Examination of Witnesses (Questions 80-99)
LORD BACH,
MR JOHNSTON
MCNEILL,
MR IAN
HEWETT AND
MR JOHN
O'GORMAN
11 JANUARY 2006
Q80 David Taylor: You have not got
any real leverage, have you? You are stuck with Accenture. They
were engaged 36 months ago and we are now one month away from
a very crucial stage of the project. 97% of that period has elapsed
and here we are still unable to say with conviction, commitment
and certainty that accurate payments will be made in the month
of February, or will start to be made, to English farmers.
Mr McNeill: To be perfectly fair
to Accenture, we were talking of the commercial aspects and the
cost of that. Accenture have delivered the functionality that
we needed, those various releases they have delivered. We have
had our fair share of problems with them, we have had testing
issues, performance issues, stability issues, the system being
able to stay up for 15 hours a day for us to work. We have had
those and one has those with system developments to a greater
or lesser extent no matter what you do. The fact of the matter
is they have delivered that and I can assure you from any discussion
I have had with Accenture, or indeed ministers have had, they
have repeatedly reaffirmed their commitment to make this work.
They want to have a longer term future of working in government.
Sir Brian Bender in particular has made it clear to Accenture
on a number of occasions that government is watching Accenture
on this piece of work. It is a very high profile, high risk piece
of work. This is mission critical to Defra and he has made it
clear on a number of occasions that he expected it to be delivered
and Accenture have fully signed up to that and delivered what
we asked. Whether we got it at the best price or not I would accept
is a debatable point.
Q81 David Taylor: In the upper reaches
of government and, indeed, in the upper reaches of the Civil Service
there are large numbers of individuals who are particularly susceptible
to the blandishments of the snake oil salesmen who can be found
in the computer package industry and that is absolute fact. The
evidence is all around us in government, local government, the
NHS and elsewhere. Why do you think that the RPA have been able
to break that sorry sequence of failure that we have seen in public
sector large systems? It is not a fixed price that Accenture is
working to, is it?
Mr McNeill: Initially it was a
fixed price arrangement but, of course, once one moves off that
original arrangement then one is open to negotiation for what
does it mean to them and the extended time, et cetera.
Q82 David Taylor: They are making
money hand over fist on those changes, are they not?
Mr McNeill: On the contrary, I
would say Accenture have found this contract very challenging.
Certainly we have open book accounting with Accenture. We are
not of the view that Accenture are taking advantage of us in terms
of super normal profits or whatever. They have to make a profit,
they make that quite clear. We do have open book accounting and
forensic accountants available, whatever we require, to assess
what level of profit they are making on the contract.
Q83 Mr Drew: Have there been any
claw backs at all in terms of monies back from Accenture or payments
not made?
Mr McNeill: Yes, there have been.
As I say, we have a particularly robust contract management team
who manage the commercials of this and we have had a situation
where either because of failure to deliver what we expected or,
indeed, particular delays on their part that has been the subject
of negotiation as to recompense and what that means in terms of
settling any other claims they might have to continue with the
work. We have also recently negotiated with them where we have
taken the view that we do not wish to extend the programme in
regard to a number of small trader schemes that we have which
were part of the original vision. We have taken the view that
when we looked at the cost of that we would rather not continue
with that work and have negotiated a discount and settlement for
that with Accenture.
Q84 Mr Drew: So is the contract as
was still in existence with the modifications? When does that
contract come to an end?
Mr McNeill: We would hope to finish
the Change Programme and the programme office shut down probably
by May this year. The contract with Accenture continues for some
years with the maintenance aspect. Having built the system, they
are also contractually tied into us to maintain the system for,
I believe it is, seven years.
Mr Hewett: Delivery is until the
current year and support is until 2009.
Mr McNeill: So when we placed
the contract it was initially seven years.
Q85 Chairman: Minister, for the record,
at the outset of this project what was its cost and what is the
current estimate?
Lord Bach: I have these figures,
Chairman. The contract for developing the Change Programme system,
which was the one awarded to Accenture, the original contract
cost of acquisition was estimated at £34.1 million broken
up as follows: 18.1 million revenue and 16 million capital. The
forecast cost against that original is now expected to be 54.3
million broken down between revenue of 37.4 million and capital
of 16.9 million.
Q86 Chairman: The revenue costs have
doubled?
Lord Bach: Virtually. 18.1 million
to 37.4 million.
Q87 Chairman: Is that a reflection
of the combination of growing complexity and growing volume?
Lord Bach: I suspect it is. I
suspect that explains it to some extent, and also, harking back
to Mr McNeill's recent replies, it is to do with Accenture being
asked to do other things than they were originally asked to do
in the original contract which meant that the fixed price element
of the contract altered. Mr McNeill can answer that better than
me.
Mr McNeill: It is largely to do
with the fact that Accenture were engaged in developing systems
for the legacy CAP schemes which were done away with, the CAP
reform, so a substantial amount of nugatory work had already been
done in designing the schemes and specifying them, preparing for
build. That was nugatory. Obviously then there was the whole issue
of designing, building and testing the new scheme. There was also
the issue of the extended time frame. They would have hoped to
have delivered the solutions for the legacy schemes much earlier
had we not had to produce the new Single Payment Scheme.
Mr Hewett: Can I just embellish
that slightly? The original contract was to deliver four prime
releases over a period up to and including 2004. Because of the
implementation of the CAP and the introduction of the Single Payment
Scheme we had to substantially modify the scope of the various
releases and, indeed, change some of them. One of them became
a prototype rather than a live delivery. Those deliveries will
run on until 2006. As Mr McNeill has already explained, we have
had to change quite considerably the approach and quite a lot
of the initial work will not be developed into final solutions
because those schemes are no longer around.
Q88 Lynne Jones: In your submission
you mention a significant "de-scope" of the required
functionality. I am not sure what that means. Does it mean that
you are doing fewer things, that you have had to go to the absolute
essential and you are doing fewer of the fringe or icing on the
cake type areas? What is the long-term impact of that? In view
of the additional costs that you have just identified of the IT
scheme, are you still on target to make your 39.9 million per
annum savings as a result of the Change Programme?
Mr McNeill: I mentioned earlier,
Chairman, that in order to reduce the risk to delivery of SPS
for this year we had to decide not to proceed with the delivery
of certain things, and a particular question was asked earlier
about character recognition which is where forms come in and the
information is literally scanned into the computers as opposed
to what we have had to do this year where we have had hundreds
of people double-keying high volume data capture, punching the
information on keyboards into the system. That would produce a
substantial saving in terms of the number of staff required and
the input. As a consequence, to improve our chances of successful
delivery of the 2005 scheme year we had to decide to defer some
of that work to the next year. The consequence for the 2005 year,
going back to the Department's support when that was discussed,
meant we have had to have more staff than we originally planned
and as a consequence there was more cost. Likewise, next year
we would hope to have that piece of functionality, that piece
of kit delivered by Accenture, so that we can use that next year
and deliver the benefits that we had planned to do at an earlier
stage.
Q89 Lynne Jones: So the answer to
the question about savings is yes?
Mr McNeill: The answer is that
savings are deferred because we did not deliver the system that
would enable us to produce the savings.
Q90 Lynne Jones: Deferred to when?
Mr McNeill: Starting in 2006/07.
Q91 Lynne Jones: It says from April
2007 anyway.
Mr McNeill: What we will be doing
is installing that equipment and we will have the full year value
in the 2007-08 financial year.
Q92 David Taylor: I think we will
move on to staffing, we could spend hours on the IT side and there
is not the time to do that, Chairman. Is it the case, Lord Bach,
that the original workforce within the RPA totalled some 3,500
of whom around 1,600 will lose their jobs during the Change Programme?
Those are the figures that we are working to, is that correct?
Lord Bach: I am sorry; I am not
in a position to answer that. Mr McNeill, who runs the organisation
itself, will be able to answer that.
Q93 David Taylor: Mr McNeill, do
those figures seem recognisable, that almost 50% of the original
workforce of the RPA is due to lose their jobs by the end of this
year? That was the original plan between 2001 and 2006, was it
not?
Mr McNeill: Yes, that was part
of the business case, the initial projection. I have the exact
figures if I can confirm them. Yes, approximately in that area.
The intention was that the investment would produce that level
of savings, yes.
Q94 David Taylor: It is not likely
to be a factor, is it, that is going to boost staff morale or
their attitude to their employers, although I did not detect any
serious problems in some of the people I talked to? That is a
backdrop which is not a very encouraging one for the Department
overall, is it?
Mr McNeill: Chairman, I made a
point of personally spending quite a lot of time around the various
sites within the RPA, in particular those offices that are closing,
the latest being Nottingham and Crewe. I have been sorely impressed
with the commitment that staff have shown up until, to be frank,
the last day of work before they have departed the organisation.
Of course, these staff, if they have long service with the Civil
Service, have received redundancy packages. Many have gone on
to second careers and, indeed, have looked upon this as an opportunity
to do something different as a result of receiving that funding.
In actual fact, as I say, I was very impressed with the commitment
that continued to be demonstrated by those staff.
Q95 David Taylor: You have already
referred to the amount of pressure of working around the clock
seven days a week for a considerable amount of time, and I understand
that, but the trade union, PCS, told us both in written submission
and in conversation that in their view a bullying culture exists
within the organisation which pressurises staff to work extraordinarily
long hours. How do you respond to that?
Mr McNeill: I can only say that
we would not accept bullying within the RPA, as indeed it is unacceptable
within the wider Civil Service. There is no doubt that all of
the staff within the RPA have shown tremendous commitment. They
are working very long hours, and have done for many months now.
We had staff in the organisation working on Christmas Day who
volunteered to do that work. The fact of the matter is that there
are times, I have no doubt, when staff are under pressure and
feel that because of the combination of long hours and the pressure
to deliver, but I can assure you we will not accept bullying within
the organisation.
Mr Hewett: A lot of those staff
actually work for me. We are very clear that whilst we are looking
to make the best use and most optimal use of the IT system, recognising
that there need to be modifications overnight, we will try and
utilise that system from 6am to 9pm. We have early shifts, late
shifts, double-day shifts, but we recognise that staff require
some time out to recuperate, to recover, before they move on.
It was a level of their commitment that people, particularly at
the Reading office, actually came to me and said, "We want
to work Christmas Day, Boxing Day" and so on, "to see
if we can make better use of it over that period".
Q96 David Taylor: Why would PCS describe
the atmosphere and ethos in that way, with that phrase, "bullying
culture"?
Mr Hewett: We have daily conferences,
as you can imagine, to monitor progress. This is a completely
different culture in terms of trying to deliver the Single Payment
Scheme than its predecessors. I used to manage one of our offices
in Exeter. I had a geographic locus and I was responsible for
the farm subsidy claims in Devon, Cornwall and the Isles of Scilly.
Now the Exeter office deals with a proportion of claims from the
whole country and there is not that discretion. We have calls
involving the managers at each site and we discuss progress against
the various competing priorities that we are working on at the
moment. We are very keen to make sure that we stick to the productivity
levels that we require to ensure that we can determine entitlement.
Q97 David Taylor: So you deny all
knowledge of any such culture existing?
Mr Hewett: We are challenging
in terms of making sure that we stick to what we are intending
to achieve in terms of productivity.
Mr McNeill: If I could just come
in there, Chairman. The relationship the organisation has with
the trade union is quite excellent. We have worked very hard.
Bar the issue of pay and industrial action, which is the one issue
on which I am afraid we just cannot agree. Bar that, which I know
is important, we have trade union representatives at our executive
board sitting with directors, fully involved in discussions on
the programme. I can say with my hand on my heart I have no recollection
of the issue of bullying being raised at those meetings. As I
recollect, there have been one or two instances when concern has
been expressed to me personally and I recollect we addressed those,
but I am not aware that they expressed formally any particular
concern about the level of bullying in the organisation.
Q98 David Taylor: The assertion that
there has been something over 1,500 casual, fixed term and agency
staff, the bulk of which are agency workers "paid the minimum
wage to work unsociable hours", is an incorrect assertion,
is it?
Mr McNeill: That is a separate
issue, Chairman. There is no doubt that the union is particularly
unhappy about the use of agency staff. Indeed, it is part of the
PCS's national campaign, having sat in their head office just
before Christmas where they explained to me that they were very
unhappy with government in general using agency staff and where
the agencies, in their view, are paying minimum wage and these
staff are sitting beside permanent civil servants who are receiving
much better in the way of packages and pension and support. As
they made clear, that is part of a national campaign that they
are putting in place to bring about changes in that approach.
I accept they have concerns about that. Our particular concern
in regard to business is our site at Workington where until recently
we had a significant number of agency staff but, following some
discussions with the union, we have moved to employing another
100 new permanent staff directly.
Q99 David Taylor: To an extent you
have accepted the summarised description of the numbers of people
who are churning through this organisation, the numbers who are
feeling vulnerable to the loss of their jobs or, indeed, who have
already gone. This is not exactly the best type of environment
in which to design, develop and implement a hugely important computer
system, is it? Is that the reason why the one thing I noticed
above all others at Reading was the paucity of experienced IT
and other staff at the very sharp end where Accenture were designing
and building a system which they themselves are going to support
on your behalf into the medium term? I noticed that RPA staff
and the predecessor organisation for which they might have worked
were almost invisible at that level and that really did disappoint
and surprise me.
Mr McNeill: I was unaware that
you had that concern following your visit. We do have a significant
number of agency staff. We mentioned earlier the business case,
which we are still obliged to work towards achieving, of reducing
the numbers and we have been looking to agency staff to help us
complete the work between now and when we get our full systems
in place so that we can more easily reduce as opposed to engage
in another significant round of redundancy. That is why we have
gone down the road of agency staff. Having met a large number
of agency staff in the organisation, I have to say they are very
committed, they are very pleased to have the job, albeit at a
lesser wage or lesser package than, indeed, some of the people
they are sitting beside, the permanent civil servants. To answer
your question about the IT, there is no doubt that a problem that
we face, which I suggest is a problem across government, is that
it is extremely difficult to get IT people to come and work at
Civil Service wages and assist us through this and, indeed, retain
our own IT staff at Civil Service pay bands when they can literally
make a phone call and move to an IT company, a consultancy, whatever.
This is a growing concern and pressure for us and we have to look
at how we can do our best to keep the staff on board. I accept
your point that we have had to rely on expertise from outside
largely because at the pay scales which we can offer it is extremely
difficult to recruit or, indeed, retain staff.
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