Universal dis-Credit shows bad habits die hard in government IT

Profile picture for user slauchlan By Stuart Lauchlan November 6, 2013

The universal credit website
We’ve written a lot about the efforts of the current UK government to overturn decades of established (bad) practice in public sector IT procurement and deployment.

There have been some notable successes to this end - step forward the G-Cloud programme and the work of the Government Digital Service (GDS) - but this is a long, long game as we’ve just been reminded again by the latest dire analysis of a flagship technology-driven programme.

Universal Credit is the ambitious programme to consolidate multiple social security benefits into one payment.

It’s one of the key policies - perhaps the defining one - of the current Conservative-Liberal Democrat administration and politically it cannot be allowed to fail.

It’s also entirely technology dependent - and that’s where the problems really kick in.

Under fire

The IT underpinning this has come under fire already, but this week saw a withering assault on the whole scheme by the House of Commons Public Accounts Committee with the IT issues being picked out as a particular running sore.

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The Department of Work and Pensions (DWP) - the responsible government departnent for UC - expects to spend £2.4 billion up to April 2023 on implementing Universal Credit, and by April 2013 it had spent £425 million, mostly on IT development (£303 million).

In February 2013 the Department ‘reset’ the programme following a Major Projects Authority review which expressed serious concerns about the programme lacking detailed plans.

But the PAC concludes that it is now highly likely that a “substantial part” of the IT spend will have to be written off.

Four main suppliers—Accenture, IBM, Hewlett Packard and British Telecom— are charged with delivering IT systems for Universal Credit.

(You’ll note incidentally that for all the fulminating that goes on about breaking down the ‘oligopoly’ of big SIs in the public sector, those four are practically founder grandees of the UK public sector IT establishment.)

As of March 2013 the DWP had paid them £265 million out of the £303 million spent with suppliers on IT systems.

Marking your own homework

Where has the rest gone? That’s not terribly clear, which hardly surprising perhaps as the Major Projects Authority (MPA) in February complained that it could find no evidence of the Department actively managing its supplier contracts, resulting in suppliers being out of control and financial controls not being in place

In its report, the PAC picks up on this theme, stating:

There has been a shocking absence of control over suppliers with the Department neglecting to implement basic procedures for monitoring and authorising expenditure.

We saw evidence that purchase orders with a total value of £8.7 million were approved by a personal assistant to the Programme Director.

In another case, two purchase orders, one for £22.6 million and one for £1.1 million, were approved by a personal assistant to the Programme Director whose delegated financial authority at the time of approvals was only £10 million.

When the Department made individual payments to suppliers these could not be linked to particular pieces of work that had been delivered.

Some of the IT assets that have been delivered cannot be used in the programme and so must be written-off; whilst initial estimates suggest the write-offs could amount to at least £140 million, we heard evidence that the precise extent is as yet unknown because the Department’s impairment review is not yet complete, relying so far on supplier self-assessment.

Self-assessment! Yup, the suppliers are allowed to mark their own homework!

Indignation personified

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Indignation levels rising...

Margaret Hodge MP, Chair of the PAC and the witchfinder general of civil servants and policy makers, ramped the indignation levels up to eleven:

“The failure to develop a comprehensive plan has led to extensive delay and the waste of a yet to be determined amount of public money. £425 million has been spent so far on the programme. It is likely that much of this, including at least £140 million worth of IT assets, will now have to be written off.

“The management of the programme has been alarmingly weak. From the outset, the Department has failed to grasp the nature and enormity of the task; failed to monitor and challenge progress regularly; and, when problems arose, failed to intervene promptly. Lack of day-to-day control meant early warning signs were missed, with senior managers becoming aware of problems only through ad hoc reviews.

“There has been a shocking absence of control over suppliers, with the Department failing to implement the most basic procedures for monitoring and authorising expenditure. In some cases multi-million pound orders were approved by secretarial staff. Individual payments could not even be linked to particular pieces of work that had been delivered.

“The Department needs to focus on the long-term successful implementation of Universal Credit. It should evaluate what benefit it can derive from the existing IT but must not throw good money after bad by introducing a short-term fix that does not stand the test of time.”

What now?

For its part, the DWP went into defensive mode, stating simply:

“We don’t recognise the write off figure quoted by the committee and expect this to be substantially less. The head of Universal Credit Howard Shiplee has been clear that there is real potential to use much of the existing IT. We will announce our plans for the next phase of UC delivery shortly.”

What the PAC wants to see in that next phase is:

  • A range of deliverable options to present to ministers, the Cabinet Office and HM Treasury detailing the services, processes and systems for Universal Credit
  • A clear strategy for IT development, demonstrating the best way forward for the programme and an accurate review of current investment which will not be needed in the long-term.
  • Realistic ambitions on timescales and the amount that can be delivered online, and the impact of these on the costs and benefits of the new system.
  • The budget for the remainder of the programme and the net benefits it expects will be delivered, explaining how these have changed compared to previous plans.

Shocking

Clearly UC is a very complex project and difficulties were inevitable, but it’s the shocking lack of basic thinking that seems to have gone in that still manages to surprise.

For example, in 2011 the DWP identified over a hundred different types of users for Universal Credit. Its response to this was to try to design IT solutions for each set of circumstances individually rather than attempting to get a ‘bigger picture’ view of the whole.

There also seems to have little by way of senior accountability. In one example, two purchase orders, one for £22.6 million and one for £1.1 million, were approved by a personal assistant to the programme director, whose delegated financial authority at the time of the approvals was only £10 million.

That’s not a technology issue; that’s just utterly crap programme management.

During questioning by the PAC, Dr Norma Wood, a consultant working for government rather than a civil servant and at the time the Interim Director General of the MPA, gave a glimpse of just how lax the management of the project was when she revealed:

“The suppliers, when we went around and did the review, were working on different assumptions and to different standards, and they were producing different solutions, so it is difficult to see how they could be linked in.”

In other words, no-one had a clue what was going on or what they were supposed to be building, while the time and materials basis of their contracts meant they could invoice for every hour their staff spend on the project, regardless of what is delivered or not delivered.

So now what?

So where to now? In a welcome move it looks like GDS could get more actively involved and effectively start again. This is believed to be the favored option of the Cabinet Office but sadly one being resisted by the DWP in full face-saving spin mode and seeming reluctance to admit the full extent of the mess.

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A bold claim...

The problem with a ‘start again’ decision is the question of the existing contracts.

The failed NHS National IT Programme floundered on for so long -  with the price tag adding billions and billions to its total - at least in part due to fears that some of the IT providers would sue the government if their contracts were terminated. Even now there is the prospect of legal action by Fujitsu that has yet to be resolved.

This threat of supplier legal action suits simply terrifies civil servants, largely on the basis that in many cases the shortcomings of the department would be publicly - and expensively - aired.

The same problem must exist with UC. As Wood articulated in her evidence to the PAC:

“An exit strategy for any contract needs to be carefully considered. In doing that, one needs to take a forensic view of all the conversations and interactions that have taken place.

“In any exit strategy there is a potential for counter-claims, and that is what I am saying about the strategy that will have to be understood and negotiated.

“There is always a risk, and I think there is a substantial risk here.”

It’s an all too familar story to any veterans of UK public sector IT programmes, such as Computer Weekly’s Bryan Glick who gloomily predicts:

“My hunch is the Department for Work and Pensions (DWP) will prefer to avoid the political fall-out of such a decision, and will soldier on with what they have until a replacement is developed.

“Even then, the existing work will eventually be phased out - so that £300m of taxpayers' money is going down the drain one way or another.

“Don't forget too - that figure is only the amount spent with external suppliers. Nobody records the cost of internal staff time or any associated expenditure, so the true cost to the taxpayer will never be known.”