Select Committee on Public Accounts Thirty-Second Report



28. The Home Office's contract with Integris to install the computer network, develop CRAMS, and provide a managed service, was drawn up in the form of an enabling agreement. The initial agreement ran for seven years until the end of December 2001. The agreement specified in broad terms the service to be provided and made provision for particular equipment, and more detailed service requirements, to be specified by the Home Office via purchase orders as and when required.[25]

29. The procurement of the NPSISS enabling agreement did not comply fully with European public procurement requirements. As a result, legal advice received by the Home Office in 1999 suggested that any new purchase orders raised under the enabling agreement would be unlawful.[26] This situation had held back work, for example, on the provision of access to the Internet and links with police computer systems. The Home Office confirmed that the procurement for the new Phase 1 contract had been conducted properly in line with EU regulations. [27]

30. The NPSISS enabling agreement was largely open ended, with additional expenditure commitments being made by the Home Office and probation services as and when required. In the Home Office's view, elements of the agreement were cost plus, but other parts transferred risk to the supplier as a fixed price was agreed for certain products. On the contract as a whole, Integris estimated that it had achieved a rate of return amounting to just over break-even, although on the implementation of CRAMS and the Helpdesk service it had lost money. Integris had expected a positive return overall.[28]

31. At times during implementation, relations between the Home Office and Integris had been strained. In May 1997, the Home Office had issued Integris with a formal warning that unless the acceptability of CRAMS improved markedly the whole programme, and hence Integris' contract, could be called into question. Integris had objected that it had not received specifications for the changes required. It had worked to improve the user interface of CRAMS, although considering that it was not contractually obliged to do so. However, Integris accepted that it had been tainted by the failure of this application.[29]

32. In 2000 the Home Office simplified its contractual relations with Integris by entering into a new consolidated purchase order, at an annual cost of £5.4 million, for central support and maintenance services. Prior to consolidation, the Home Office had relied on a total of 69 purchase orders, some of which were overlapping and unnecessary. The Comptroller and Auditor General's Report concluded, however, that the consolidated purchase order, which did not fully specify the desired outputs and outcomes, left value for money at risk.[30] Negotiations for the new consolidated order had been completed under severe time pressures because Integris had threatened to withdraw resources from support functions. The Home Office had therefore not been in a strong position when negotiating the new consolidated purchase order.[31]

33. The Home Office spent around £15.5 million on remedial work in 1998 and 1999 to ensure that the NPSISS hardware and software were Year 2000 compliant, and to upgrade the NPSISS infrastructure.[32] Integris were not aware initially that the systems it was supplying were not Year 2000 compliant. Once Year 2000 issues came to light, Integris had carried out a study at its own cost to advise the Home Office on the way forward. At the same time, it sought warranties from hardware and software suppliers about their Year 2000 performance. However, in the absence of those warranties, Integris had continued to supply non-Year 2000 compliant information technology systems to probation services. Integris agreed that to some extent it had failed to meet industry best practice.[33] Legal advice received at the time suggested the Home Office had no clear right to require Integris to carry out the Year 2000 compliance work at no cost, but that the supplier would be liable for any breach of contractual service levels and for any failure to comply with best industry practice. The Home Office had used the opportunity to upgrade the system and investing in Year 2000 compliance had therefore been worthwhile in its view.[34]

34. The Home Office acknowledged that there had been failings in its management of the NPSISS agreement, and that it had under-invested in contract management. The Home Office had taken action to put right mistakes made in the past, and the National Probation Service had since enhanced its procurement management capability. The new Phase 1 contract with Integris, in their view, had been awarded on value for money grounds. The Home Office regarded Integris as a successful company and, it hoped, a collaborative partner.[35]


35. Flaws in the original enabling agreement with Integris held back urgent developments needed by local probation services. Future contracts should receive proper legal scrutiny prior to being finalised and, if problems occur, solutions should be identified which minimise the impact on probation services.

36. For contracts that may run for some years, it may not be possible for all aspects of all services to be specified in detail at the time the contract is signed. Any significant new developments during the life of the contract should be based on a clear specification of the required outputs from the contractor, with costs being controlled tightly.

37. For a time, probation services received non-Year 2000 compliant equipment even though this fell short of best industry practice. Any failure to receive services or equipment in line with best industry practice should be vigorously pursued and suitable reparation received.

38. The Home Office underestimated the effort required to properly manage the contract with Integris. The National Probation Service should specify clearly the roles and responsibilities of its project management team, users and its contractor, establishing a shared understanding of key terms and deadlines.

25   C&AG's Report, paras 1, 13, 1.14 Back

26   C&AG's Report, paras 15, 2.52 Back

27   Q12; Ev 1 Back

28   C&AG's Report, para 3.5; Qs 74-77, 173-183 Back

29   C&AG's Report, para 2.31; Qs 5, 69, 141-142 Back

30   C&AG's Report, paras 14, 2.49-2.51, 3.12 Back

31   C&AG's Report, paras 11, 3.11; Qs 197-204 Back

32   C&AG's Report, paras 3.13-3.16 Back

33   Qs 48, 78-83 Back

34   C&AG's Report, para 3.15; Qs 90-92 Back

35   Qs 8,18, 95, 158; Ev 1 Back

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