Ministry of Justice e-tagging programme a classic tale of terrible public procurement

Profile picture for user ddpreez By Derek du Preez January 23, 2018
Summary:
The Ministry of Justice aimed to roll out the new electronic tagging system in 2013. It’s now not expected until 2019 and £60m has been spent.

System Fail Situation
The Ministry of Justice has been slammed by the influential Public Accounts Committee for its disastrous electronic tagging programme, branding it a “catastrophic waste of public money”. Reading the MPs’ report, it’s clear that the programme is a classic tale of Whitehall failing to understand the basics of procurement and not learning from a well-documented history of similar failures.

Electronic monitoring allows the police, courts or probation services to monitor an offender’s location and their compliance with home curfews. In 2011, the Ministry of Justice (MoJ) launched a programme to develop a new “world-leading” ankle tag, employing GPS technology to be used by all tagged offenders.

The programme was intended to reduce the cost of tagging and provide wider operational benefits and more sentencing options for courts. The new tags were originally due to be rolled out from November 2013.

However, following a series of delays, the new tags are now expected to be rolled out from early 2019, more than five years late.

The MoJ has so far spent over £60 million on the programme, including £7.7 million (plus VAT) of losses which cannot be recovered, and it still relies on the same form of tagging technology that was commercially available when the programme first started.

The problems are those that have befallen many other procurement programmes in government - mismanagement of contracts, a lack of skills, wanting to reinvent the wheel and a dogmatic approach that results in more problems than are necessary.

Sir Geoffrey Clifton-Brown MP, Deputy Chair of the Committee, said:

The Ministry of Justice took an all-singing, all-dancing approach to what could have been a relatively simple procurement exercise. The evidence to support a wholesale transformation of the tagging system was weak at best but the Ministry pushed ahead anyway.

This ill-fated adventure in the possibilities of technology has so far costed taxpayers some £60 million. The new tags are expected to be rolled out more than five years later than planned and, even then, the system will rely on the same form of technology that was available when the programme launched.

The Ministry accepts it got this badly wrong but admitting its failures does not excuse an approach that disregarded fundamental principles we would expect to see applied in the spending of public money.

What went wrong

The MoJ told the Committee that it was “startled and stunned” by the over-optimism of the original project, accepting that not enough research was done before the programme was approved (sound familiar?) and that it should have piloted the programme.

It attempted to develop a bespoke tag across a timetable for delivery that was unachievable, according to the report, instead of taking available off the shelf options. The report states that “the Ministry accepted that it should be more ready to use off the-shelf products where these are already available and appropriate rather than reinventing the wheel and seeking to develop ground-breaking, untested technology”.

This isn’t unique to the MoJ and Whitehall procurement often focuses on thinking it is special, when in fact there are multiple options available in the market.

MPs found that the MoJ had a fundamental lack of knowledge of electronic monitoring services or how they operated when the programme started, as the service had always been outsourced. Despite this, it chose the highest risk procurement strategy in adoption the ‘tower model’ for delivering the programme.

A tower model splits the service into a four supplier tower structure, with an integrator bringing all the contracts together. The Ministry was unprepared for what essentially was a transformation programme and found that it lacked the capacity and capability to manage the difficulties and delays that it created.

Throughout the procurement the MoJ overbilled the existing suppliers and this has resulted in a  repayment of £179 million from Serco and G4S - a matter that has been referred to the Serious Fraud Office. The report states:

The programme lacked continuous leadership, having been led by five senior responsible owners (SROs) in its six-year life. The Ministry now recognises that the model it had adopted will not deliver the system that it wants. It has brought the integrator function in-house and strengthened its commercial and project delivery functions.

Failing SMEs

The MoJ’s decision to adopt a tower structure for the programme was in part driven by its aim to increase involvement from SMEs - a broader government policy. However, MPs found that the terms that were imposed on SMEs were unreasonable and its approach ultimately failed.

For example, it appointed an SME, Buddi, as its preferred bidder to develop and produce the new tags in August 2013, but ended the company’s involvement in March 2014 after being able to resolve fundamental differences. In particular, the MoJ expected Buddi to hand over its intellectual property for nothing.

It contracted another SME, Steatite, to develop and produce the tags in July 2014, despite the fact it had scored below the minimum benchmark in the procurement. The Ministry also ended its contract with Steatite in November 2015 after growing delays to the programme. The report states:

The Ministry failed to adapt its approach to help smaller suppliers, or to take into account their more limited staffing arrangements and financial resources. The Ministry told us that it regretted that it had been unable to agree a contract with Buddi, and accepted that it would have been better to re-open the procurement exercise rather than to rely on Steatite as the last remaining bidder.

We were concerned that this programme is a bad advertisement for SMEs working with government and extremely damaging to SMEs’ confidence in government Programmes.

The MoJ spent £60 million on the programme up to the end of March 2017, yet it still relies on the service that was available when the programme started in 2011. The costs it has incurred so far include paying Steatite £4.4 million (plus VAT) in compensation for ending its contract for the programme, on top of the £3.3 million (plus VAT) paid during Steatite’s contract. The programme was originally expected to reduce the cost of tagging by between £9 million and £30 million a year but has failed to deliver any tangible benefits so far.

My take

A cock-up that was predictable and avoidable. A tagline for a lot of government procurement programmes. Incredibly disappointing.