Mission impossible? Pensions CIO faces tough task despite tightening up EDS deals

If Joe Harley were to quit as chief information officer at the Department of Work and Pensions (DWP), an honest advertisement for his replacement would make grim reading.

If Joe Harley were to quit as chief information officer at the Department of Work and Pensions (DWP), an honest advertisement for his replacement would make grim reading.

"Looking for mission-impossible? This is the job for you. You will be the IT head of the government s largest department with responsibility for 128,000 PCs. You must deliver an IT-based modernisation programme we have been promising to parliamentary committees for more than 20 years.

"You will also ensure the smooth day-in, day-out running of some of the nation s most critical systems that pay 100bn a year in benefits to, among others, the incapacitated, poor, jobless and elderly.

"At the same time you will ensure there are major changes to many of these systems, almost weekly, to cope with policy amendments and new regulations.

"This is the perk: you will have among your main set of tools the worlds largest estate of Fujitsu VME-based mainframes that the curator of any IT museum would be proud to display.
 
"And stimulating is not the word. You will need to transform services while getting no more money for IT. The Gershon efficiency agenda means our departments budget must be cut by գ1bn, 30,000 jobs must go by 2008, and then there is the Child Support Agency to help sort out ..."

Despite being parachuted into this harsh landscape Harley smiled more than one would have expected last week when speaking of the "demanding challenges"  confronting him. He was pleased that new contractual arrangements were completed last week with EDS, the supplier on which the DWP is most reliant.

The deal standardises about 150 separate contracts agreed by EDS and the DWP after the two sides agreed an Accord framework deal in 1998 under the Private Finance Initiative. "We don't do PFI any more," said a DWP official last week.

The 150 contracts remain but have been revised, the official word for which is "realigned". Whereas the contracts had different service levels and expiry dates over the next five years, there are now standard conditions and extended expiry dates for some deals. This means all the contracts expire in 2010. The DWP said the realignment provides for "stiffer penalties for any service failures or shortcomings". 

The contractual changes will allow the DWP to cut its spend with EDS from £700m this year to £520m a year between now and 2010, a theoretical saving of £900m. In return the DWP has agreed to deals which enable EDS to increase its previously stated estimates for revenue from the DWP over the next five years by £800m. Also, EDS has been promised an extra £180m for new work if its performance is top notch.

It is unclear exactly how the figures are arrived at. But it is evident that EDS will get business it was not assured of before, and which indeed could have gone to other suppliers. And with a hefty income that is all but guaranteed, EDS can risk investing money in new technology which cuts its service invoices to the DWP by offering standardised hardware, software, networks, hosting arrangements, applications support and maintenance. It has also agreed to improve the quality of service.

The Child Support Agency's £456m PFI deal with EDS was among the realigned contracts. A backlog of thousands of cases at the CSA has prompted ministers to blame poor technology for the problems. However, earlier this year MPs reported that poor management and a breakdown in communication with its IT contractors contributed to the chaotic introduction of the new system at the CSA.

The new deal is a breakthrough for EDS  which at one time looked like being slowly marginalised by the DWP   and it is an important victory for Harley, who joined the department last summer. His arrangement with EDS was prompted by the freeze on IT spend. With about 90% of the IT budget outsourced  50% of it to EDS   he had looked to suppliers to cut their prices.

But the challenges for both sides remain. EDS' predominant relationship is threatened by other DWP suppliers, particularly Accenture.
And the tireless Harley, with everything else on his "to do" list, will need to convince MPs that the latest IT-related modernisation plans will be more effective than the previous ones.

The deal may be a sensible correction by Harley of a situation that developed before his arrival. Neither side wanted the overhead of administering 150 dissimilar deals.

But if this proliferation of contracts was kept from MPs by a lack of transparency and accountability, then how many other government departments and agencies are quietly labouring under such unrestrained arrangements?

Perhaps Harley should offer his services to other parts of government   even if it means the DWP has to place an honest advertisement for his replacement.

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