Don't just read the summary: the PASC report goes to the heart of why the rip-off image has come about

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The PASC Select Committee Report into "Government and IT - a recipe for rip offs - time for a new approach" is better than the title implies. It genuinely adds to our understanding of why Central Government gets such poor value for what it spends with its major suppliers and how the situation can be improved.

At the heart of the problems is the way "commercial confidentiality" is used to conceal expensively toxic mixes of muddle, inefficiency and  waste, whether or not there is actual financial, as opposed to "intellectual", corruption.

The core recommendations that central government should publish all procurement contracts,  benchmark  performance and mandate open standards and inter-operability to help open up its supply base are most welcome. So too is the call for a move to flexible development approaches .

If I have a criticism of the summary it is with wording which might enable Sir Humphrey to implement  the letter of a recommendation while doing the opposite in spirit. I have never seen an more ponderous approach to system development that the way in which "agile and iterative development methods" are being used to support a classic "delayed big-bang  approach" for the DWP systems to support the Universal Credit.

Those who view the report as an attack on a successful industry should re-read and ponder.  They should then look at the track record from the perspective of the Finance Directors and Shareholders of the supplirs concerned. UK Central Government has commonly been the customer from hell, not a profitable cash cow. It has bankrupted more suppliers than it has made rich. Those paid according to hours worked (e.g. lawyers and consultants) or nominal contract size (e.g. the sales team) are the only ones who have done well out of what is being condemned.  Little of the business has been profitable, hence the main reason there are so few UK suppliers left and the share prices of those that are.

Now to comment on the main body of the report - and I will confine myself to areas where I think have something useful to add. 

2 The Public Sector's Record

On page 9, in listing the "six underlying causes of failure in Government IT" the Committee implicitly, and in my view sensibly, limits it ambitions to the causes of IT failure, not those of wider policy  failure. Thus  it looks at the problems of "Inadequate information resulting in Government being unable to manage its IT needs successfully"  as opposed to the wider problems of inadequate information resulting in government being unable to accurately assess the likely scale and nature of impact of policy changes, whether on the target audiences or as collateral damage.

3 Lack of Information

When it looks at how to address the lack of information on Central Government IT performance it stops short of suggesting that Government departments be made to participate in the benchmarking routines organised by SOCITM for Local Government. Perhaps the loss of face on the part of Treasury, DCLG and Cabinet Office, who always know best, would have been too great.

I liked the recommendations on transparency.

If transparency is good for Local Government then it is most definitely good for Central Government. I recently spent some time with a recently retired Whitehall warrior trying to work out how and when the cult of commercial confidentiality, other than for Defence contracts, came in.  When I was Comptroller for ICL Public Corporations Sector (in the mid-1970s) one of our constraints in proposing innovative solutions was the knowledge that all details would become public after the contract was awarded. Therefore we tried to get other contracts, where we might wish to do likewise, negotiated in parallel.

4 Suppliers

You need to read to the end of this section and then go back to the beginning before you begin to appreciate the full implications of the analysis and recommendations.

In looking at whether the dozen or so suppliers who get 80% of the Central Government business are a cartel or an oligopoly it is important to understand why the situation has arisen. If bidding costs 30% or more of the likely contract value then it is suicidal for suppliers to bid seriously against more than a couple of competitors. More-over they also need to quickly decide whether they really wish to win or are"going through the motions" to ensure that the competition does not get it cheap".  In the 1970s the IT supplier oligopoly was even smaller and I would undoubtedly have been fired had anyone thought I knew my counter-parts in IBM, let alone met with them.  But my role commonly included agreeing the resources we were willing to put into competitive bids for major contracts and I did exactly those sums. So do all suppliers who wish to survive.      

If government wants more open competition it has to slash the cost of bidding at all levels, not just for SMEs.  The Information Society Alliance EURIM addressed this in its evidence to the European Commission consultation on the procurement directives after I had used this blog to ask for inputs. The current EC exercise to guidance on, for example, State Aid rules and Broadband, also gives a great opportunity to short-circuit the provision of simple, clear and authoritative guidance - in place of the current mountains of misleading English language verbiage that has been generated by those paid by the hour from UK central government funds.

5 Integrating IT 

"It's the wetware stupid" is a difficult message to get across when everyone has got used to blaming IT for the failure to have  clear objectives or think through the people processes (alias "wetware").  Concept viability is not enough. Most concepts are viable. However what is subsequently contracted is often not.

6 Agile IT

I attended the Institute for Government workshops that led up to their report "System Error". The challenges to Central Government in adopting the spirit not just the theory of the approach cannot be under-estimated.  I used an early "agile" methodology when I decimalised the ICL sales ledger. The spirit implies breaking programmes into series of short projects which go live and deliver benefits before the next phase.  Using the techniques inside a simulated test environment, to produce and test modules that will not be fitted together for live running until the year after next, is not agile development.

7 Security and Privacy

This section raises many difficult issues and quite rightly stops short of giving facile answers. Addressing the issues is, however, now urgent and is one of the reasons for the Information Society Alliance policy study on Information and Identity Governance. Next week the leadership team on the bottom up exercise to take a victim's eye look at the issues of impersonation has its first meeting.

8 Skills and Leadership

There is much good material in this section but I fear that it will be lost as cost cutting pressures leads to Civil Service training being slashed because staff are too busy fire-fighting. It was, however, always thus. My favourite recommendation from twenty years ago was that spells in customer support , acceptance testing and project management should form part of the mandatory career progression of every "high flier" being groomed for the board of a public or private sector organisation. Those running the UK's most successful customer service operations  (e.g. Tesco) have usually had more than one spell in a line IT function. HMG's most successful IT system (the original computerisation of PAYE) was run by a senior Inland Revenue official who had line IT responsibilities and an industry secondment as part of his rotation to the top.

9 Transforming Public Services  

This is my favourite section of the report. I will not comment further other than to say that you will realise why when you read and consider the prejudices that shine through my past blog entries. I look forward to juxtaposing the thinking in this section with that in the PASC report on "The Big Society" when this comes out. I am currently trying to organise a meeting at the Conservative Party Conference (Sunday 2nd October, 17.30 for 18.00, Exchange 6 & 7) on "The Big Information Society". The aim is to look at the challenges of using technology imaginatively in ways that evolve incrementally over time as needs change, moving away from the current inflexible lose-lose contracts to win-win partnerships which will enable suppliers to make more profit by delivering more and better for less.

Conclusion

8/10 and a 2:1 (as when 5% got Firsts, 10% got 2:1s, 20% got 2:2s and so on)

It loses one mark for accepting the attempts by Whitehall to blame the European Procurement Directives for the volumes of misleading legal verbiage it has itself commissioned.

It loses the other for the way its attack on a non-existent cartel (as opposed to a very real government created oligopoly) detracts from more important material.

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1 Comment

Thank you for such interesting feedback on our report, particularly picking up points which are inevitably lost in more general coverage. We do not claim there is a cartel - we merely report that many in the industry feel that this is the case (and understandably, because of the way that the system seems to shut them out.) And I belive you are mistaken to dismiss the effect of EU directives - they really do inhibit what ministers and officials do: they live in fear of being taken to court so they are very risk averse. Yrs Bernard

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About this Entry

This page contains a single entry by Philip Virgo published on July 28, 2011 12:35 AM.

Government and IT: A recipe for rip-offs. Stand by for a kicking was the previous entry in this blog.

Yesterday I gave 8/10 to PASC Report "A recipe for rip-off". Part of my reasoning has already been confirmed is the next entry in this blog.

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