Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 180 - 199)



  180. Nobody knows the size of the penalties for something which was between 69 and 91 per cent when the target was 95 per cent. Subsequently in the first ten months of 1999 the performance was between 76 and 91 per cent and the contractor still made money out of the whole contract. Have I summarised that correctly? I think so.
  (Mr Gieve) Over the whole contract, yes. We can only apply the penalties we have in the contract.

  181. I understand. Mr Crade, did you make a profit on this section of the contract?
  (Mr Crade) Difficult for me to tell with that aspect, but what we are talking about here in these paragraphs is the Helpdesk service particularly, nothing else.

  182. I understand that.
  (Mr Crade) The total value of the Helpdesk service in relation to the overall contract was quite small.

  183. Do you think you made a profit on this section?
  (Mr Crade) I do not know. Unlikely, I would say.

  184. So you must have made even bigger profits somewhere else to balance that. If I look at paragraph 3.6, we have here in the first sentence, a fascinating suggestion that "Before the start of this examination", presumably by the NAO, "the Home Office had not reviewed the total costs and achievements of the NPSISS programme against the business case. There has been no overall reporting of expenditure and no comparison made against the budget in the business case". Does that seem right?
  (Mr Gieve) No. I assume it is accurate but no, it is not right.

  185. How did this happen then?
  (Mr Gieve) What happened was that each year we set an individual budget in the light of where we had got to and how many people were taking the NPSISS programme. As this report shows, we simply did not run the sort of project monitoring and management that we should have done.

  186. Did the Treasury notice this?
  (Ms Constable) We did not set any specific proposals for us to monitor this particular project, so we did not notice.

  187. That is a no. Thank you.
  (Ms Constable) We did not notice.

  188. Am I right in thinking that until the NAO looked at this, in fact if the NAO had not looked at this, we would never have had any of this. Is that a fair assessment?
  (Mr Gieve) Do you mean you would not have had a report?

  189. We certainly would not have had a report from the NAO if the NAO had not looked at it.
  (Mr Gieve) No; in fact that is not true because the independent Inspectorate of Probation decided anyway to look at the use of IT and the system and much of this report is based on an inspection report.

  190. Let me be slightly more specific then. What I was interested in was reviewing the total cost and achievements against the business case. That would not have been the role for the Inspector of Probation would it though?
  (Mr Gieve) No, although they did cover costs and benefits in their report.

  191. Yes, but not against the business case. I shall come on to costs and benefits in a moment.
  (Mr Gieve) No, I do not think so.

  192. I think I understand what the position is there. Paragraph 3.7, where we have in the third sentence, "The Audit and Assurance Unit identified an overpayment to Bull of £395,000 . . . The funds were repaid". On how many other occasions has there been an overpayment and refunding?
  (Mr Gieve) In this contract?

  193. Yes.
  (Mr Gieve) I am not aware of any others.

  194. How do you know that there have not been any other repayments?
  (Ms Wallis) There has been another repayment for work not done.

  195. How much was that?
  (Ms Wallis) Forty thousand pounds.

  196. We have no way then of assessing whether or not there are any other overpayments in the system. Is a thorough review undertaken to make sure you have not paid them more for stuff they have not done?
  (Mr Gieve) There are two regular reviews: internal audit and then our external audit by the NAO.

  197. That is what, just short of half a million, and the company still made a profit on the contract. May I turn to paragraph 3.11 which has a wonderful phrase? "The Home Office told us that the negotiation had had to be completed under severe time pressure because Bull was withdrawing resources from support functions which it considered were not covered by existing purchase orders." Is another way of putting that, that Bull had you over a barrel? Is that a yes?
  (Mr Gieve) You could put it like that.

  198. That is sufficient for my purposes at the moment. That is not really the action of a partner, is it? You had to negotiate a contract with them quickly, which is hardly the best negotiating position to be in, because they were saying that if you did not negotiate it quickly, they were going to stop the service.
  (Mr Gieve) As I understand it, the situation was that neither the Home Office nor Bull, nor the probation boards which were separate, were happy with the way the contract was going. We had just had a report that there were overlapping and perhaps duplicating purchase orders. We wanted to rationalise it and therefore we wanted in effect to enter a consolidated new contract with Bull. They were saying they were doing lots of stuff which they had never contracted to do, so we were in a normal negotiation which we were trying to do quickly.

  199. You have agreed this statement.
  (Mr Gieve) Absolutely.

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