open their kimonos so it can see for itself if it's getting value for money from them. The main criticism against large contracts has been the power they give outsourcing firms to inflate prices and suppress innovation.

Mark Hall, deputy CIO at HMRC, told government IT managers at a recent Inside Government conference, its changes were part of a programme to better manage its "commercial model" with suppliers.

"We have started a new process called Tripartite," he said, "Which is where we were always challenged, around getting everybody to the table.

"So now when we have conversations, the prime contractor, ourselves and the SME delivering the goods are in the same conversation.

"We are working around cost savings and working very closely and collaboratively with the cabinet office. This is not just about what we can negotiate, its about what UK government can negotiate," he said.

Suppliers told to open up

HMRC aimed to cut £900m, 25 per cent of its cost base. The other major reform programme involved identifying "value chains". That meant understanding where its expenditure was delivering value, from the citizen "right through to the to the final piece of technology in the supplier".

"This is quite challenging for supply chains because it demands transparency," said Hall.

"You need to be able to open up and look at the whole supply chain. This is not dissimilar to what motor manufacturers or logistics companies do. It's the same as Lean, but where Lean works bottom up, we are doing it top down," he said.

HMRC tap.png
HMRC was in addition scrapping unwanted computer systems to cut the cost of processing £435bn revenues and £39bn of payments it transacts with 38m citizens and businesses every year.

"It's about moving from a complicated legacy estate due to multiple inheritances, to what would be a simplified IT estate based on just 13 core platforms," he said.

HMRC hoped the consolidation would be self-financing. Savings taken from decommissioned IT systems would be pumped back into the rationalisation programme.

The ICT Strategy had nevertheless not changed HMRC's "direction of travel" since Cabinet Office launched it in March, said Hall.

"Its made us think slightly differently," he said.

It was not dissimilar to the last strategy, published under the Labour government in January 2010. But he did concede it was less about centrally provisioning an enterprise architecture and more about collaboration and the Agile methodology.

Agility problems

HMRC felt Agile was a challenge, though, when it had to rely so much on external suppliers.

"The new approach is far more agile, far more collaborative," said Hall.

"The question is then how do you [create] a delivery approach that allows that to happen, because agility's great but you do all need to work in the same way," he said.

It's in-house team of 200 developers were "increasingly" being turned to Agile. Their future reform was assured and was being examined.

Marion Sinclair, information systems strategist at Kensington & Chelsea Borough Council, asked Hall an Agile question, though she didn't mention the A-word.

Was there any way to align IT with business processes in a way that allowed projects to keep up with the speed of change and deliver efficiencies sooner? Hall said HMRC was trying to do that with Lean process re-engineering. It took power from IT people and put it in the hands of process people.

HMRC was meanwhile still wringing savings out of its £8.5bn contract with HMRC. It had renegotiated the contract in 2006, 2007 and 2009. It would realise £125m of savings from the latest negotiations this financial year. They would equate to £1.2bn of savings over its life.

500 rogue Gov websites nabbed four years after Varney

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The Cabinet Office has discovered another 500 government websites it needs to shut down as part of the Varney review launched in 2006.

One of the biggest websites for the chop might even be the gargantuan DirectGov itself.

The rogue sites mean it has been one step forward and two steps back for the Government Digital Service, previously called DirectGov after the web portal it managed. The unit was charged with eliminating waste across the public sector web by former HMRC boss Sir David Varney in 2006. But it has found nearly twice as many superfluous websites as it has managed to close.

Sharon Cooper, director of strategy and innovation for the Government Digital Service, told a recent Inside Government conference the unit had achieved Varney's target off shutting all unnecessary public sector websites and subsuming them into DirectGov by March 2011.

It had shut 287 websites by 5pm on 31 March, converging 95 per cent of all public sector information into DirectGov. But it had found another 500 websites that must be axed.

Sharon Cooper - Government Digital Service 3.png"There are still another 500 out there because we found a lot more in the process of trying to shut them down and that work is still going on," said Cooper.

DirectGov, which was transferred from DWP to Cabinet Office on 1 April, had struggled to get some departments to accept its authority.

But its cause was boosted with the publication of Digital Champion Martha Lane-Fox's strategic review of DirectGov last year.

Cooper is now charged with carrying out Cabinet Office minister Francis Maude's order that all government services be made "digital by default", a tall order when so many people were unable to connect to or use the internet.

Cuts by default

The cross-government Cabinet Office Public Sector Employment Relations Committee, a group of Human Resources directors charged with managing civil service job cuts, sanctioned the Digital by Default order in March on the proviso that assistance was given to people who needed help getting online. 

"We are working out how the hell do you do that," said Cooper.

The answer would probably be in the spirit of Varney's recommendation that DirectGov became the primary source of government information. But technology had changed so much the result may be radically different than envisaged in 2006.

Varney Report 2006 Front Cover.pngSo Cooper said the Digital unit would, "like Martha said", have teeth. It would tell all departments what to do on the web. But it was no longer wedded to the idea of "one big monstrous website".

It would set standards and it would monitor departments to see they were complying. It would advise and share best practice. But the Digital unit was still deciding what exactly it was going to tell them to do and how they should do it. 

"One of our big things as we replace the DirectGov infrastructure is to replace that with infrastructure that anyone can use," she said.

"We want to procure a whole cloud-based, future-looking infrastructure rather than the massive enterprise stuff we've had in the past."

DirectGov-less Gov

Just months after clearing out DirectGov's top brass, the new digital unit was even contemplating axing DirectGov portal in a radical revision of Varney's reforms.

"We are thinking, should there be a DirectGov in five years time? Or should there just be a wholesale market-place of open APIs so every transaction is available, so that anybody can use that transaction and embed it in their own service?" said Cooper. "Should there just be a great big asset database on which we can build a version of DirectGov?

Cabinet Office was considering how car insurers might process people's applications for car tax and disabled badges, for example. It was taking the lead from the post-Varney HMRC, which had distributed APIs for PAYE and other systems.

Government Digital Service was still wedded to Varney's vision of government having a "single online presence", said Cooper. It would be demonstrated imminently by a test site called, which was still password protected at the time this article was posted.

Local ICT sold down river

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Localism is the buzzword for the Local Government ICT Strategy. But centralisation is the modus operandi. Cuts are the impetus. Privatisation will be the outcome.

While Her Majesty's department for Communities plots devolution, local government ICT is being consolidated and stuffed into the cloud where big corporations set the rules. This is a wasted opportunity to revitalise civic Britain. 

Jos Cresse edit.png
The draft Socitm Routemap ICT strategy and Jos Creese, the Socitm president overseeing it, claim local choice will play an important part in these reforms.

"We have never actually had a strategy and action plan for IT-enabled local public services, let alone one conceived for a citizen-driven public sector," says Creese in the blurb.

Local authorities will however have little choice but the means by which they fulfil the strategy's request for "pan-local" centralisation and assimilation into the cloud.

That much localism will be granted only because the government has no choice. Decades of IT investment is sunk in systems and contracts that cannot be scrapped overnight.


So Socitm proposes regional commissioning authorities to govern local IT purchasing, much like was done in the NHS under the last government.

It's not that the regional model is especially good. It's that the ends are thought to justify the means. Because while IT is being concentrated, NHS purchasing is being devolved back out to communities again: to those all-but-private GP surgeries, which will consequently consolidate into regional and multi-national corporations.

These inverse reforms are stages of the same journey, which starts with the extraction of purchasing power from public hands, follows with its devolution back out into the private sector and concludes with private consolidation of corporate power as far from the community as it could be.

Local ICT Routemap Programme Boards.png
The ends for the staff carrying out the Socitm IT reforms will purportedly be locally-defined "priority service outcomes".

But these will be overseen by Cabinet Office programme boards to ensure local outcomes are enabled by IT that is consolidated, commoditised and stuck in the cloud.

Socitm, which Creese says developed its strategy "very closely" with the Cabinet Office Efficiency and Reform Group, condemns large IT projects like the NHS National Programme for IT, to contrast its own reform plans, which it portrays as part of the government's localism agenda.

The reforms, will indeed require vigorous participation from all corners of local government. But this will not be concerned with energising the civic spirit.

It will involve root and branch homogenisation of the entire local government machine for the sole purpose of making it capable of being serviced by suppliers in the cloud.


As Creese told Computer Weekly, the consolidation of ICT requires the standardisation not just of systems but the working practices of those people who use them.

"There are too many hybrid adaptations of standard ways of doing things," said Creese in a telephone briefing on the proposed reforms. "You can only really join up some of our systems if you've got organisations doing things in a fairly similar fashion."

So local government will be put through a programme of "process standardisation". Local authorities have developed working processes "at the most granular level" to be the most favourable from their perspective. Those processes will have to be homogenised so they can all use the same cloud software.

This will require unprecedented collaboration between public sector organisations. It will require the sort of multi-stakeholder collaboration that created and still manages the infrastructure that defines our age: the internet.

Get in line.jpg
What a tragic waste of effort to have localism undertaken only as far as required to make UKGovITplc suppliant to whichever corporations happen to command the market for cloud services.

It is anathema to localism. And it is anathema to the open source movement whose values the government assumed to make these reforms sound palatable.

The government gained a lot of kudos from its association with open source. But is now looks like a lost opportunity. The multi-stakeholder forums required to homogenize public sector working processes are the same required to give the government's open source policy legs.


The government doesn't have the stomach for such ambitious reform. So the fate of open source policy is being left to the private sector, which is dominated by companies wedded to the idea that software is an intellectual property rather than a collaborative forum.

Take for example those two or three companies that have made a mint supplying the same benefits systems to 400 different local authorities. They may not suffer the indignity of the government's "open source software and re-use" policy, which would refuse them all but one of their 400 sales.

Neither will their public sector code be made public property - open sourced - though that is where policy was heading. These suppliers will stick their software in the cloud and apply 400 sets of service charges instead of 400 licence fees. Unless all such public code is open sourced, the Big Society love-in will be jaded somewhat by its reliance on black-box IT systems.

Let's not forget the G-Cloud idea was sold into the Cabinet Office in 2009 by a troop of Intellect members who had the most to lose from open source reforms then being introduced by Tom Watson, minister for Digital Engagement, and in the Conservatives' then nascent IT Strategy.

Both reform programmes had the open source model and ethic at their core. When George Osborne first elaborated the Conservative position in 2007, it included that crucial commitment: "Building public sector capability so that civil servants can generate real commercial leverage from open source."

Classic example

Mr Creosote.png
That was the year Parliament learned of the infamous example of the National Insurance Records System Accenture produced for HM Revenue & Customs. Accenture lost its £200m contract but kept rights over this public software. It landed HMRC with a £14m licence charge as it went out the door. If HMRC didn't carry on paying, it couldn't carry on using the software. HMRC had then to beg Accenture back as a subcontractor because no-one else could fathom the NIRS2 code.

Osborne's open source initiative was to turn situations like this on their head. Suppliers would be paid for their labour. But they would be refused a monopoly over public code. HMRC or anyone else could roll their sleeves up and contribute improvements.

The tragedy is that public sector capability is being cut. Socitm's proposals involve councils dispensing of IT engineering staff when they should be playing the active part Osborne originally proposed. Instead of the Big Society we will have absolutist corporatism, in which everything has become supplicant to the corporation: public sector not as enabling, civic agency but as victual.

As the New Economics Foundation put it in its rousing 2009 essay: "Any localism which simply administers government more locally and democratically - but leaves in place the same forces of centralism and giantism in business - leaves people very little better off.

"They remain supplicants to distant boards of directors just as they were supplicants to distant government."

The open source element of the current reforms already looks doubtful. The government might make an open playing field, but software corporations prefer pigging out on software licences and cloud fees. The open source business model is too lean for them.

This is a shame because empowering workers solely for the purpose of consolidating IT suppliers is like doing lean process re-engineering without the empowerment that makes it worthwhile. It's like giving a car factory a flavour of Kaizen without any of its nutrients.

Government to end ICT "oligopoly"

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The government has promised to bring down the ICT oligopoly as part of a strategy that may have seismic consequences for the public and private sectors.

The 18 large ICT suppliers that have controlled 80 per cent of Britain's much maligned public sector IT will have the rug pulled from beneath them if the reforms promised in today's Cabinet Office IT Strategy work as envisaged.

Big Ben.pngPolicy makers will be freed from the lead shoes put on them by the lumbering, multi-billion IT contracts that have tied them to the big suppliers and hold political initiative back, the policy claims.  

Open standards will be "imposed" on technology in the public sector, creating a country-wide computing platform that will subvert the misshapen procurement regime by allowing young, innovative firms to merely plug-in to

Such an ecosystem may become a feat of civil engineering to define the early 21st Century: a public work to make monoliths like the National Programme for IT seem like the work of 19th Century engineers.

The reforms will bring far-reaching changes to every corner of the public sector. They will require the civil service to agree common working practices in order for the computer system processes built upon them to be interoperable.

"The government will put an end to the oligopoly of large suppliers that monopolise its ICT provision," declared the strategy.

But government would "move away from large ICT projects that are slow to implement or pose a greater risk of failure" only "where possible". The government is already locked into IT contracts, such as the £8.5bn Aspire deal HMRC has with Capgemini, that preceded the last Parliamentary term and may yet outlive the present government.

The government would nevertheless adopt a "presumption against" IT contracts above £100m, while HMRC got a special mention for a plug and play website into which IT SMEs have been plugging tax data apps.

Open source

The strategy also carried forward a raft of reforms begun under the last government. The coalition would re-use its software systems, instead of buying them anew for different departments.

It would build an "asset register" and a government app store. Senior officials would be made to take more interest in and responsibility for their IT systems so fewer of them turned into hash.

But just as the last government in 2009 promised "a level playing field for open source", and a year later promised the same again. It has now been promised again. Open source would get a level playing field and would be used "where possible".

Both the government may have to step up their campaigning efforts if it wants its next ICT strategy, in 2014, to reflect any serious support it may be have for open source.

The programme of reform would, appropriately enough for one proposing lean and agile development methodologies, only last 24 months.

Any longer would be too long to leave the large ICT suppliers unsupervised.

Doom clouds gather over parliamentary IT hearing

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A couple of the great mandarins of government IT got top billing at the Parliamentary inquiry into computing last week. They set a gloomy scene for the government's forthcoming IT strategy, which CW anticipates will be published on Wednesday.

They were upstaged by a bunch of small town IT directors who chirped on about the information policy principles everybody expects to become formal policy, and which they claim to be adopting already: small, agile, open, interoperable, entrepreneurial.

Goverment CIO Holds Court at the PASC - edit - 22 March 2011.pngIt was tempting to think of this as the Old Guard's last gasp. It was a horrible sight.

Joe Harley, government CIO and chief of IT at the Department for Work and Pensions, and Phil Pavitt, CIO at the megalithic HM Revenue and Customs, lumbered on about how well their multi-billion pound contracts were performing, using PR-approved factoids that ticked all the faddish boxes.

They showed just how deep the IT establishment is dug into these most powerful departments of state and propped up the 10-year, multi-billion pound alliances it has with the large IT suppliers. The government might not have machinery big enough to shift them.

It looked awful for government policy, awful for the open source movement that has driven its reforming bent and awful, paradoxically, for the neo-Labour movement these old boys represent: a lose-lose situation the extent of which is hidden by confidentiality clauses from all but a chosen few.

Big Society ITopia

It had all looked bright and breezy as the Public Administration Select Committee's inquiry into government IT set into its third week.

Three local government IT chiefs cheerily extolled the virtues of an IT ecosystem modeled not on power hierarchies but on the networked society.

Socialization - Solidarity - Humanity.pngTheir ideology makes the Big Society sound desirable as well as possible, if only it wasn't also used as an excuse to slash and burn public services.

The idea is that interoperable computer systems and open data will form a "backbone", or "glue", or "WD40" on which it is possible to imagine civic Britain as the primordial soup, humming with evolutionary potential, bustling with community co-operatives and do-gooding corporations.

This take on the Big Society vision has become so irrefutable it even has Marxist academics praising the health-giving properties of free-forming, quasi-capitalist societies.

That's what Professor David Harvey told BBC's Hard Talk when he published a book on the subject last year.

Homogeneity was losing favour with the left as well as the right. Diverse, decentralised, self-deterministic communities had proven their worth, Harvey told the Beeb's Sarah Montague.

"Utopia is about continuous change," he said. "Human beings are astonishingly creative. Capitalism has got to the point where its not using that any more."

What crippling contradiction it can cause, to be so transported when such ideas are presented by executives from Tory councils among those most zealously making the public service cuts being used to force through these reforms.

While we hear persuasive chatter from the likes of Mark Adams-Wright, chief information officer of Suffolk, the "virtual" county council, and David Wilde, the CIO at Westminster City, the Old Guard lets the side down. The IT establishment hasn't got a reason why. It doesn't have an ideology. It doesn't even have a spiel that can justify its ugly great contracts.

Kelvin Hopkins MP.pngIt's left to PASC members like Kelvin Hopkins, Labour MP for Luton North, to meet these upstarts in debate.

Watkins pelted them: outsourced public services in places like Westminster are supposed to be "wonderful", he said. But they're not.

Then IT suppliers bamboozle public bodies and charge them outrageous fees, he said.

And what about private care homes, he said, which are dreadful despite being propped up with public subsidies?

Universal credit

The Big Society ITerati doesn't have answers to questions like this. Neither did Professor Harvey, funnily enough.

The Old Guard at least has big IT contracts, and we haven't seen the last of them, for all the talk we've heard from Cabinet Office Minister Francis Maude.

Most of Universal Credit, the coalition's first gargantuan IT project, was already being shoed into existing contracts with large suppliers without an open competition, the Old Guard told the Committee.

They didn't say why, or how. But Malcolm Whitehouse, group applications director for the DWP said something about how important it was to keep the same people on because they knew the ropes. African dictators are fond of that excuse.

CIO Harley claimed the government had learned its lesson from past IT failures, before trotting out a list of things he was doing to make his multi-billion pound IT contracts more palatable.

The committee heard earlier how 400 benefits systems in local government were serviced by just two or three suppliers.

Storm Clouds.pngBad omen

Socitm has been warning that the large government departments will block the Big Society reforms.

And so it seems the Cabinet Office IT strategy may be forced into a fudge with the very IT oligarchy it has been chipping at for the last six months.

So Pavitt said HMRC liked this idea that government IT systems might be broken up into smaller, interoperable components.

But he said it would be "foolish" to break up HMRC's existing system. It handled £435bn of tax and transacted with the DWP 3bn times-a-year.

It is also locked into a 13-year, £8.5bn contract with Capgemini.

Pavitt trotted out some tired old marketing slogans to shore this Aspire contract up in front of the Committee. It will have cut £1bn from HRMC's IT costs by the time it terminates in 2017, he said. It has even built an open source website.

No matter that the work was only meant to cost £3bn when it was contracted in 2004. Nor that its three year-extension from 2014 is to cost as much as the contract is supposed to have saved over its life.

Nor that HMRC will likely to have no choice but to grant another five-year trigger-extension in 2017. The deal is so uncompetitive HRMC had to pay Capgemini and others nearly £52m to take it on.

It's so uncompetitive HMRC has to build artificial incentives into the contract, as though it were the Department for Health trying to force an NHS trust to mimic the market.

Capgemini logo.pngHush hush

The lions share of the money goes to Capgemini and its two main subcontractors, Accenture and Fujitsu.

HRMC pays Capgemini over £800m-a-year for everything from application development and data centres, to call centres and maintenance.

Another 238 suppliers get a piece of those billions. One must wonder why there aren't more of them. But we don't get to see the numbers.

Even the Cabinet Office's much trumpeted bulk renegotiation of Capgemini's government business is commercial in confidence. Capgemini's executives and major shareholders will have the details. We shall have to trust them and the Whitehall mandarins to ensure what little competition they have is sporting enough.

MOD test flies Universal Credit elastoplast

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Systems analyst letches over old Univac computer operator.pngThe Ministry of Defence has been struggling to patch together a vast estate of creaky old computer systems to make them fit for interconnection in the 21st century.

It's travails may provide insight into the challenges being faced at the Department for Work and Pensions, which aims to build its ambitious Universal Credit system on a veritable shanty town of legacy systems.

Kevin Wallis, lead applications architect at the MOD, heckled open standards purists with the legacy problem at a meeting of the British Computer Society's Open Source Specialist Group last week.

This chatter about open standards and interoperability was all very well, but legacy systems simply did not conform to new world thinking.

You can glue disparate systems together, he said, "provided the whole of the architecture has been designed around open standards.

"We are working in a brownfield site where we do not have that bit. That is the problem I face architecting the Ministry of Defence application suite. We don't have open standards that we can plug and play. That's the problem."

Having lobbed the inconvenient truth into the open source meeting, Wallis was forced to admit that the MOD IT section had earned itself the nickname "the Microsoft/Oracle department". But, he said, 70 per cent of MOD IT projects used some element of open source software.

The MOD headache will become familiar to departments across government as the Cabinet Office presses ahead with plans to make its systems interoperable through the use of open standards.

Open standards didn't exist 30 years ago

Very old codger with very old computer possibly from DWP but origin uncertain.pngAfter the meeting, Wallis told Computer Weekly: "The MOD has systems that are 30 years old. They are mission critical. How can we work round them to go to an open standards architecture? Mostly open standards didn't exist then."

The MOD was solving the problem on "a case-by-case basis" using a variety of approaches.

"One of the options is, can we wrap it into a web services wrapper so we can pull that existing system as a web service," said Wallis.

"It can work. The huge advantage is that we don't have to redevelop the application," he said.

Another advantage was business continuity, said Wallis. It could plonk a new IT system on top of the old one, getting some of the advantages of modern computing without the usual delay. That would win the department breathing space where it might consider a long-term strategy for upgrading its decrepit systems.

The department's long-term plan was to do this with all its old systems. But it had a finite budget. And the government was considering whether the MOD was a special case whose systems deserved special attention.

The MOD was had been reviewing all its software applications and asking: "Can we eliminate, can we migrate, do we have to tolerate or do we invest," said Wallis. One MOD programme alone was seeking to "rationalise" 600 applications. The Defence Information Infrastructure had rationalised about 2,000 applications to just 500.

Universal credit

The MOD approach may win the backing of duffers at the Institute for Government, whose report into government IT last week itself won the backing of Ian Watmore, head of the Cabinet Office Efficiency and Reform Group.

The report said the DWP's proposed £2bn Universal Credit system would be built using agile development methods, which effectively means it would be developed piecemeal, with a high degree of autonomy given to software development teams and outputs being produced iteratively as they were in the commercial software world.

The Universal Credit system proposes to integrate 51 separate state benefits into a single credit in just three years. DWP disperses £90bn-a-year through the present system, which is said to rely on 51 separate computer systems, some of which are 30 years old.

Watmore reportedly said at the launch of the Institute's report that Universal Credit would be built on top of the DWP's legacy systems.

DWP spent £5m on ID database it never built

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The Department for Work and Pensions spent over £5m on an Identity Cards database so poorly conceived that it was never built.

The department spent three futile years designing the database after the Identity and Passport Service (IPS) commissioned it 2007. It was to be one of two key ID databases and would form the backbone of a system to share personal data about British citizens across the whole of government. But poor planning, inter-departmental disagreements and data security risks prevented it from being developed.

The DWP refused to reveal how much it had spent designing the aborted ID system, called CISx. The DWP press office said it would only answer questions if forced to do so by a Freedom of Information Request. The answers Computer Weekly obtained under FOI revealed how much money the government wasted on the IPS/DWP plan before it officially pulled the plug last summer.

"The cost of establishing the CISx service and developing the technical changes to CIS to enable data sharing and the storage of additional data items totalled £5,200,000," a DWP spokesman wrote in an FOI report.

The plan involved transforming the DWP's Customer Information System (CIS), which has 90m records of living and dead British citizens, into a biographic reference for government department wanting to check people's credentials and record more of their personal details.

The DWP spokesman said the department could still make use of some of CISx design work in its legacy CIS database, which is still used by more than 200,000 civil servants.

"Standards and policies that were developed have or will be used to support ongoing CIS activities," he said.


He also gave an insight into the inter-departmental problems that led the ID CISx plan to flounder. The system was so ambitious that numerous government departments where required to govern and fund it, with the work being done by the DWP's Information Systems section. But their inability to co-operate caused the IPS to order the DWP plans be torn up in 2010.

The spokesman said some of those departments appointed as joint owners of the DWP CISx had contributed to its development costs.

"IPS and the Driver and Vehicle Licensing Agency (DVLA) reimbursed DWP the cost of developing the original CISx service assets, apart from the development of a financial management tool for the use of CISx services by OGDs (other government departments), which was paid for by DWP...IPS also paid for the development of technical changes to CIS."

The DWP made no reference to HMRC, one of the other departments that had been appointed joint owners of CISx. Neither did it specify amounts paid by each department.

The DWP had tried to establish an innovative means of governing the development and operation of its cross-government system. Such a system had never been built before. The governance model was untried.

The DWP elected to act as though it were an IT services company. Other government departments in on the CISx plan would become commissioners. The governance model proved unworkable.

"CISx proposed a Commissioner/Provider model and shared governance arrangements, with users of CIS acting as Commissioners and the DWP acting as the Provider," said the DWP spokesman's email.

"The DWP has decided not to adopt this model to avoid overhead costs that would otherwise need to be borne by the Commissioners and because experience led the Department to conclude that the model did not provide significant benefits over existing governance arrangements," he added.

The DWP accepted the IPS' request for the CISx in 2007 after establishing loose agreement over the system of governance with IPS, HMRC and DVLA.

HMRC benefits as new PAYE system issues wrong tax codes

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The introduction of new Pay As You Earn computer systems at HM Revenue and Customs means that many people are being sent, and will be sent in coming weeks, incorrect tax codes, according to the Chartered Institute of Taxation. 

When mistakes happen, it appears that taxpayers will usually pay more tax than they should, unless they spot the error and contact HMRC. 

The Institute says that HMRC is issuing around 25 million tax coding notices this year, double the number issued last year, and "a significant proportion of these are wrong".

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