Britain's defence department has wasted at least £70 million on a new Army recruitment system, largely because it couldn't effectively manage the contractsfor its IT suppliers.
Surprised? You shouldn't be. Take a look at our report on the UK National Audit Office's review of 60 government contracts, of which over half were found to have “issues with billing to some extent”.
Stuart's piece highlights exactly the issues faced by the Ministry of Defence and its latest costly IT problems, where civil servants seem to seem to rely on poor information and find it seemingly impossible to effectively manage suppliers.
A Public Accounts Committee report out this week outlines how the MoD's programme to reduce the size of the regular Army and increase the size of the Army Reserve has resulted in a poorly managed contract with Capita, which is leaving capability gaps in Britain's defences and is resulting in unnecessary costs to the taxpayer.
The plan was to reduce the regular Army by approximately 20,000 and increase the strength of the trained Army Reserve to 30,000 by 2019. However, these recruitment targets are being missed by thousands.
Part of the problem is the Army recruited Capita to implement a recruitment system and strategy, without fully understanding of the scale of the project. For example, because of the Army's “poor management information” (as the report describes it), it was vastly overestimated how many feasible recruitment candidates were being passed to Capita at the beginning of the contract.
Capita expected to be working with approximately 55,000 potential candidates that it could sift through for possible recruitment, but by the time it had verified the Amy's records, only 12,000 potential candidates remained. Of these, 6,000 had been on the system for over a year and were considered likely to be redundant.
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Not only this, Capita explained to the Committee that IT was important for the successful operation of its recruitment contract with the Army (hardly surprising). However, the MoD has failed to provide Capita with the IT infrastructure that it needs to effectively run the system.
This has largely been blamed on an inability to manage two software and hardware contracts with ATLAS (held by the MoD) and with Capita (held by the Army). The report states:
The Department and the Army failed to manage the contracts with these two suppliers effectively and the necessary IT is not expected to be ready until summer 2015. The Department acknowledged that this poor management was unacceptable. The Army will incur additional costs of £1 million a month up to that point. These costs relate, for example, to the Army having to fund 80 extra soldiers and 100 temporary staff to help Capita run the recruitment process.
Essentially, the MoD originally expected the Army's recruitment contract with Capita to deliver savings of £267 million, but the additional costs are expected to wipe out at least £70 million of these savings. Also note, that's a minimum figure – the MoD is still finalising the costs involved and I don't think anyone would be surprised if they were to rise further.
Not only this, because of the IT problems and the way that the contract was set up, the Army has had to pay Capita as though they met all of the recruitment targets in 2013-14, when it recruited only 2,000 out of a target of 6,000.
Chair of the Committee, Margaret Hodge, did her usual thing upon the release of the report and dished out some stern words to those involved. She said:
It is astonishing that the Ministry of Defence went ahead with plans to cut back the regular Army by 20,000 and increase the number of Reservists without testing whether this was doable and without properly consulting the Army itself.
The Army told us that shortfalls in recruitment are increasing the risk of capability gaps emerging in some parts of the Army’s structure. This in turn increases the risk of additional pressure being placed on regular troops.
The Army’s recruiting partner, Capita, missed its regular soldier recruitment target by 30% in 2013-14 and recruited fewer than 2,000 reserves against a target of 6,000. Yet Capita was paid as though it had delivered the full 6,000.
The MoD's bungling around the recruitment contract with Capita has meant at least £70 million of the planned £267 million savings fromthe contract have already been lost. There was no clear understanding of the scale of the recruitment challenge, poor information about potential recruits and the MoD did not provide Capita with the IT infrastructure it needed.
I have requested a statement from the Ministry of Defence, but have not heard back at time of publication. I will update when it is received.
No surprises here, this is classic IT failure in the public sector. Nothing actually wrong with the systems, but plenty wrong with the management.
The severity of this issue shouldn't be overlooked or undermined. No matter what tools the government introduces to make the public sector 'better' at IT, none of it is going to go to plan if civil servants don't get better at managing their suppliers.
If anything, in the UK the plan is to diversify the supplier base and introduce more contracts into the supply chain – contract management is going to get harder, not easier, and government departments need to up-skill. And quickly.