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Defence Information Infrastructure

Mr. Connarty: To ask the Secretary of State for Defence (1) what in-house options have been considered for the Defence Information Infrastructure project; and whether a public sector comparator is being explored as part of his Department's approach to IT infrastructures; [183763]

(2) what intelligent customer elements are being explored as part of the possible privatisation of his Department's IT infrastructure; [183764]

(3) what consultation has taken place with the recognised trade unions regarding the privatisation of IT functions in his Department; and what documents have been passed to the trade unions as part of or as a result of this consultation process; [183768]

(4) if he will place in the Library information on the previous contract record of bidders from the Defence Information Infrastructure project; and what account is being taken of these records during the current bidding process. [183769]

Mr. Ingram: The Defence Information Infrastructure (DII) programme is not a privatisation of IT infrastructure. Under the terms of the Public Private Partnership arrangement, the MOD will continue to own the infrastructure but the delivery of the service will be the responsibility of the chosen commercial Delivery Partner.

A significant proportion of the Department's IT provision has been outsourced in recent years as part of wider initiatives to make greater use of the private sector in the provision of public services. The Department's policy is that when services already delivered under outsourcing arrangements are re-competed or rationalised, in-house bids should not normally be invited because the associated requirement for substantial reinvestment in management, training and support systems makes it unlikely that an in-house option would represent value for money. Where no in-house bid is invited, an estimate of the costs of a public sector option would normally be made, in order to provide a value for money benchmark.

In the case of the DII project, the Public Sector Comparator (PSC) is currently being developed with the Trades Unions and reflects the "fallback' option that the MOD would pursue if the commercial bids for DII failed. The PSC assumes the continuation of the current mix of in-house and commercial arrangements including some internal efficiencies and a capability uplift. It will be used within the DII Future Main Gate Business Case as a Value for Money comparator against which to assess the commercial bids. The Trades Unions have been briefed on the current scope of the first increment of DII Future and the related PSC. They have been given the opportunity to comment on the robustness of the PSC and associated risks by 30 July 2004. They have also been invited to submit alternative proposals in the context of the PSC.
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It has also been agreed that the Trades Unions will be involved in the development of the Intelligent Customer Function (ICF) as it progresses. Work on the definition of the Intelligent Customer Function for DII is being taken forward under three main headings:

The elements of the ICF which are currently being explored include:

Formal meetings between MOD staff and the Council of Civil Service Unions (CCSU) have been taking place since the beginning of 2003. We have provided the Trades Unions with access to the same information that has been provided to the two remaining bidders for DII Future. Some examples of the information provided include:

Formal meetings will continue between officials and the Trades Unions according to an agreed timetable of engagement. This includes a workshop held with them on 2 July 2004 when the current scope of Increment 1 and the PSC was briefed to them.

Information relating to the track record of the two remaining bidders for the DII contract will not be placed in the Library of the House. This information is commercially sensitive and I am withholding it under Exemption 13 of the Code of Practice on Access to Government Information. However, track record is one of a number of factors included in the evaluation of bids. The Department's Supplier Relations Group has conducted research of bidding consortium members' performance both in Defence and across Government. In addition, the project has taken up references, by telephone and through visits, from existing customers of the key companies in the bidding consortia. Further reference visits will be conducted during the final phase of the procurement, targeting customers in receipt of a similar volume and range of services.
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John McDonnell: To ask the Secretary of State for Defence (1) if he will place in the Library a copy of the full risk assessment setting out control measures proposed by the Government for the possible privatisation of IT infrastructure; [183082]

(2) how many employees fall within the scope of the Defence Information Infrastructure project, broken down by (a) civil servants and (b) staff provided by contractor support. [183083]

Mr. Ingram [holding answer 14 July 2004]: The Defence Information Infrastructure (DII) programme Integrated Project Team (IPT) is currently in negotiation with two potential commercial Delivery Partners (DP) for the provision of Information Systems services for Ministry of Defence.

The DII programme is not a privatisation of IT infrastructure. Under the terms of the proposed Public Private Partnership arrangement, MOD will continue to own the infrastructure but the delivery of support services will be the responsibility of the commercial Delivery Partner.

Risk management is a key feature of the business of any IPT and its associated Senior Responsible Owner (SRO). DII programme risks are managed on an on-going basis through a risk register; each risk has its own mitigation plan. The IPT also manages a joint risk register with each of the two bidders for the DII contract; each is therefore specific to the particular bidder's proposed solution. These registers are, by their nature, commercially sensitive, and cannot therefore be placed in the Library of the House without the on-going competition being prejudiced.

As part of the concept phase of the Smart Procurement process, the Initial Gate Business Case (IGBC) for the DII programme outlined the headline risks identified at that stage of the programme. The IGBC was approved in September 2002; the risks identified at that stage will be placed in the Library of the House. A copy of the DII Business Prospectus has already been placed in the Library. The Business Prospectus details why DII is necessary for MOD and how it will be procured.

The Main Gate Business Case, which is due to be presented to the Investment Approvals Board later this year will provide a current assessment of DII risks and their mitigation plans associated with the procurement. This Business Case will contain commercially sensitive information from the two bidders for the DII contract and therefore cannot be made publicly available.

Over the planned three main increments of the DII programme, it is estimated that up to 1,500 civilian staff fall within the full scope of the project, including both staff supporting current systems and those presently within the IPT. It has been necessary in some cases to supplement the skills of the civilian and military staff employed in the IPT by more specific expertise from the commercial sector.

There are currently 13 contractors occupying established civil service posts within the IPT.
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