Examination of Witnesses (Questions 160
MONDAY 12 NOVEMBER 2001
GIEVE CB, MS
160. Would I be right in thinking that the Probation
Office has a relatively low priority within the Home Office and
that is why there was such a turnover and that is why so much
of this was allowed to continue without action being taken?
(Mr Gieve) No, you cannot assume that. The Home Office
has three major operational services, prisons, probation and immigration.
They are all represented on my group board; Eithne is on the group
board. They have a very high priority. At this time when these
decisions were being taken, the position was complicated by the
fact that the Probation Service was not part of the Home Office
group it was a local service which we tried to influence through
policy advice and guidance. That relationship did not work. That
is what this Government decided.
161. I understand what you are saying to me.
Mr Sleightholme, why are you here? What can you add to this?
(Mr Sleightholme) Very little I suppose. I was the
person responsible in Integris for delivering the services for
a couple of years.
162. That is what I thought. You were in the
Prison Service for some considerable time.
(Mr Sleightholme) Yes, I was.
163. Do you think the Prison Service received
greater attention from the Home Office than the Probation Service?
(Mr Sleightholme) The Prison Service was part of the
Home Office and during the time I was there it became an executive
agency within the Home Office.
164. Is that a yes?
(Mr Sleightholme) I suppose it is; yes.
165. Thank you. It would be easier if you just
gave us a yes or no answer. From your experience as a customer
in the Prison Service, do you think the Probation Office was as
good a customer as the Prison Service was.
(Mr Sleightholme) As a prison officer was?
166. No. You were a `high heid yin' in the Prison
Service, were you not?
(Mr Sleightholme) In the Prison Service I was providing
IT services to Prison Service staff. In Integris I am providing
IT services to Probation Service staff.
167. Yes, that is right. So you were a customer
in one and a provider in the other and you must have a view on
the abilities of your customer. I am just seeking to clarify whether
or not you believe that the Probation Service was as good a customer
as you on the receiving end were in the Prison Service.
(Mr Sleightholme) In the implementation of systems
all people, whatever their profession or whatever their organisation,
require a high degree of attention in terms of implementing systems
and a high degree of training.
168. Is that a yes or is that a no?
(Mr Sleightholme) It is a yes.
169. Try to answer the question. You were asked
a very clear question and you did not really try to answer it.
(Mr Sleightholme) Yes.
170. It is a yes, then. Thank you, that is helpful.
May I turn to the Treasury? You accepted the business case which
was made by the Home Office for all of this. Presumably you will
tell us that you are now sadder and wiser as a result of this.
Was there a public sector comparator in all of this?
(Mr Smith) No, there was not. This is because, essentially,
there was exploration of whether private finance should be used,
but in the event it was decided to proceed using conventional
171. Were there other bids for this contract?
(Mr Smith) In terms of our approval process, we do
not look at individual bids by different providers. We look at
the overarching business case. We would not actually approve or
rule in or rule out specific providers. That is not our role.
(Ms Wallis) There were other bids. There were three
approved suppliers; Bull and two others.
172. Were the other bids going to cost less
than Bull eventually cost?
(Ms Wallis) I do not have that information.
173. Maybe we could have that, because I would
be interested to clarify that. May I ask whether or not it was
the intention in all of this to transfer any degree of risk whatsoever
to Bull or was this just cost plus?
(Mr Smith) The actual approval of the business case
by the Treasury would not have got down into the detail of the
contract with the contractor.
(Ms Constable) This was not a PFI contract, this was
a standard contract.
174. There was no cost limit on this then, was
there? They put in a bid which was lower than the other two, but
there would appear to be no sanction or penalty if they exceeded
it. Have I got that right?
(Mr Gieve) Bull have already referred to one aspect
of the transfer of risk when they said they lost money on the
CRAMS development. What happened under the contract was that there
was an estimated cost for an illustrative number of offices, but
it was open-ended in the sense that if we wanted to order more
things we could. It was not just us, it was also the local probation
boards. It was open-ended and some of it was definitely cost plus,
but some of it transferred risk in the sense that you transfer
it in any contract when you pay a price for a given product.
175. Given the history of all of this, which
as we have listened to people here today is hardly a major success,
are you surprised that Bull still managed to make a profit out
of all this? Is that a yes?
(Mr Gieve) No, I am not surprised that Bull made some
profit out of this.
176. Given that a number of mistakes do seem
to have been made in the contract, the fact that they still made
a profit out of it does surprise me, I must confess. You and your
colleagues as custodians of public money should surely, in circumstances
where there are enormous cost overruns, have some penalty which
can fall on the contractors, should you not?
(Mr Gieve) That raises the nature of the cost overruns.
The original business case, which is compared in this report to
the eventual outturn cost, did not include provision for some
costs, although we knew there would be costs and a number of local
costs in particular. If we had said we wanted a set of equipment
for this price and it cost twice as much, you would be right.
In fact this was a developing project in which the hardware has
come in pretty much to cost and at various points we have asked
Bull to do other things besides. It has not been like a PFI contract
where we ask for a service for a given price and then they fail
to do it.
177. Once they were signed up for this and you
wanted additional things they really had you over a barrel, did
they not? They quoted you a price and you just had to cough up.
Is that how capitalism works? Do I have that right?
(Mr Gieve) How capitalism works?
178. Never mind that. I digress. May I move
on to specifics? Paragraph 2.46 shows they were contractually
required to provide something and they did not. May I clarify
whether or not any penalty was involved in any of that? The second
sentence, "Bull were contractually required to provide restoration
of an equipment service within 8 to 30 hours, depending on the
priority assigned to the problem by the Bull Helpdesk". In
the next paragraph, 2.47, second sentence again, "Between
April 1997 and July 1998 the percentage of `fixes' within the
contract varied between 69 per cent and 91 per cent. The target
was 95 per cent. In response . . .". It did then subsequently
improve. The last sentence of that paragraph reads
(Mr Gieve) I think the answer is yes.
179. Yes, what? Were there penalties? How big
were the penalties.
(Mr Gieve) I do not have the numbers.
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