Housing staff walk out over outsourcing plan

Gateway Review process shown to lack teeth as Housing Corporation ignores its findings

Gateway Review process shown to lack teeth as Housing Corporation ignores its findings

IT workers at the Housing Corporation have staged a series of walkouts protesting against an outsourcing project that has been given the red light in the Office of Government Commerce's Gateway Review procedure.

The Housing Corporation, which hands out more than £1.3bn a year to housing associations, is set to sign a seven-year deal for desktop management and core business systems with PC manufacturer Elonex.

Corporation documents shown to Computer Weekly put the cost of Elonex's bid at £16.7m over seven years. A rival bid from Computacenter was "unexpectedly unaffordable" at £33.7m, the documents said.

IT analysts believe large discrepancies in outsourcing bids often spell danger for a project.

Mike Dodd, vice-president of analyst group Giga, said, "When you get a massive variance in price, either the request for tender documents were misunderstood or the documents were not detailed enough."

The Housing Corporation is set to sign the deal with Elonex early next month despite getting a red light after Gateway 3 hearings held last month. The Treasury introduced the Gateway process in 2001 to help end public sector IT disasters.

A report handed to the corporation said, "The previous Gateway 2 Review's recommendations were not adopted in full." It highlighted failures to update the business case "to reflect all the options that should be considered". It also said the corporation failed to consider the impact of staff transfers under the contract.

Stuart Barber, regional officer of public services workers union Unison, said management had not consulted properly on job transfers or on proposed redundancies. "We are not convinced this proposal will deliver best value for public money. We want it put on hold until there is a full independent investigation by someone with real power."

As the crisis at the Housing Corporation has developed, politicians and IT experts have been voicing increasing concern about the lack of teeth in the Gateway process.

Last week e-minister Douglas Alexander said departments were encouraged to follow the Gateway Review's advice, although it was not mandatory. He turned down calls to strengthen the process or make it more transparent.

However, Liberal Democrat IT spokesman Richard Allen said, "The Gateway Reviews should be mandatory. If organisations go through the review and then ignore its findings, it not only raises questions about their judgement, it undermines the authority of the whole process."

Giga's Dodd said the Gateway Reviews had improved government IT but warned, "If projects are carrying on regardless of review findings, the whole thing could be a waste of everyone's time and taxpayers' money."

In a statement, the Housing Corporation said, "The Corporation is engaged in a competitive procurement process for the supply of services to continuously improve our delivery to external and internal customers.

"We are not in a position to discuss any of these issues as we owe an obligation of confidentiality to the shortlisted suppliers and information relating to this process is commercially confidential."

Elonex was unavailable for comment.

The Gateway Review's recommendations
The Gateway Review said that unless the Housing Corporation addressed the following critical recommendations, the success of the outsourcing project would be in jeopardy:
  • The business case must be updated (it was claimed the business case would be revised but no final version was seen)

  • The benefits management plan must be developed further

  • A risk register must reflect all project risks and these must be managed

  • A detailed plan must be put together covering the period from now until the contract is awarded

  • People issues, particularly Tupe and pensions, must be resolved and a clear statement of intent agreed.

Read more on IT outsourcing