Reports of the NAO on risky IT projects - has a precedent been set?

Since 1986 reports of the National Audit Office have been subject to a “clearance process” in which their factual content is agreed with departments and agencies before publication.

It’s a good system in theory.  The departments “sign off” NAO reports to show that, even if they don’t agree with some NAO comments, they agree the figures and factual statements.

This cosy agreement stops the NAO and the department contesting factual points at hearings of the Public Accounts Committee, when civil servants are questioned by MPs over the contents of NAO reports.  

But some departments take advantage of the clearance process. They can refuse to agree a report until the NAO tones down criticisms or changes its figures.

If departments keep on refusing to sign off a report, they know the NAO will eventually give in to get its report published.

Otherwise delays could go on for years – which is what happened when the Department of Health refused to clear a draft NAO report on the NHS’s National Programme for IT [NPfIT].

The NAO’s first report on the NPfIT was delayed by more than a year. And when it was finally published in 2006, it was so devoid of criticism that an MP, Greg Clark, called it “gushing”.

Defra refuses to sign off NAO report

Last week a precedent appears to have been set. Computer Weekly has learned that the NAO published a report earlier this month on the Rural Payments Agency’s IT-based Single Payment Scheme without any sign off by Defra, the Department for the Environment, Food and Rural Affairs, or its agency, the Rural Payments Agency.

Defra and its Agency run the Single Payment Scheme.  

This breakdown in the “clearance process” was confirmed in a formal exchange, in a House of Commons committee room this week, between Amyas Morse, the Comptroller and Auditor General – head of the National Audit Office – and the MP Richard Bacon, who is a member of the Public Accounts Committee.

Morse – who was appointed in June this year – was answering questions from MPs who were concerned that he would be too soft when reporting the results of value-for-money audits on departments and agencies.

NAO not satisfied with level of Defra’s co-operation

Morse said: “I haven’t found, so far, many of my Whitehall interlocutors thinking that I’m being extremely soft or lacking in willingness to hold them to account  …we have an upcoming hearing, as you know, where we’ve actually chosen to issue a report unagreed because of the fact that we were not satisfied with the co-operation we were getting.  I’m willing to take a very tough line –

Richard Bacon: “Was that the Rural Payments Agency?”

Morse:    “Yes.  And I’m willing to take a very tough line and I would not mistake that.”  

NAO in dispute with Defra and Rural Payments Agency

That the report of the NAO on the Single Payment Scheme was “unagreed”  means that when it’s discussed at a hearing of the Public Accounts Committee on Monday, 26 October, 2009, civil servants from Defra and its agency, the Rural Payments Agency [RPA], will dispute the NAO’s figures and findings.

It could become quite acrimonious. Defra and the RPA are, if history is anything to go by, congenitally optimistic. They and their ministers will claim that the IT at the Rural Payments Agency is better than it seems.

But the NAO and MPs will want to know why the NAO has produced three reports on the Single Payments Scheme, each one more negative than the one before.

Rural Payments Agency in administrative anarchy?

To judge from the latest NAO report on the Single Payment Scheme, large parts of the Rural Payments Agency are in administrative anarchy. The IT systems are making large overpayments, and changes are being made to the Oracle source code of a system supplied by Accenture without staff keeping proper records of the changes.

It’s clear the Agency is locked into its IT suppliers, including Accenture, yet there are no clear lines of accountability should the system fail and farmers cease to be paid. If they’re not paid, the UK government can face EU fines of up to £1.6bn.

NAO urges Defra and RPA to replace £350m IT system

The NAO says that the Agency should look at replacing the “cumbersome” and “very expensive” £350m IT system that supports the Single Payment Scheme – even though the system is only four years old.

The good news

The fact that the NAO is now willing to publish its reports without the agreement of departments means that its auditors no longer have to be circumlocutory, or even gushing in their praise, to get a disputed report published. The NAO says it will always seek to have its reports cleared by departments.

But it won’t always delay its reports if clearance isn’t forthcoming. 

Richard Bacon, Public Accounts Committee MP, comments

Richard Bacon says: “I think it is a sign of Amyas’s new broom that he’s not prepared to accept delaying tactics from departments.”

Bacon adds:

“There is some merit in getting agreement on the factual content of NAO reports through a clearance process. However, I am afraid that departments have sometimes abused this clearance process – especially when the report is on a controversial issue where the government of the day is widely seen to have ‘failed’ in some way – in order to persuade the NAO to tone down its reports.  
“The NAO is an independent office which for works for Parliament on behalf of all taxpayers, to help the nation spend wisely. It uses a rigorous methodology in producing its reports, which relies on objective evidence-based conclusions about the work of government departments.

“That will sometimes be uncomfortable for the government of the day, what ever its political complexion, but is an important part of the process by which Parliament safeguards the use of taxpayers’ money.
“If we can see clearly where a department and the NAO disagree, then it should be possible by examining the evidence to see where the problem lies.
“In the case of the Single Payment Scheme administered by the Rural Payments Agency, the problem was clear: the government chose to introduce the most hideously complicated of all the possible payment schemes, in the shortest of all the possible timescales, while sacking its most skilled and experienced staff and replacing them with temporary agency workers in order to achieve ‘efficiency’ savings. One is tempted to ask: ‘What could possibly have gone wrong?’ ”


Rural Payments Agency’s toxic legacy – Richard Bacon’s website

NAO urges Defra and Rural Payments Agency to replace £350m IT system that’s only four years old –

NAO in dispute with Defra over IT-based Single Payment Scheme –

National Audit Office hits brick wall over Rural Payments Agency’s IT failure – IT Projects blog

£350m Rural Payments Agency IT – throwing money into a digital landfill? – IT Projects blog

The murky clearance process – IT projects blog