Tories to ID Cards suppliers: don't sign the contracts

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Shadow Home Secretary Chris Grayling appeared briefly on this morning's Today programme to ask the five framework suppliers under the National Identity Service - CSC, EDS, Fujitsu, IBM, Thales - to think carefully before signing any contracts associated with the delivery of the scheme. Restating the Conservatives' manifesto commitment that they will cancel the NIS, he warned them that if they sign the contracts they may find themselves out of pocket when the contracts are revoked.

Unfortunately that's a pretty hollow threat for the suppliers, and there's not a hope that any of them will rethink their delivery plans on the back of it. Aside from the fact that the suppliers will obviously have factored a change of government into their risk models, there are three key reasons why they won't rethink their approach:

  1. The Identity & Passport Service has boasted on a number of occasions that the termination clauses in the supplier contracts are so punitive that no government would dare cancel them (sorry, I can't find a reference for this, but IPS representatives have definitely made this assertion);
  2. The delivery of ID Cards has become inextricably intertwined with that of biometric passports. Cancelling the ID Cards component would not in fact require a cancellation of the supplier contracts, but instead a simple renegotiation of the scope of work that would most likely only shave a small component off the contract value for the suppliers, and certainly not cause them any major problems;
  3. Even if the Conservatives repeal the Identity Cards Act and scale the biometric passport programme back to the bare minimum obligation (which is significantly smaller than the government has repeatedly insisted it is) there will be a gaping void in public service information systems that will have to be filled with some sort of trusted authentication/verification infrastructure. The incumbent suppliers, having been amply compensated already, will have a strong case to argue that whatever new system replaces ID Cards should be procured through the existing framework rather than incurring the cost and delays associated with a fresh framework competition. They also have a wealth of experience in designing these solutions so will be well-placed to bid again.

This highlights one of the policy dilemmas that the Conservatives have created for themselves: it's not enough just to cancel the ID Cards programme, they have to come up with a more constructive alternative that takes into account both our international commitments and the needs of public authorities and industry for a trusted authentication infrastructure.

It'll also be interesting to see whether this reignites the spat between Intellect and the Conservatives, where John Higgins wrote to then shadow Home Secretary David Davis to warn him not to interfere in the IT industry, which was countered by a wonderful open letter from Davis in which he chastised Intellect for its involvement and promised that a Conservative government had learned how to deal with the IT industry.

[Declaration: I have no commercial relationship with any of the ID Cards framework bidders, although HP (who own EDS) are members of the Enterprise Privacy Group]

5 Comments

  • This reminds me of what happened on rail privatisation. Labour, in opposition at the time, warned the companies that they would cancel the contracts if they got into power. The companies took this risk factor into account in the bid prices they submitted for the contracts to run the franchises etc. The privatisation went ahead and cost a lot more than it should have, and guess what. The contracts didn't get cancelled once Labour came to power.

    This is slightly different as it's the passport and ID card payer who pay the price, not the taxpayer, but the principle is the same. It's gesture politics, and apart from costing the consumer more, it doesn't change anything.

  • (1) Punitive contractual terms are unenforceable at law. If Crothers' did make such a statement then it would presumably be pretty strong evidence that the termination clauses cannot be enforced.

    (2) If he did say that, and I was an incoming government, then I would want to look closely at the termination clauses in *his* contract. What private company would continue to employ a Commercial Director who boasted of what a bad deal he had got them? The shareholders would want a word with the board.

  • What is to prevent an incoming government from including a clause in the repeal legislation to nullify any penalty terms in the contracts?

  • Now there's a thought - a "Fred Goodwin Bill" for ID Cards...

  • Erm, the fact that by doing such a thing would virtually ensure those companies would never want to work with Government again, which as a Government you might be able to live with. What a Government of any colour couldn't live with is the ripple effect on any future government/business contracts. Once you cross that particular rubicon you create a level of mistrust which would mean much higher overall contract charges in all sorts of unrelated areas governments are involved in, an effect out of all proportion to any money you might save passing legislation that abolished the penalty terms in this one area. From a political perspective, I suspect this simply wouldn't be a starter either. A potential Conservative administration alienating business in this way? Very unlikely. The City would have a fit over the principle of the thing. Besides, the Conservatives are already saying that they aren't unhappy with the existing contracts, just future ones. And thier is only one left to sign - the contract for producing the large volume ID card itself.

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