Feature

The air traffic chief, EDS, and dirty linen

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.

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This was first published in May 2002

 

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