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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1071-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Environment, FOOD AND RURAL AFFAIRS committee (THE RURAL PAYMENTS AGENCY SUB-committee)
THE RURAL PAYMENTS AGENCY
mONDAY 22 mAY 2006 MR SEAN SHINE, MR PETER HOLMES and MR ANDY NAISH Evidence heard in Public Questions 370 - 642
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee (The Rural Payments Agency Sub-Committee) on Monday 22 May 2006 Members present Mr Michael Jack, in the Chair Mr David Drew Lynne Jones Sir Peter Soulsby David Taylor Mr Roger Williams ________________ Memorandum submitted by Accenture Examination of Witnesses Witnesses: Mr Sean Shine, Managing Director, UK & Ireland - Government, Mr Peter Holmes, Managing Director, Atlantic & Europe - Government and Mr Andy Naish, Senior Executive, UK - Government, gave evidence. Q370 Chairman: Good afternoon ladies and gentlemen. I am sorry you are so far away but unfortunately this was the only room that we could get. We are delighted to see such a large turnout. Can I formally for the record welcome Sean Shine, the Managing Director of the United Kingdom and Ireland of Accenture, Mr Peter Holmes, Managing Director, Atlantic and Europe and Mr Andy Naish, Senior Executive, UK. Gentlemen you are very welcome. Last week we had a very interesting session where we had the former permanent secretary, Sir Brian Bender, and Helen Ghosh, the current permanent secretary, accompanied by Mr Andy Lebrecht. They answered a lot of very interesting questions from the Committee about some of the issues underlying the problems that the Rural Payment Agency has faced. I would be unsurprised to learn if Accenture had not got a very detailed record of those exchanges and indeed have read the transcript so that you will be very well equipped to know what the line of inquiry is that the Committee is interested in. To start off I would say that right at the end of the session last week when I was still trying to get to grips with what had actually gone wrong, where was the nub of the problem; I put that to Helen Ghosh. I asked her if she could help me and she said (I quote from her remarks): "In my opening remarks I came back to the point that there is not, in my view - but I shall be interested to see the outcome of the Committee's deliberations - a single person, a single set of circumstances, one single decision which was taken which led us to where we are today." Do you agree? Mr Holmes: Yes we do agree with that. Q371 Chairman: Could you explain why you do agree because usually when something goes wrong you can unpick a system such as the RPA and at least, if not to one thing, you can point to a collection of things which enable you to identify what went wrong and then answer the question, why did it go wrong? Can you help us? Mr Holmes: Yes, certainly. It is a very complex situation implementing IT systems to support a change programme. It is a complex thing to do. On top of that we had, as discussed at previous committees, a very radical change in policy. The timescales were onerous so there were a number of factors, when put together, which meant that this was an extremely challenging project for us. Q372 Chairman: That is a description, not an answer to the question. You are a professional company, amongst the world's best known in the field. You are used to dealing with complexity, challenge and radical change. That is why you were employed in the first instance by the RPA as its IT partner as part of its change programme. That is why you went through this complex bidding process, including convincing the RPA of your credentials otherwise you would not have won the contract. The question I asked was whether you could help us, if it was not one event, thing or person, to put our finger on or point us at least down the road we should be travelling, to find out what actually went wrong. Bluntly your system is a part of this and you are being fingered and I am sure you would want to defend yourself. Would you like to try to answer my question, could you help us to try and get a list of the things that did go wrong that account for why payments to farmers have been so delayed? Mr Holmes: Yes. Our IT system, the system we were contracted to deliver, is part of a jigsaw of many pieces that go to ensuring that farmers get paid. We delivered against the IT system we were contracted to deliver against the timelines and our system has been operational for many months now. Our IT system underpins the change programme but we do not have responsibility for the overall change programme. Q373 Chairman: Mr Holmes, that still has not actually answered my question. You told me effectively you did your job. We will come on to look at some of the detail of that in a moment, but can I ask you for the third time if you can identify for me the list of the things which, from your perspective, having delivered on your bit, when you are looking out you are fully involved and engaged in this process, all of your experts are embedded in the RPA, you are by definition having to talk to all the other players to integrate what they are doing to what you are doing, you must have got an idea why the wing fell off. Let me ask the question again, what went wrong? Help us with our list. Mr Holmes: It is very difficult from our perspective to do that because we were not involved in all of the activities in the programme. We were not involved with discussions around policy; we did not have an oversight of the change programme itself. We were not involved with some of the work around changing the business processes. Our role was a role where we had a fixed price contract to develop an IT system against an agreed specification. The answer to your question, from where we sat in the overall scheme of things, is that it is impossible for us to have a perspective on that and inform proceedings. Q374 Chairman: Let us just be very clear about this. You have provided, if you like, the engine room - the delivery system - and you have no idea, sitting in what sounds like a hermetically sealed little box, as to what is going on in the outside world around this system that you have created, and suddenly you wake up one day to find that outside the box it is not working. I find that almost unbelievable. You have had your staff working with the RPA, and anybody who understands anything about systems development must, by definition (if you are going to plug your little box, or big box, into all the other things that are going on) understand the total picture to know where you plug in. Therefore if bits of the other picture are not doing what they are supposed to be doing you, by definition, are going to have some difficulties, are you not? Mr Holmes: Where our systems plug into other systems - in total there are five technology IT systems which are involved in paying farmers - we need to understand the detailed specification and make sure that those systems interface tightly and correctly with each other. On things like the re-engineering of business processes, the management of how the forms were being handled, we were not involved in those activities. It was never part of our contract and we were not involved in those activities. Q375 Chairman: You were not involved in things that you were subsequently going to have to deal with. Is that right? Other people brought information systems requirements to your front door and then you have had to take them over in your system and do something with them. Mr Holmes: Our contract was to develop a system that met a specification and to prove and demonstrate that that system had met that specification, which we did, and then to help with its implementation. Q376 Chairman: What I am struggling to understand is that Sir Brian Bender last week, when he came to see us, indicated that you were a very important power in the RPA's change programme and when you first got the specification for what you were bidding for you would have had to have a very clear understanding of the universe into which you were about to descend. You would, I presume, have been aware that in addition to Defra's change programme for the RPA there were a lot of policy unknowns going on - changes to the Common Agricultural Policy - which could well have an effect on what you were subsequently asked to do. Were you aware of those? Mr Holmes: Yes, we were aware of those. Q377 Chairman: Were you aware of them in some detail? Mr Holmes: No. Q378 Chairman: No? You were not aware of what the change programme was? Mr Holmes: Sorry, we were aware of the change programme; we were not aware of the detail of the policy changes. Q379 Chairman: Do you not think you ought to have been? Mr Holmes: We were not brought in as experts on agricultural policy or CAP reform. Q380 Chairman: Bearing in mind the RPA's job is to administer something like 38 of the old legacy schemes, in order to enable them to do that with the change you would have to have had some idea of what these various sorts of policy schemes or systems actually did. Presumably you understood that. Mr Holmes: Not prior to award of contract in detail. That was part of the initial phase of our contract, to understand the requirements. Q381 Chairman: So as part of the contract you did have to work to understand that detail. Mr Holmes: Of the existing schemes, yes. Q382 Chairman: You understood the existing schemes and I presume you subsequently had to understand the new schemes. Mr Holmes: Subsequently, yes. Q383 Chairman: So you understood the old; you understood the new and you understood the change programme. Mr Holmes: We understood the change programme at a level. Q384 Chairman: Could you say what you mean by "at a level"? What does that mean? Mr Holmes: We understood what the change programme was about, what its objectives were, how it was being implemented, but not in the detail of how the change programme would roll out and what impact it would have on existing processes. Q385 Chairman: Let me ask you one final question by way of introductory remarks. If, at any stage, in trying to deliver against the evolving contractual relationship between you and the RPA you saw a risk of reference to being able to deliver within a timescale which the RPA or ministers had set, do you feel duty bound to tell the RPA's management and others about a risk factor that would prevent them achieving a publicly stated objective? Mr Holmes: Yes. Chairman: Fine. Thank you very much indeed. Q386 David Taylor: Mr Holmes, which of today's triumvirate have been with Accenture throughout the whole process from 2003? Any of you or all of you? Mr Holmes: Just myself. Q387 David Taylor: Who has had the greatest opportunity or indeed the responsibility allocated to them for the day to day involvement with the emerging system? Would that be Mr Naish? Mr Holmes: Today it is Andy. Q388 David Taylor: When did Mr Naish join the company? Mr Naish: I joined the company in October 1987. Q389 David Taylor: You have been with Accenture through the whole period then. Mr Naish: Yes but I have not had responsibility for the ... Q390 David Taylor: I asked Mr Holmes which of the three of you have been with Accenture through the whole the thing. Mr Holmes: All three of us have been. Q391 David Taylor: Would you agree with the old maxim that success has many parents but failure is an orphan? Mr Holmes: Yes. Q392 David Taylor: Would you say that Accenture have done their best to distance themselves from the procreation of this department? Mr Holmes: No, I would not. We have said on record that we have delivered against the contract that was agreed. We have met the specification, we have delivered against the set of agreed dates and we are proud of what we have delivered, to be honest. Q393 David Taylor: In a sense this select committee inquiry is a paternity test on failure in relation to the SPS IT system. We have no idea yet what the conclusions will be but do you expect to come out largely unscathed from this process? Mr Holmes: We do not have expectations of the end of this process. Q394 David Taylor: You are bound to have some idea as to what might emerge, some scenario that would be acceptable to you. Mr Holmes: We do a lot of work with public sectors around the world. We accept that doing work in the pubic eye means that from time to time we find ourselves in these kinds of discussions or being subject to media interest and we accept that that is part and parcel of undertaking work in the public sector. Q395 David Taylor: Would you accept that your association with this project which has failed in the most public and spectacular way will not exactly and necessarily burnish your reputation when you are bidding for future public sector contracts. Mr Holmes: No, I would not accept that; we do not believe that. Q396 David Taylor: You do not believe that, so it does not matter. Mr Holmes: It does matter. Q397 David Taylor: You said in describing the scope of your 2003 contract the various things like the Land Register and Customer Register but you also referred to claims processing. Mr Holmes: Yes. Q398 David Taylor: Towards the end of our inquiry a week ago today it is that section of the whole project which in particular seems to have failed in an unexpected and unpredicted way; the patient had died even though every part of the operation had been successful. Is that how you read it? Mr Holmes: No. Q399 David Taylor: You have read what she said. Mr Holmes: Yes, and in fact I have discussed this since with Helen Ghosh and RPA. What she meant to say was that it was the broad business process system and not the IT system. Q400 David Taylor: Did she know she meant to say that? How do you know she meant to say that? Mr Holmes: We have spoken to her subsequent to last week. We had a meeting with her officials and our view is that the IT system did not fail. We are very emphatic about that and are happy to discuss that at length today. The IT system did not fail. The IT system has been stable, delivered since October of last year, and what she meant by the remarks about the system were the overall business systems not our particular IT system. Q401 David Taylor: She expressed penitence for this remarks, did she? Mr Holmes: She said she was happy for it to be said today that we had had that discussion with her. David Taylor: So she will be submitting a memorandum to confirm and correct what she said. We need that to be in hard evidence from here. Q402 Chairman: It might be helpful for us if you defined for us what you mean by an "IT system". Mr Naish: The system that we have built and operate for the RPA is known as RITA. RITA consists of a number of components. The first we delivered was the Rural Land Register which is a database of land in the UK and particularly a layer which describes permanent boundaries of fields called land parcels. The second part is the Customer Register which is used for capturing and processing amendments to customer details; their names, addresses, bank account details and so on. Those are systems which are important together because an important part of the process is linking together the land with the customers who have a claim on that land. The third part is a system for capturing claims as they come in, claim form information as it arrives. Then there are two parts which support the process for taking a claim from its initial submission through steps of validation and then into the entitlements and payments process. Q403 David Taylor: I know the terms are not necessarily absolute ones but to what extent is what you have described a group of off the shelf applications or ones that have been designed almost from the ground up to reflect RPA's own unique circumstances? Mr Naish: There are parts of particularly the Rural Land Register which are based on packages for processing geographic information in the way that is appropriate for the Land Register. We have also made use of some packages in some other parts of the system, but there has been a lot of customisation of those products in order to provide the system that the RPA required. Q404 David Taylor: Was the claims processing engine packaged-based? Mr Naish: Part of it yes. Q405 David Taylor: We went to Reading towards the end of last year and we have had evidence from PCS as well, but the task-based approach which was the characteristic of the system until the new chief executive took over was causing serious problems. Do you recognise that and can you put your finger very briefly on why that might have been? Mr Naish: I have heard that said, yes, and we are involved in some work with the RPA now looking at solutions for the future to change that. The task-based approach was part of what the original specification was in the way that we were asked to design a delivery of workload to RPA users. It was task by task rather than on a claims basis. Q406 Lynne Jones: Are you saying that it was the RPA that laid the task-based approach or did you have any discussions with them about whether that was the appropriate way of going about things? Mr Naish: It was part of the requirement specified by the RPA that the system should work that way. Q407 Lynne Jones: You just accept that that is what they require and you do not have any discussion about the most appropriate way of dealing with the requirements. Mr Naish: I am not aware of discussions that took place at that time and whether that was appropriate or not. Mr Shine: The task-based process actually pre-dated the RPA so that before the RPA was created when an initial review was done by PWC that at that time identified that the shift should be towards a task-based process so this was a core tenet of the procurement that was subsequently held which we then bid against. Q408 Lynne Jones: When Mark Addison came in the task-based approach was abandoned. Is that correct? Mr Naish: Yes, the intent at that time was to move towards clearing tasks but grouped together by claim. Q409 Lynne Jones: Do you think the department of Defra had any discussions with the RPA about the task-based approach? Mr Naish: I am not aware of any. Q410 Lynne Jones: It was entirely the RPA's responsibility. Mr Naish: I am not aware of what discussions might have taken place. Q411 Lynne Jones: Could you explain which parts of the IT system were not your responsibility? Mr Naish: In support of the overall business process there are a number of other system components. For example, the system that actually creates payment records that go into bank accounts is a separate system. There is a separate system that prints paperwork and letters that get sent out. There is a system that handles the internal calculation of partial payments and there is a system which delivers communications and messages out to the user base. Q412 Lynne Jones: You were aware of these systems and you were quite happy with their adequacy, were you, when you entered into this contract? Mr Naish: At the time we entered into the contract I do not think we had any direct involvement with them. It was obviously part of the early part of that to get to grips with what they did and what their responsibilities were. Q413 Lynne Jones: Are you aware of any problems with those systems subsequently? Mr Naish: No. Q414 David Taylor: What proportion of your European revenue is associated with public sector in its broadest sense? Mr Holmes: Fifteen to twenty per cent. Q415 David Taylor: What proportion of your profits is associated with public sector? Mr Holmes: Less than that. Q416 David Taylor: We shall be examining that one later on. You were procured - if I can use that expression - in January 2003, were you not? Mr Holmes: That is right. Q417 David Taylor: At that point Capricorn was not incorporated within the specification. Mr Holmes: That is correct. Q418 David Taylor: It was understood that Capricorn was not just on the horizon but it was galloping into the field almost. Surely the contract tendering process must have talked about possible indications of Capricorn. Were any of you present or had reports made to you about what was happening in that regard? Mr Holmes: Not in any detail. There were 68 schemes in operation at the time. Our contact was to design a system that would support the existing schemes with an expectation that at some point between the award of the contract and the implementation of the system Capricorn would come along. The general headline was that the reform would make the systems much simpler. The view was that it would actually make life far easier for us because the new scheme would be a single scheme, not many schemes, and it would be simpler. Q419 David Taylor: Was this an important project to you? Mr Holmes: Yes. Q420 David Taylor: Were any of the three of you directly involved in any part of the negotiations, specifications, discussions or are you telling us today what you have had reported to you? Mr Holmes: I was involved in those discussions. Q421 David Taylor: In a detailed way. Mr Holmes: Yes. Q422 David Taylor: You are the very last person to say that you do not recall very much happening in the way of CAP reform. Mr Holmes: I was involved in those discussions, yes. David Taylor: There was a set of assumptions made that the new systems would be simpler and assumptions were made about when decisions would be made, about complexity and over a period of time those assumptions either turned out to be correct or incorrect. Q423 Mr Drew: Just a very quick point, clearly you must have done all your calculations of how you were going to write this system based on the historic model of payments. Mr Holmes: Correct. Q424 Mr Drew: Did you look at all at any ways in which you could adapt that, you could enhance that, given that it was fairly widely known that it was looking to change its approach to payments? Mr Holmes: We were asked to develop a system based on the existing schemes and to provide a degree of flexibility to cope with subsequent on-going changes. Q425 Mr Drew: As IT specialists did you see that as a challenge? Did you see that as optimistic? Foolhardy? Here you have a system that is working; it is a system that needs to be improved, that is why you were brought in to organise the change. Then you start hearing noises whenever that basically the payment system is to be radically altered. How did you see that? If you go for an interview for a new job someone might say, "How do you think you might take this job on?" and that sort of discussion. Did that not take place at all? Mr Holmes: No, it is far from ideal. There is a lot of best practice out there which says in an ideal world you would not want to undertake that amount of change in the middle of such a large and complex programme. Q426 Lynne Jones: You said that you were told that the reforms would make life simpler for you. Lord Bach told us that the impact of reform would not be significant in the overall IT solution. That is what you thought the situation was. Mr Holmes: That is what we probably thought the situation was in the middle of 2003. Q427 Lynne Jones: At what point did you discover that the CAP reform was going to be significant and life was going to be more complicated and not simpler? Mr Holmes: That began to emerge for us I would guess in late 2003/early 2004. Q428 Lynne Jones: That quote I have just given from Lord Bach was given to us this year when he was still optimistic about payments being made. Why do you think the minister still thought that the impact of reform would not be significant in the overall IT solution? Mr Holmes: I am sorry, I cannot comment on that. Q429 Lynne Jones: You do not think that would have been a correct statement at that time. Mr Holmes: The impact of the reform in terms of what impact did it have on our work, it had a big impact on our work. It had a big impact on our work but what it would mean ultimately when the new system was implemented was that it would a different impact on different people at different points in time. Q430 Lynne Jones: When government was in discussion about what way the single payments would be made and whether it would be historic or area based or the dynamic hybrid that eventually took place, were you consulted in any way? Did you have any input into whether the system that they chose would have any significant impact for the computer system that was being developed? Mr Holmes: No. Q431 Lynne Jones: So you basically were just told at the end the process that this is what we are going to implement and we have to re-negotiate a contract on that basis. Mr Holmes: There had been some assumptions made during the second half of 2003; those assumptions subsequently turned out to be incorrect in terms of which scheme was opted for and the impact upon us. Q432 Lynne Jones: When you were actually told what the new method was going to be did you have any input then? Did you issue any warnings that the complexity of that might lead to problems in actually making payments in the timeframe necessary? Mr Holmes: Not at that stage. When we were first told to be honest we probably did not fully understand the complexities of the policy and its impact on the timescale. Q433 Lynne Jones: Whose fault was that? Was that your fault for not grasping the problems or was it the fault of the way in which you were told the information? Mr Holmes: As with all these things, the devil is in the detail and it is fine to make a policy announcement but there is an awful lot of detail that goes into it. Q434 Lynne Jones: Are you saying then that policies were decided without a proper understanding of the detail and the significance for the need to actually make payment to farmers? Mr Holmes: No, I am not saying that because we were not involved in ... Q435 Lynne Jones: It sounds like you are. Mr Holmes: We fully understood what was meant and in fact we are on record as saying in our early submission that it was late 2004 before all the details of the new policy and its implications on the system were fully defined. Q436 Chairman: Can we be absolutely clear here? During 2003 when the negotiations to finalise what became the new single payment scheme were going on with the Council of Ministers in Brussels, are you telling us straightforwardly that nobody from the RPA had any conversations with Accenture about the IT implications for what might emerge? Mr Holmes: I would not say categorically that nobody in the RPA had any conversations; we were not involved in any working sessions or detail sessions or understanding around the policy options. Q437 Chairman: Nobody from the RPA or Defra talked to you about the deliverability of an alternative scheme such as the one we have now. Mr Holmes: I am not aware that anybody did. Q438 Chairman: Who actually was in charge day to day with Accenture's dealings with the RPA? Who did Accenture report to in the RPA? Mr Holmes: Day to day in those days probably ... Q439 Chairman: Not probably; you must know the answer. I am trying to establish some facts as to what the organisational structure was within which you operated. In other words, who fed you information and who, in the opposite direction, did you feed information to? Mr Shine: Formerly, as you know, in our submission we talked about the governance arrangements. In effect we reported to the Programme Board. There was one official within RPA with whom we had more day to day contact with, that was Simon Vry. About your question around the policy changes, as we have said, the changes themselves did not become finalised in detail until towards the end of 2004 so as we went through 2004 we were aware of the policy to shift to a land-base was coming but the details had not yet been finalised. At the same time we were continuing to build other components of the system as we have outlined in our submission and we were delivering those. In a sense the view was to wait until the details are finalised before we begin to look at specifying that and then pick up the detail. As I think many of you will be well aware, there is no point too early in the process beginning to do detailed specification. Really we needed to wait for the specification to be done so that we could then begin to assess the impact of the system and then assess the way in which we would manage the components of the system in order to get delivery. Q440 David Taylor: One of the Committee last week put to Helen Ghosh the fact that you might have seen Defra as a dream customer and she retorted that they are pretty tough actually. How do you rate it? Mr Holmes: I would agree with that. We competed for the contract under public procurement. It was a highly competitive competition. We gave what we believed was a fair price based on our estimate of what it took to do the job. As part of that original tender mechanism there was a very clear mechanism in place to deal with change control and change request which is the mechanism that has been subsequently used. Q441 David Taylor: Is the customer always right in terms of the specification that they want? Mr Holmes: I guess rhetorically the answer to that is, no, they are not, but in this particular case we were brought in not as advisers, we were brought in as an IT developer to build the system to meet a fixed specification. Q442 David Taylor: So your devil in the detail comment a moment or two ago, was that Accenture code for "Not us, guv"? Mr Holmes: Sorry? Q443 David Taylor: Are you trying to wriggle out of responsibility by saying that the customer said what they wanted and you merely delivered what they asked for. Do you not have a moral and, more importantly, a professional obligation to nudge them away from things which you strongly feel are going to be costly or less likely to work? The task-based approach, if you like, would be an example. Mr Holmes: No, we have an obligation to deliver what we are contracted to deliver. We are not in that role in an advisory capacity; we are there very much with a fixed price to do a fixed piece of work, delivered to a certain level of performance against an agreed specification. Q444 David Taylor: How does Defra compare with your other public sector clients in terms of being "a tough customer!"? Mr Holmes: I would say that Defra compares very well in comparison to other public sector clients in terms of being a good customer. There have been good governance arrangements in place throughout the project. We had regular meetings with Sir Brian Bender and now Helen Ghosh. There has been good engagement at senior levels and regular contact and governance arrangements. Q445 David Taylor: Rapidly changing specifications or amendments that are added thereto can be a bit of a cash cow can they not for the Accentures of this world? Mr Holmes: No because, as I have already said, we had a contract which, whilst it was part of the competition process, had a defined mechanism to deal with change request. Defra have full visibility of the resources that are going into the change of request and understand the mechanism and overall price, so it is not a cash cow. Q446 David Taylor: In the bills of quantity and specifications for the construction of houses there is often a phrase something along the lines of "unforeseen works below ground level". Is there not that equivalent built into contracts of this kind therefore companies sometimes have a vested interest in a rather loose specification being part of the agreed contract. Mr Holmes: Certainly in this case there are no such phrases and it is very clear what the mechanism was to deal with the changes. RPA officials had full visibility of the resources that were being committed to those changes and to understand why they were happening. Q447 Mr Drew: Do you have any interest or partnerships with companies who are delivering agricultural payment systems in any other EU country? Mr Shine: I am not aware of any formal interest but I think, given the scale of Accenture, we would tend to work with most companies. If I take for example Oracle - the database provider and some of the software provider in the RPA - we would of course work with Oracle in multiple countries and multiple projects, but in terms of your specific question around interest in agriculture payment systems the answer is no. I am aware of one project we undertook in Ireland a number of years ago when we used some sub-contractors around spatial systems and other components of payments, but the specific answer to your question is no, not that I am aware of. Q448 Mr Drew: You will have had people from Accenture who will have gone to conferences discussing issues to do with IT capability and how that will help the reform of the CAP. Surely there must have been international conferences to look at this issue. In terms of the budget of the EU this is the biggest issue the EU has to grasp. Are you saying that you did or you did not have members of staff going along to look at those issues? Mr Shine: I am not aware of any specific people who have attended. I am happy to check for you. Q449 Mr Drew: Could you check that up? We would be intrigued to know whether you had any interchange of ideas with what was happening in other countries which would at least give you an idea here that things might be more problematic if the UK, leading the charge for a new system of agricultural payments, were to say, "Okay, Accenture, you fix it". Could you come back to us on that? Mr Holmes: Yes, I will. Q450 Sir Peter Soulsby: In your evidence you have described the governance arrangements for the RITA project and amongst that number is the RPA and indeed others within Defra. I think you told us a little while ago that you had, throughout the process, regular contact with the permanent secretaries. Is that the case? Mr Holmes: Yes. Q451 Sir Peter Soulsby: Not just with the Rural Payments Agency itself but also with the permanent secretaries. Mr Holmes: That is the case, yes. Q452 Sir Peter Soulsby: At what stage did you tell the permanent secretaries that all was not going well? Mr Holmes: We had regular meetings with the permanent secretary, Sir Brian Bender at the time, and we had discussions and we would provide a view based on the deliverability of our IT systems. We were not asked for a view and we never presented a view. In fact we would have actually said that we believe we could deliver our IT system on time - as we subsequently did - but would remind the permanent secretary that there was a whole pile of other activities which were outside the scope of our contract which we were not in a position to comment on deliverability. Q453 Sir Peter Soulsby: At no time did you tell the permanent secretaries that all was not going well with the projects. Mr Holmes: In the early stages we had some challenges with the project. Q454 Sir Peter Soulsby: You are not answering my question, with respect, Mr Holmes. Are you telling us that at no stage in this project did you tell the permanent secretaries that all was not going well with it? Mr Holmes: I do not believe that at any stage we did tell them, no. Q455 Sir Peter Soulsby: At no stage you told the permanent secretaries that all was not well with the project. Mr Shine: Part of our meetings with the permanent secretaries was to take the review of progress on what we were doing as one would expect given the scale of the IT project. At any point in time there would be a series of issues and risks that we were assessing, so every discussion would have focused on the issue of the moment or particular issues. As Peter has said, our focus was on delivering the IT component of the systems and therefore at times we would have discussed challenges and issues around delivering the IT components so therefore we would have raised issues, but we would not have raised other concerns because we were not directly involved in the other aspects that were involved in the bigger business process and indeed with the other IT system components. We were focusing on an area and quite frankly we had a lot to do a Peter has said. We had a series of issues there in getting on with the project and we were focusing on getting those under control and ensuring that we were delivering. Q456 Sir Peter Soulsby: So despite your intimate involvement with the delivery of this project, the permanent secretaries could reasonably believe what you were telling them, that it was going to be delivered successfully and on time. Is that right? Mr Shine: I think as my colleague has said, we were very clear to say that we could comment in detail on the IT components ... Q457 Chairman: When you had these meetings with the permanent secretaries, were you on your own? Was it Accenture to permanent secretary, full stop? Mr Holmes: The RPA officials were there. Q458 Chairman: The RPA officials were there and they, I presume, would have had the knowledge about the other bits that were not your responsibility. Mr Holmes: Yes. Q459 Chairman: So let us come back to the question that Sir Peter was asking. When the question was raised about how things were going, presumably at some of the meetings the permanent secretary would have asked the question, "Is everything going well? Is everything on time?" and you, from your standpoint, would have given a reassuring answer. Mr Holmes: As Shaun said earlier, the whole point of the meetings ... Q460 Chairman: Could you just answer the question instead of giving us what might have been. Is it yes or no? Mr Holmes: Could you repeat the question, please? Q461 Chairman: The question was, do you give a reassuring answer on each occasion when progress is being questioned by the respective permanent secretaries that you were going to be able to deliver your bit functioning and on time? Mr Holmes: Yes. Q462 Chairman: So all your answers were in the affirmative. Mr Holmes: Yes. Q463 Chairman: You would have heard at the same meetings if there had been any messages to the contrary. Mr Holmes: If there had been messages we would have heard them. Q464 Chairman: You heard nothing at any meeting that you were at with the permanent secretaries, with the RPA in attendance, that gave a contrary message that everything would be all right. Mr Holmes: That is right. Those meetings were essentially about managing the relationship between Accenture and RPA and Defra. Wider issues about impact on policy or other things were not discussed. Q465 Chairman: I am not talking about wider impact on policy or anything; we are talking about deliverability. We will come in detail to look at some of the mapping issues, but in your evidence you say at paragraph 31: "RITA has been fully stable since October 2005". That says that it is all ready to go; you are confident it will deliver what you said it would deliver. It does what it says on the outside of the tin, is that right? Mr Holmes: Yes. Q466 Chairman: Is that what it means? Mr Holmes: Yes. Q467 Chairman: You were sitting there with a smile on your face; Accenture can deliver. Mr Holmes: Yes. Q468 Chairman: Did you at that time have any misgivings whatsoever that the other parts that were complementary to what you could do were not going to deliver their part of the project? Mr Holmes: Misgivings is the wrong word. We were at pains - and continue to be at pains - to say that this is only part of a jigsaw. Q469 Chairman: You said that before, but let me come back and ask you the question again. Did you have a meeting with the permanent secretaries to discuss that statement that the system was stable at October 2005? Mr Holmes: I cannot honestly recall. Q470 Chairman: You cannot remember. Mr Shine: If I understand your question, did we have a meeting to discuss that specific point, the answer is no. It is worthwhile saying that the RPA measures system availability every month and has done since September 2004. It is a fact that the system has been available 98.9 per cent since that point. In our submission you have that specific question. The final release of the system that was required for making payments went live in October and so that is why we pointed to October in terms of the system being available from then and also the percentage availability. From October onwards the system has been available in excess of 98.7 per cent of the time. We did not have a specific meeting to discuss that; that is part of the normal monthly statistics that are measured in terms of system availability and, as we have said, the system was available as part of our commitments given early in the process. Q471 Chairman: Would you like to re-focus your mind; when was the last meeting around that autumn period in 2005 that you did have with the permanent secretary? Do you have any recollection of that? Mr Holmes: It would have been in September or October. Q472 Chairman: Would you like to tell us a little more about that meeting? Mr Holmes: To be honest I find it difficult to recall which meeting that was. Q473 Chairman: Mr Holmes, you have been giving us, with remarkable clarity and recall, the reassuring messages about what Accenture negotiated and could deliver, the nature of the contract, the nature of the arrangements, but when it comes to me asking you a specific question about these rather important meetings your company was having with the permanent secretary your collective memory has gone somewhat fuzzy. Could you try to de-fuzz that for us and give us an insight as to what was actually said? Mr Shine: My recollection is ... Q474 Chairman: Were you at this meeting? Mr Shine: Yes, I was. Q475 Chairman: Good. Mr Shine: My recollection of precise dates is not absolutely correct but we can check that. We had a regular series of meetings with the permanent secretary throughout the project. As you may have recognised, we did have some challenges in the system throughout the summer and particularly in August and to be quite frank the focus of the meeting in September was focussing around those technical issues. We have commented on some of the issues and some of the reasons why they arose which were primarily driven as a result of unexpected volume. My recollection is very clear of those meetings. We commented on the volume of land changes was in fact ten to eleven times the expected volume. The actual number of changes to land parcels turned out to be around ten or eleven times what was expected, so over a thousand per cent. The reason why my recollection of that meeting is so clear is because there was a core focus on addressing the issues that had been occurring during August and focusing on how those technical issues were going to be resolved. As we were pointed out in previous submissions we made a number of technical changes during that period in order to support the increased volume that was required at the time. It was a very detailed, technical discussion focusing on the issues that had arisen. Q476 Mr Williams: I think at the beginning Mr Holmes said that although you were not responsible for the change programme your systems were going to be responsible for delivering it. Can you just tell us what you understood by the change programme? Mr Holmes: Going back to the discussions with the RPA in 2002 during the procurement there were a lot of briefings about the change programme and it was about bringing the organisations together; it was about having a new approach which was essentially a task-based approach to dealing with the claims and driving efficiencies out through this process so that there would be an office rationalisation process and a general efficiency. It is about harnessing technology to improve the efficiency and effectiveness of the Rural Payments Agency. Q477 Mr Williams: So it is about reducing numbers of staff in the Rural Payments Agency. Mr Holmes: Yes. Q478 Mr Williams: Were you seen by the people working in the Rural Payments Agency as someone who was likely to result in the loss of their jobs? Mr Holmes: I do not believe so because the die had already been cast, the decision had already been made to go with the change programme. Consultants had been working with the RPA in defining how the change programme would be structured and the requirements so the die was cast by the time we were brought in. Q479 Mr Williams: Do you think that the change programme coming together with the added complexity of the contract that you had to deliver for the RPA, knowing those things were going to come together was the decision to go on and deliver them simultaneously a good decision? Mr Holmes: That is a pretty normal kind of situation where there is a major technology system or programme that is underpinning some business change programme. We would expect that to be something that is going to be able to be handled. Q480 Mr Williams: As part of your contract did you have an agreement to have embedded in your organisation experienced members of the RPA? Mr Naish: We worked very closely with the RPA in a number of places assisting development. They are not embedded in our organisation in that sense but we worked in joint teams on a few specification phases and also through testing phases. Q481 David Taylor: What is your idea of having RPA staff embedded in your organisation? Mr Naish: I am assuming you are thinking about having RPA staff and reporting to Accenture management. Q482 David Taylor: Possibly, or the other way round. What is your perception? Mr Naish: From the way the question was phrased I assumed the former. Q483 Mr Williams: Did you have either? Was either system operating then, either you having RPA people working in your organisation, reporting to you, giving you the benefit of their knowledge of how their systems have worked in the past and their way of working with their customers? Mr Naish: We have had RPA people working with us but not in a reporting line to Accenture. Q484 Mr Williams: Were the RPA willing to enter into that type of arrangement? Were you happy with the quality of staff from the RPA? Mr Naish: We have had good quality staff from the RPA working with us. Q485 Mr Williams: When you signed your contract in the beginning of 2003 it was against the background of the change programme without any knowledge of the complexity of the systems that you might have to deliver in the future. Mr Holmes: We had made our own assumptions and estimates about the complexity of the system based on supporting the existing scheme so there were a lot of opportunities to understand the existing schemes and the technology that supported them today and therefore the technology that would be needed for the future. Q486 Mr Williams: Then in May 2004 you updated your contract. We are told that even after that there were 60 changes in the scheme that you finally had to deliver programmes for. Is that true, or is it an under-estimate or an over-estimate? Mr Shine: I do not have the precise number but that scale of change sound reasonable. As we have outlined already the final parts of the detail for the CAP policy were only finalised in December 2004. That time frame generated a series of changes and, as we have said, the specific detail can have a significant impact on the system. I do not know the precise number but that does not sound unreasonable in terms of the amount of changes. The precise rules would be finalised based on policy direction. Q487 Mr Williams: Our line of inquiry has been criticised, that we are spending too much time on the decision to go in for the dynamic hybrid and the effect that that has had on the inability to deliver and the chaos that has resulted from that. Somebody has told us that the problem was fundamentally the inability of the Rural Land Register Mapping system to work efficiently and talked of a payment system both technically and in management terms. You are saying that that is not the case. Mr Shine: Absolutely. The Rural Land Register stores land parcels. There are currently over 2.5 million parcels of land stored on that system. It is a working system; it is there; it is storing all the land details. In terms of the period that you referred to, there was, as I have already commented, firstly an increase in the number of customers from around 80,000 up to around 120,000. Somewhere in the region of a 50 per cent increase in customers were registering for the first time directly as a result of some of the policy decisions to include all land types and all land owner types or land user types. That was the first part of the change. The second part was the entire policy around CAP reform was based on shifting to an end usage. The nature of the rules that were identified out of the directions that were taken meant that the customers were then focused on their land. There were a lot of land changes generated at a much higher volume. I have already spoken about the numbers; well over 100,000 land changes would have come in when the typical expectation prior to that for a typical year was around 9,000. So in excess of eleven times the number of changes plus 50 per cent increase in the number of customers. That drove the fact that there was some system availability and stability issues during the summer. As I have already referred to, they were addressed and dealt with and they are now working fully and have been for some time. They were the facts that happened during that period. Q488 Mr Williams: Was there any expectation either in your first contract or the amended contract in 2004 that the payments should be delivered at the beginning of the payment envelope? Mr Shine: When the broad policy for Capricorn began to pin down in the first number of months in 2004 we were able to take a broad view of what effort it would take in order to deliver the components of the system that would subsequently be required to establish entitlements and subsequently make payments. In about February of 2004 when we looked at that it appeared that at that point that the December date was not possible. At that time the target date was February. At about the end of the first quarter in 2004 our target date was to ensure that the payments were capable of being made in February 2006. As we have already said, the first payments were made in February 2006 in terms of delivering on our commitments. We did that and, as I have also said, our system components that were required for that were delivered as per schedule in October 2005. The final piece of the component that was required for establishing entitlements was done in October. The final piece that was required for doing all the task updates for those particular pieces was done in July 2005, all in advance of the February target date. As I have said, the February target date was achieved and the first payments were made then. Q489 Sir Peter Soulsby: You have told us how you and your company were intimately involved with and responsible for the systems that were at the heart of this project. Therefore obviously you needed to understand the totality of the project even though it was not within your direct responsibility. You have told us about the very close working relationship that you had with the permanent secretaries and with others involved there. You have also described the changes that were taking place, the increase in the number of customers involved which, being intimately involved, you were clearly very well aware of. You are saying that at no stage did you tell the permanent secretary that it was not going to deliver, does that therefore mean that you, like the permanent secretary, were completely taken by surprise when the chief executive of the Rural Payments Agency announced that it was not going to happen? Mr Shine: Yes. Q490 Sir Peter Soulsby: You were completely taken by surprise. Mr Shine: Yes. Q491 Sir Peter Soulsby: Do you not think that might be difficult for us to understand? Can you perhaps explain, if it was not your systems that did work, if it was not the related systems did not work (you have said they were all fine), how we might remain puzzled as to what it was that gummed-up? Mr Shine: Certainly as was discussed last week and it seemed to be discussed in some detail, making payments is the final stage in a whole series of steps that have to happen in terms of identifying the cost for establishing the entitlements, working through all the tasks in terms of any land changes, corrections need to be made, ending up finally with entitlements being established and subsequently payments being made. There are quite a lot of steps to be done. As we have said already, the system components that we were responsible for were in place. We have also said that we were not directly responsible for the other components but our understanding was that steps were being taken to ensure that those tasks were in hand. We were not monitoring on a daily basis or on a frequent basis; we did not have a direct view of that. As I have said, from what we could see the technical components were in place to get to that point. Q492 Sir Peter Soulsby: Despite your intimate involvement and responsibility for the heart of this project you were not involved and did not think it necessary for you to be involved in making sure that the project actually delivered. Is that really what you are saying? Mr Shine: No, that is not what we are saying. As I have said we were specifically responsible for delivering the system components and we continued to do that and continued to focus on that. That does require on-going work in terms of making changes and, as you are aware, in the recent past we were focusing on ensuring the system components were there to make partial payments. We continued to be very busy focusing on that aspect. As I have said, we have one part of the process that we focus and ensuring we deliver and as was discussed in great detail last week the points were made that it was the bigger business process, there were a lot of components that had to happen. The IT system was there and ready for it but other parts of the process did not work as fast as had been expected. Q493 Chairman: Let me pursue Peter's line of questions because I, too, am a bit stuck here. You said a few moments ago, Mr Shine, that the payments were made at the end of February. According to paragraph 24 of your evidence, "Release 3a2 - the core batch function required to establish entitlement and authorise payments went live on 3 October 2005". Was there another process after that for which you were not responsible which actually delivered the payments or was batch 3a2 the bit that delivered the payments? Mr Naish: The 3a2 release included the last pieces of functionality required to make payments. Q494 Chairman: Mr Naish, please can you speak in layman's terms. What does that mean, it included the last piece of functionality? Just tell me, did 3a2 contain the bit that enabled the cheque to reach the farmer? Mr Naish: The piece of the system that actually writes a cheque and sends it to the farmer is not part of the RITA system. That already existed. Q495 Chairman: The bit that writes the cheque or transmits the money is not yours. Mr Naish: Exactly. Q496 Chairman: Where do you stop and where does that bit start? Mr Naish: Perhaps I could describe the last stages of the process. Q497 Chairman: Yes, by all means. Mr Naish: The last steps of the process through to getting payment out to the farmers are that once a claim has been fully validated, ie all the validation tasks created against that claim have been cleared, our system - the RITA system - goes through a number of steps. First of all it calculates the entitlement value for that claim and it calculates the monetary value associated with that level of entitlement for the land associated with the claim. Q498 David Taylor: Is cheque production down stream of the claim processing system? Mr Naish: Yes, it is. Q499 David Taylor: Cheque production is not you, claims processing is. Is that what you are saying? Mr Naish: Yes. Q500 Chairman: You end at the bit that says, "This is how much you ought to receive". Mr Naish: I am not quite there yet. Once we have established the entitlement we calculate the value of that entitlement and then we create a record that indicates the payment to be made for that claim, the amount of money that will be paid for that claim. That system then creates a task for a user to perform to authorise that the payment be made. It delivers a task to a user on a screen which says, "Please authorise this set of payments together"; it creates a batch of payments that are authorised together. Once a user says, "Yes, this payment is authorised" that night our system will then create a file of payments which then go into the payment system itself which executes the physical payments. Q501 Chairman: Let us go upstream. You were saying that after validation you began the process of entitlement calculation. Mr Naish: Yes. Q502 Chairman: Which bit of validation were you responsible for, if any? Mr Naish: The system validates the claims in two steps. First of all a set of checks that the claim form itself is correctly completely, that the customer exists, that the details of the customer match the records. There is then a second stage of validation that checks that the land associated with the claim is matching the land as recorded in the Land Register to make sure the land is accurately being claimed. Our system validates those things and creates tasks for the users if there are any issues associated with that validation, any points of discrepancy. Q503 Chairman: Do you do anything before validation? Mr Naish: Before validation we do the claim capture process. Q504 Chairman: You do from claim capture to putting a message on a screen that says, "This is how much the farmer should receive". Your system is responsible for everything between those points of activity. Mr Naish: Yes. There is a wider business process where users are making use of our system to clear validation issues that have been raised. Q505 Chairman: I am trying to establish very clearly what you are responsible for. I want to move into this bit and try and unpack what, if anything, did not work properly. We are getting somewhere near to being able to try to disaggregate this system you have created to see what did not work. What we do know is that there were huge problems with the processes involved in validating claims. The Committee has heard evidence on this. You have said to us that all of the system worked. You told us the Rural Land Register went live in September 2004 so I presume that meant it worked and you are satisfied it worked. You told us the Customer Register went live in February 2005. The High Volume Data Capture went live in May 2005. The core validations functions for the single payment went live in a pilot in July 2005 and rolled out in August 2005. If all of that worked why were there such problems when it came to do it? I think that is what Sir Peter was after. You have told us you delivered what you were asked to do; you have produced a list for us of the things that you say worked, and yet when it came to claims validation the thing collapses. Why? Mr Naish: I do not recognise the collapsing. Q506 Chairman: We know there were a lot of problems with claim validations. Ministers told us in relation to the number of applications, when they finally pulled the plug on March payments, it was an indication that there were a lot of claims that had not been fully validated. Mr Naish: Yes. Q507 Chairman: So we know the validation process had some problems. Why? Mr Naish: The primary driver is one of volume. The amount of work, the number of tasks that were created by the system where there were discrepancies in land from claims that were on the Rural Land Register, was much higher than had been expected. Q508 Chairman: In paragraph 27 of your evidence you told us that the January 2003 contract would be capable of supporting 100,000 customers was increased to 150,000 customers as part of the revised May 2004 contract. That would suggest to me that you anticipated extra business going through the system. If there was more than 50-odd thousand customers going in by definition there must have been more bits of land going to be applied for. When did you first become aware of the volume issue? Who told you or did you just wake up one morning and think, "Oh, good heavens, we've got all these extra things to deal with. We thought we'd got it all bolted down, everything was working, everything was fantastic"? What volume of land were you working on? Mr Shine: If I could comment on that, I think I have covered some of it already. The expected volume of land changes, as I said, was predicted beforehand to be in the region of around 10,000 per year. Q509 David Taylor: Predicted by? Mr Shine: By RPA as part of our contract. As you would expect as part of our contract we will design a system for a particular volume so one of our pre-contract assumptions in terms of procurement time was take some view on what the volume would be. As I have already said, the actual volume of land changes turned out to be much higher than anyone had predicted, in excess of eleven times higher. Let me take a real life example in terms of understanding what might happen. There may be two farmers/land owners who both claim are on the same piece of land. It may be that the boundaries between them have moved somewhat; it may be that one of them has drawn the map incorrectly, but that one claimed for one plot of land on one side and one plot on another. If there is an overlap there is a task that says, "The application that you have made for a piece of land does hang together correctly because those two boundaries do not work". That issue will in turn generate some tasks which would therefore require somebody within RPA to look at that and in some cases they might contact the farmer directly or in other cases they might look back at the original and take a view from there. The volume of tasks is a function of the large number of land changes and indeed the shift of focus to land. The underlying focus of Capricorn was to shift away from production to that of land, therefore the number of land changes is much higher, therefore the number of tasks generated in terms of validating that particular claim was high. Q510 Chairman: On a point of detail, does that mean that the original estimate for the volume of land that you might have to be dealing with, was that predicated on the historic system? Mr Shine: That is correct. Q511 Sir Peter Soulsby: Can I follow up this question about the volume of claims and ask Mr Shine when they first became aware that the volume was not really what had originally been proposed and was in fact many times more? Mr Shine: Certainly from recollection that seemed to occur round the July/August 2005 time period. It was during that period because that is when the amount of work on the system increased, the amount of changes coming in, so it is in or around that time. Q512 Sir Peter Soulsby: You are telling us that one of the main contributors to the difficulties that subsequently emerged was the increase in volume. You had been aware of that increase in volume back many months earlier, but nonetheless you were taken by surprise when the whole thing failed to produce. Mr Shine: No, what I said is that the increase in volume in land changes did result in some technical issues with regard to system availability which were dealt with immediately at that point. Essentially we changed the system and as you are also aware the RPA took some steps to outsource some of the digitisation of some of the land changes that were coming in as well in order to give increased capacity in a short period of time. That was the case then. As I have said already, the IT system component then required to enable the entitlements to be made and to enable the payments to be made was there and running from that period. Q513 Sir Peter Soulsby: I understood you to be telling us that it was this increase in volume that was the major contributor to the difficulties that subsequently led to this project failing to deliver. If that is the case, how come, if you had been aware for many months before that, you were taken by surprise when it did actually fail to deliver? Mr Shine: The increase in volume was a contributor to the increased number of tasks which subsequently had to be worked through by the RPA. Q514 Sir Peter Soulsby: Surely you, as the ones who are intimately involved in developing these systems and are responsible for these systems, must have realised at a very early stage that the volume that was actually going to have to be dealt with by the system was out of all proportion to what was originally expected. Surely you must have realised that that would have implications on whether or not the project could actually be delivered on time. Yes, you tell us, despite having had this knowledge you were nonetheless taken by surprise when it failed to deliver. Mr Shine: And very much our focus, you are right. At the time when the amount of land changes were higher we had to do immediate work in terms of increasing the capacity of the system to handle that volume of changes which we focused on during that period and which we did. What we were not managing and were not responsible for was actually managing the business process. In effect the number of tasks that were being handled and how those tasks could be closed and how fast those tasks were being dealt with, that is part of the business process. Q515 Chairman: Who is responsible for that? Mr Shine: That is the RPA. Q516 Mr Drew: Can I establish very clearly in my own mind, these are bespoke bits of software; they were written especially for the RPA initially to take account of the historic methods of payment but you were then given separate enhancements to go on and adapt the software. Are these very complicated bits of software? On the A to Z of software creation are we on the As or are we on the Zs? Mr Naish: It is difficult to make a comparison but they are very complex calculations to work out entitlements and payment amounts. I think the key area of complexity is in dealing with the Rural Land Register and the mapping process around that. It is scale which drives complexity and the way in which land in particular is handled makes it complex. Q517 Mr Drew: As soon as the system approaches change and the RPA came to you and said, "We are not going for a historic system; we are going for a different system" you must have said, "That's fine, we can do this but don't come to us telling us there is going to be a big increase in the volume of people putting in claims". That is what you would have said. Mr Holmes: What we said actually was, "Let's sit down and understand the requirements and have discussions about it, which is what we did. Q518 Mr Drew: At what stage did you go from discussion to having some concern that if there was an increase in the volumes - whether it is the volume of the land numbers or the volume of the claims - to start saying to the RPA, "Volumes are going to make a difference here"? Mr Holmes: We went from discussion to agreeing the revised contract in May 2004. We then had separate work going forward about the complexity of the new policy. As we have said a number of times today it was only later in the year that some of those detailed requirements were finally understood and a system was sized to meet the volume of customers that we ended up dealing with and that was fine. I guess we started to understand the volumes involved in terms of the land changes around the spring of 2005. In fact we made some changes to the software to handle high volume data capture. We were taking on board the IT system implications of the increased volumes. We produced some software to allow the data to be captured at volume and we did some work to cope with the increases, but we were not looking at this from a "how will all these forms be processed, how will all these tasks around the land changes be handled" because that was outside the scope of our contract. Q519 David Taylor: You have just heard your colleague say that scale drives complexity. Do you agree with that? Mr Holmes: Yes. Q520 David Taylor: Do you? Mr Holmes: Yes. Q521 David Taylor: Impacts on performance certainly; impacts on capacity, but surely it is variability that drives complexity. Mr Naish: The reason for saying that is that the scale and breadth of types of data ... Q522 David Taylor: Hold on, they are likely to be more variable and more complex in themselves. You did not say that, did you? Mr Naish: Apologies. Q523 David Taylor: That is all right, I am not trying to pin you down. The fact is that I want to compare what you have said with what Helen Ghosh said. She said, "At the moment when we pressed the button, it was the bit that translated validation into payment and at that last stage - rather like a space rocket, where you use bits of your IT system for a purpose for which you have not used it before, so you have your launch and then your booster and whatever it may be - what we were using was effectively a new piece which had been tested but not tested in anger." Do you recognise that distinction between tested and not tested in anger? Mr Naish: Again, from an IT system stand point, we had been through very thorough testing phases prior to the release being delivered in October 2005. We had also been through what we called a live data test during the early part of 2006 where we took a copy of the actual data as it was being worked on by the RPA. Q524 David Taylor: Was that the first time you had had real live data from the real fields in Leicestershire and real components of farms? Mr Naish: It was the first time we had used the software that was delivered in October to process the entitlements and payments part of the system against that live data. The live data had been there and been worked on for some time prior to that using the Land Register system. Q525 David Taylor: It is quite difficult to define test data on a scale of adequate complexity to check out systems, is it not? Mr Naish: It is, yes. Q526 David Taylor: It is one of the most difficult parts of the process, do you agree on that? Mr Naish: It is, I do agree on that. Q527 David Taylor: Do you think that the access to real live data from real people with real fields was sufficiently early in the whole process to make you content that all was well? Mr Naish: We would always like to do it as early in the process as possible. The difficulty with this particular programme is that because it is the first time through you can only start using live data once it has been captured and processed for the first time and because this was the first year of a new scheme prior to having the system in place there was no capture of that data that enabled us to do a live data test earlier than that point. Q528 David Taylor: Were you surprised that the volume estimates that the RPA had come up with had been so far adrift, bearing in mind the changes that had taken place? Mr Naish: I think it would be true to say we were surprised, yes. Q529 Chairman: Can we go back a bit. The Rural Land Register, the basis of the mapping exercise, you said in your evidence that this Register went live in September 2004. What exactly does that mean? Mr Holmes: That means that our software was fully developed, fully tested and put into operation. Q530 Chairman: Fully tested. What do you mean by fully tested? Mr Holmes: Fully tested against our system test and acceptance testing. Q531 Chairman: Fully tested? Mr Holmes: Fully tested. Q532 David Taylor: Fully tested with what? Mr Shine: At that point there were 500,000 land parcels that were moved into the Rural Land Register. Prior to that period the RPA had been involved in the digitisation process. Q533 Chairman: When you talk about digitisation can you explain what that means? Mr Shine: Essentially what it means is that you take a picture, a map of a field and turn it into a part which can be put into a system. Q534 Chairman: Where does this picture come from? Mr Shine: The picture comes from that digitisation process. Q535 Chairman: Who took the picture? Mr Shine: As my colleague has already said before and I apologise if I get too technical, underlying within the Rural Land Register first is a mapping database that essentially stores pictures of all the land in England. Q536 Chairman: Is that by satellite imagery? Mr Shine: Yes, and other mechanisms. It is essentially based on the ordnance survey mapping of the entire country. That base is there. On top of that then goes what is called a permanent boundary layer. It is in a sense the boundaries of a piece of land. Q537 Chairman: Who supplies the boundary information? Mr Shine: The farmer supplies that because the farmer supplies maps to the RPA which says, "Here is the piece of land that I own, here is the field and I mark in the boundaries". In a typical situation of what affects land is a river. As you will know the banks of a river will change over time so in fact there are changes required to land boundaries every year. In some cases farmers will have cut back their hedgerows so they will be narrower. Q538 Chairman: Let me make something clear. The closing date for applications for the year in question was May 2005. Mr Shine: Yes. Q539 Chairman: So are we saying that between 2004 and at some point in 2005 the Rural Land Register was not tested with any real data? Mr Shine: As I said, to be precise in September 2004 when the Rural Land Register went live for the first time it started with 500,000 real land parcels, so there was real data in it and the system was working. Q540 Chairman: That was data which had come from the mapping exercise. Mr Shine: Yes. Q541 Chairman: The Committee has seen many, many cases where when farmers sent in their details and it came to validating their claims, there seemed to be a lack of fit between what the farmer said was their parcel of land and what the Rural Land Register said belonged to them. Then all kinds of strange things happened. Land was uplifted and put somewhere else, all kinds of operational glitches occurred. What I am coming back to, bearing in mind this information that farmers had was available at the same time that you had satisfied yourselves in September 2004 that your Rural Land Register software worked, did nobody actually go and get some examples of what farmers said was their land and see if it worked in the Register before you actually went live with it? Mr Shine: My understanding is that from that period onwards there was a continuous amount of land changes happening. As I have said already, the standard practice is that there would be changes ... Q542 Chairman: Mr Shine, that is not what I was asking about. What I envisaged was that somebody might have gone out to a group of farmers and said, "Excuse me gentlemen, would you be so kind as to help us? We are going to test out the Rural Land Registry. Would you please submit us in the following format what you think your holding is?" You would have then said, "Look, this is the front end of the application, let's run it through the Land Register and see if everything fits together using the farmers' supplied rural information". Did that process not happen until you went live with the system? Mr Naish: I cannot say whether it did or not. I could perhaps be allowed to go and find the answer to that question. Q543 Chairman: Mr Naish, I cannot believe that you do not know whether in fact your piece of software which you believe was capable of delivering was not in any way evaluated against a real world land data from real farmers until you went live. Mr Shine: Perhaps I should clarify this. Q544 Chairman: That is a good idea, Mr Shine. Mr Shine: The 500,000 parcels that were put in September 2004 was real live land data. It was based on the digitisation process that had been undertaken by the RPA with real land. Q545 Chairman: The point is that there is a difference between building the land database, what you think is out there based on these satellite pictures, ordnance survey and co-ordinates and all of that going in ... Mr Shine: And, if I may say, land submissions from farmers as well. It was not just a theoretical exercise. Q546 Chairman: If that was testing, why did it go so wrong when it came to go live? Why have we heard so many complaints about the mapping system and that seems to be at part of the heart of why validation could not take place. Why did that go wrong? Mr Shine: I think it is worthwhile saying that first, as I have said, the shift in policy made a profound movement from that of production to that of land. It did come out in last week's discussion that while there was an expectation within the RPA that the farmers would have had their land records up to date from previous interactions they had had with the Department, it turned out that that was not the case and in fact that the volume of changes made by farmers and made by land owners was much higher than expected. Q547 Chairman: I accept that there may have been in process timing a volume issue, but what we are talking about is an accuracy issue. In other words, somewhere along the way what the farmer sent in I presume did not tie up with what was in the Rural Land Register. Is that right? Mr Shine: That is correct. Q548 Chairman: Is that because farmers were wrong or they changed at the last minute? Why could it not be sorted out? Mr Shine: You depend on getting input from the farmer. The scheme was based on the farmer saying, "Here's my land" and giving mapping. Part of the process that went on was that the RPA sent maps out to the farmers and said, "Here's the reference that we have about your land". Because of the shift in policy to move to land my sense is that the farmers were very much focused on having a higher degree of accuracy in their land because it also results in entitlements. As you are aware the entitlement process was going to be done once in terms of establishing definitive entitlements; that was one of the features of the new CAP reform scheme. Therefore there was an onus on all land owners to ensure that their land records were fully up to date. That was one side of the process for existing land owners. The second part of the process was that there was now a new number of customers - as I have said already, over 40,000 - who were now focused on adding more land details because they had never had them in there before. Those two things together resulted in a huge volume. You also then had the possible situation - but real life situations do occur - where two farmers, for example, on both sides of a land boundary perhaps moving it a few feet away. Q549 Chairman: In reality you, as Accenture, only became aware of the changes you have just described from the time when the system went live and started to deal with real live applications. Mr Shine: Yes, but secondly I think it is worthwhile saying - as you have said already - that the closing date for the scheme is when the large volume of changes came in and that is when as the business process said, "We now have all of these changes to make, let us start entering them" and that resulted in the system having much higher requirements for throughput than what it was designed for. Q550 Chairman: What I am intrigued about is that you said you only became aware of this in July 2005 but the closing date was May. Mr Shine: As I have said to you already, my precise memory on the precise dates is not fully accurate. I am very happy to check that but it was a random period. Q551 Chairman: In your judgment, looking at this, was there anything that the RPA could have done to have trialled in the real world some of the implications of the policy changes and given you a better feel for the volume side of things? Let us be benevolent to you, you look as if you are feeling in the dark; the customer is not giving you accurate information from what you have told us about the anticipated volume. The customer has sent out to all these farmers maps which do not tie in with what the farmer believes is the land holding situation, and when all of this lot comes hammering back with ten times the volume that was anticipated, not unnaturally something had to give and I presume it was the inability of your system not because from your judgment it was badly designed and incapable of delivering, it just could not cope. Mr Shine: Partially, but the bigger impact was the volume of forms and all the validation checks and tasks that had to be done. Q552 Chairman: Although the closing date is May 2005, if the RPA had been sampling the volumes coming in and the content, I am sure they would have been able to predict that something was happening that they did not expect. Did they not communicate at all to you in April or early May and say, "Hey guys, something is happening in the way these applications are coming in that we didn't expect". Mr Shine: As I think was said last week, it is down to customer behaviour in terms of putting in changes at the last minute. I cannot recall precisely the time when the significantly higher land changes began to become clear. I am happy to go and check that and come back to you in writing. Q553 Chairman: I would be grateful if you would because, as I said right at the outset of this inquiry, we are not trying to stitch somebody up. We are trying to find out what actually went wrong and who must accept responsibility. We started off with one policy, the historic; we moved to the dynamic hybrid which had certain consequences. You are telling us that in volume terms from the Accenture standpoint that was not predicted. Suddenly your customer confronts you with a lot of information which you did not anticipate and your system which was, according to you, fit for purpose could not cope. In terms of actually putting all of this extra information in was it the case that the RPA could have got round that by having more operators, more input, or was the system only capable by definition of taking in and dealing with so much information at a time? Mr Shine: Again to clarify the volumes question, as I have said already the system is designed the number of customers so the system will support up to 150,000 customers, so the number of farmers, the number of land owners up to 150,000. The system was also designed with an expected volume of land changes as to what happened in a period of time. As you said yourself, Chairman, it is the volume of those changes in a period of time being ten or eleven times the expected volume which caused the temporary issue in terms of the availability of the system which we identified and focused on. We made some changes to both hardware and software in conjunction with the RPA. We made those changes and the system is available and does support that volume of changes today. Q554 Lynne Jones: We have heard about those problems but you seem to have overcome them because you were not flagging up any problems to permanent secretaries or to the ministers. Is that correct? Mr Shine: As I have said already, I recall the specific meeting in September 2005 where much of the discussion was focusing around some of those system availability issues. Q555 Chairman: Who was that meeting with? Mr Shine: That was with the permanent secretary. Q556 Chairman: And who else? Mr Shine: With representatives and officials from the RPA and a number of people from Accenture, including myself. Chairman: We are going to suspend the Committee for as short a time as possible, ten minutes if colleagues can manage it, whilst we go to vote and then we will come back. The Committee suspended from 6.14pm to 6.26pm for a division in the House Q557 Mr Drew: Can I reflect on what you have been saying to us and I think I would like one question answered from what you have been alleging. With the benefit of hindsight, if you had been able to run a full scale test with real data that could only have been a good thing. Or was what you were trying to do so clearly identified in your minds as a company you just thought it was going to work so a test was irrelevant? Mr Holmes: No, we would always say it is a good thing; it cannot be anything but a good thing. Q558 Mr Drew: So why did you not ask for real data to do a test? Why do you think the RPA did not offer you real data to do a test? Mr Holmes: Real data to do a test at which stage? Q559 Mr Drew: At a stage when you had the data coming in, from May 2005 onwards. Mr Naish: We did do a test on real data. Once the final part of the end to end system had been delivered and the processing of claims through the validation steps had gone far enough in January or February this year, this was the earliest opportunity to take real live claim data that had been progressed far enough through the business process to be able to test those entitlement and payment steps. Q560 Mr Drew: That was three and a half months after you said that you had a working system that was running nicely. Mr Naish: Yes. Q561 Mr Drew: If I can go back, from May 2005 you have real data. You may not physically have that real data in your computers but, take Leicestershire for example, somebody could have said, "Let's just look at Leicestershire, let's look at what the farmers are putting in, let's look at the data and what we expect it to be. Let's try Leicestershire and see if it works for Leicestershire." That did not happen. Mr Naish: No, and there are some good reasons for that which make it difficult to do that at the last stages of the process. The way the system works when it establishes entitlement is that it needs to take the claims across the whole of England in order to make those entitlements. It is difficult to run those end pieces of the programme on a small part of the population. Q562 Mr Drew: I understand the problem; you need to know the size of the wedding cake before you can actually cut the slices. Mr Naish: Yes. Q563 Mr Drew: Let us say that somebody somewhere - presumably the RPA - could have come to you and said, "Let's just test one of the slices" you are saying your system could not have worked with that. Mr Naish: It would have been an unrealistic test to have used just a small part of the overall area. Q564 Mr Drew: Or a random or typical set of data or a sub-set. Mr Naish: Any sub-set would have been something different to what was intended with the system design. Q565 Chairman: If I have understood you correctly, what you are saying is that until you got all of the claims in you did not know what the totality was of the area that you were dealing with. That was the sticking point, was it? Mr Naish: That is right. Mr Drew: I cannot get my head round about not being able to carry out a test on some of the data. Q566 Chairman: If you are saying that the first time you were able to run it in anger, if you like, a proper real live test with all the bits functioning was January or February 2006, how does that fit in with the fact that even at that time there were still unvalidated claims where, by definition, you would not have known what the area was that was being discussed. Mr Naish: The tests we performed at that stage we used those unvalidated claims as well and we went through an analysis step with the RPA at each stage of that test to make sure that anything that was unexpected would be explained. Q567 Chairman: Do you know when it was in January or February you actually did your first real live test to see if it all hung together? Mr Naish: It would have been in the first or the second week of January. Q568 Chairman: Were you asked before Lord Bach gave his Oxford farming conference speech by either the RPA or by Defra or by both what the payment deadline would be at that time in the light of the tests that you ran? Mr Shine: The consistent question that was asked of Accenture with regard to the system was, would the IT system be there and be ready in order to make entitlements and payments? We were asked that question on many occasions. The answer to that question was yes, the IT system will be there and running in order to make payments. As my colleague has already pointed out earlier on, that is one part of the system; the other business process steps were not our responsibility. As I also said earlier on and I think it is worthwhile repeating, our system was there as required and as agreed. Our system did work. The IT system components did work as required. What we have been talking about here is the business process and the use of that system. As Helen Ghosh said last week, that was the part that gummed up, but the IT system components were working and were then from October. I think it is worthwhile having that clarified in that it was there, the system components were there and were there in good time. The question we were asked on a consistent basis was, will the IT system components be there to enable the rest of the process to continue, and the answer to that question was consistently yes. Q569 Mr Drew: When it came to February 2006 the system crashed. Mr Shine: The IT system did not crash. The IT system continues to be available and continues to work. The IT system component required to handle the validation is there and is working and continues to work. Q570 Mr Drew: When the CLA in their evidence said there was "the frustration of operators who are professional people trying to cope with essentially a lousy IT system" they are completely wrong. Mr Holmes: They are completely wrong, yes. Q571 Mr Drew: The system is not crashed. Mr Holmes: No, the IT system is working and has been working. Q572 Mr Drew: Why then did Helen Ghosh say "For some reason, having started to make the payments, the whole system gummed up"? Mr Holmes: That comes back to the earlier comment at the beginning of today's session where Helen has since said that she meant to refer to the wider business system not just the IT system. Q573 Chairman: What did you understand went wrong? Mr Shine: I think as was discussed last week, there was quite a discussion that you have had around the business process, the components. The IT system components are working, continue to work, have been there since October and are working. Q574 Chairman: Let us say for a moment that we put all the ticks in the box. You have done your job; you have produced a system that is capable of working. What has let you down? You are in the line of fire and your defence is, "We produced a system that was capable of delivering" but from the outside from the farmers' point of view, you are the authors of a system that has not delivered. You are saying it has. What parts of the business process did not work? Mr Shine: I think as we have said already the part of the business process involved in the validation and the decision to approve payments, that did seem to take longer than expected. The IT components underlying all of those are working and continue to work. Q575 Chairman: What do you believe was the final, convincing piece of evidence that led to ministers pulling the plug on what had been assurances on the payment deadline? Mr Holmes: I do not think we are in a position to understand that. We were not party to those discussions. Q576 Chairman: Somebody must have explained to you why things had changed, or do you live in a sort of information free zone? Mr Holmes: No. Q577 Chairman: Nobody from the RPA came and explained why the then secretary of state, Mrs Beckett, said that she had effectively lost confidence with the person you had had a lot of dealings with, Mr McNeil. Did nobody come to you and explain why that had occurred? Mr Holmes: What was clear to us was ... Q578 Chairman: Would you like to answer my question? Did nobody come? Yes or no? Mr Holmes: In fact the permanent secretary phoned us up to make us aware of the fact. Q579 Chairman: What did he say to you? How did he communicate this new era of awareness? Mr Holmes: Basically it was a very brief phone call; it was a "for information" phone call. Q580 Chairman: What information did he impart to you? Mr Holmes: That an announcement was going to be made and that the chief executive of the Rural Payments Agency was about to be suspended. Q581 Mr Drew: Did any of your people working the system prior to the permanent secretary ringing you up to make this announcement give you indications there were problems? Mr Holmes: We were aware that despite the fact that the software had been in place since October, despite the fact that there had been some early payments made, the payments authorised and claims being authorised were not coming through at the rate that one would have hoped. Q582 Mr Drew: You are telling us that these people who were working with the RPA embedded or otherwise did not ring you up and say, "We think there are some real problems here. It may not be your problem; it may be the number and the amount of data that is coming in, but we seem to have a problem in that our output is not working the way it should be"? Mr Holmes: Yes, we were aware of that Q583 Mr Drew: How many people? One? Two? Half a dozen? How many people do you have there and how many people alerted you to the fact that there was a problem, maybe not your problem but there was a problem? Mr Naish: It would have been two or three people. Q584 Mr Drew: Did they all ring you up? Did you document it? Did you not say to yourselves, "We'd better talk to Mr McNeil here because potentially there's a fall out going on"? It may not have been the IT system, but the system was not working. Mr Naish: I do not think that would have been documented in the form of a memo to Mr McNeil in that way. We would have been present at meetings discussing the progress at that stage with the Agency until the information about what had happened the day before and the day before that would have been clear. Q585 Chairman: Can I ask you what happened when Mr Mark Addison took over because he seems to be something like a miracle worker. Every time Mr Addison waves his magic wand all of a sudden payments gush forth from the system. It seems absolutely remarkable that in spite of all this expertise, knowledge, information, system availability nothing happens until Addison steps into the post. When Mr Addison came along did he have some discussions with you? Mr Shine: As soon as Mark Addison took office I met with him shortly afterwards; two or three days after he took up office in Reading where essentially he set priorities for us in terms of focusing on ensuring that we were doing anything that was required from a systems perspective to support any payments that needed to be made. Q586 Chairman: Did he give you an analysis as to what he thought was the problem? Mr Shine: My recollection of the meeting is that he focused on the throughput of both the approval process for payments and also closing the validation of the individual claims. That, in a sense, was not happening fast enough. Q587 Chairman: Was that in any way related to the system that you had designed? Mr Shine: No. Q588 Chairman: So what was it related to? Mr Shine: It was related to the throughput. As we have already said there are a large number of tasks to be validated and closed off. There were also a large number of claims where entitlements had been established, I believe just under 40,000, so in a sense they were ready to go to the next stage of being approved for payment. What we discussed - certainly the impression I formed at that time - was that the focus was on speeding up both processes in order to speed up the throughput so that there would be a faster rate of approval and a faster rate of entitlement established. Q589 Chairman: Can I just ask for the record, was I right in being informed that when the system was first designed a lot of the data which was coming in was supposed to have been read electronically. Mr Shine: That is right. Q590 Chairman: In the end it was not. Mr Shine: That is correct. Q591 Chairman: Who was responsible for that bit? Mr Shine: We were responsible for the data capture component. Q592 Chairman: Is that the optical character reading of application forms? Mr Shine: Yes. Q593 Chairman: So that did not work. Mr Shine: It is not that it did not work. As we went through the process during the summer of that year a decision was taken that it had not been tested fully and therefore a decision was taken to use the high volume data capture component that we have referred to already and that was used instead. Q594 Chairman: So something that was not tested was dismissed. What was the replacement system? Mr Shine: The high volume data capture. Q595 Chairman: Is that a technical name for employing a lot of people? Mr Shine: For key entry on the applications. Q596 Chairman: Does that explain why the cost of this system went up very substantially from £18 million to nearly £36 million? Mr Shine: The data entry is not included in those costs you have quoted. We are not responsible for actually keying in the application forms. Q597 Chairman: Why could your optical character reading system not cope with reality? Mr Shine: I would have to check in terms of specific facts. I cannot recall so I would only be speculating. Q598 Chairman: I would have thought that would have been engraved on your memory. Mr Shine: As I say, I would like to go and check the facts and then respond to you in writing to give you specifics. Q599 Chairman: Do we assume from that that the fact they went to a human based system might have accounted for some of the difficulties that were subsequently discovered with mapping and validation issues? Mr Shine: It is hard to say. I would not assume that that was the case because the application form includes text essentially, it includes name, address and some other details that the land owner puts in but the maps were handled separately. The mapping data has to be handled in a different way. The fact that the data capture was done essentially by key entry rather than by optical character recognition would not necessarily introduce more errors into that process. Q600 Mr Drew: Did these discussions come up when you were at the project team? Mr Shine: I cannot recall the specifics of it; I will come back to you on that. Q601 Chairman: Let us move onto the questions about partial payments. Was that an option, as I think we were told last week, that was built into the software you designed from the beginning? Mr Naish: No, it was not. The partial payment system was not part of the original system. Q602 Chairman: When did it become part of the system? When was it first discussed with you? Mr Naish: Throughout 2005 there were a number of discussions with the Agency about contingency solutions, what could be done in the event of contingency. Q603 Chairman: Why in 2005 did the RPA suddenly start talking about contingency? If we go back, you had obviously been right the way through 2004 busy working along your contract, working up the software, delivering what was what, the first bit goes live in September 2004. Why, in 2005, did they start talking about contingencies? Mr Naish: I could not say why in 2005 specifically but as part of good practice in delivering payment systems they wanted a contingency. Q604 Chairman: Why did they not do that at the beginning? Mr Naish: The key driver for 2005 was based on the point at which the policy decisions were finalised at the end of 2004. Q605 Chairman: From your standpoint you think it was the fact that policy made them realise that perhaps they had bitten off a bit too much. Mr Naish: I think it more likely that their policy decisions gave enough clarity to be certain about what sort of contingency might be required. Q606 Chairman: Would you not advise a client, when the systems have been specified, to consider contingency arrangements? Mr Naish: Yes, we would. Q607 Chairman: Did you at the beginning of the process when you were negotiating your contract or when the system was being specified? Mr Naish: I could not say with any certainty. Q608 Chairman: You have just said to me in words of great clarity that you would normally advise a client to think about contingency measures. Mr Naish: Yes, and I would expect that we would have done but I do not have a piece of documentation to that effect. Q609 Chairman: You expect you would have done; could you check that fact because it would be of considerable interest to the Committee to know? You reckon in 2005 they start talking about contingency issues and you think it was because they then could see with clarity what the policy was all about. Mr Holmes: And because in 2004 the focus had actually been on resolving these outstanding issues. Q610 Chairman: It would be helpful to know exactly when in 2005 these contingency conversations started. Could you tell us more about what was discussed? How did they raise the question of contingency? Mr Naish: It was an evolving picture as 2005 continued, as more of the RITA system was delivered and also as business processing progressed further through to claims payment. Q611 Chairman: What was the contingency that they were asking you to handle? Mr Naish: The contingency that gave rise to the first partial payment scheme was that if it is not possible to establish definitive entitlement and so start making payments in time to begin that process in February, then what possible alternatives are there to taking the data - the information on the RITA system - and making an accurate partial payment at some level off that RITA system by some other means. Q612 Chairman: So at a date to be confirmed in 2005 there is a realisation that a contingency arrangement was required. When did you actually deliver or say to them, "We have now written the software that will give you a partial payment option". Mr Naish: We did not actually write the software. Q613 Chairman: Who did? Mr Naish: It was written by the RPA's advice organisation. I think they may have used some other third party. Q614 Chairman: Why did they discuss contingencies with you if they could do it themselves? Mr Naish: They wanted to understand how the information in the RITA system could form part of a partial payment solution. They wanted us to be involved in the testing of the partial payment system and comparators between the partial payment system and the core RITA system. Chairman: Helen Ghosh was very complimentary about what you did so you obviously got that bit right as far as that was concerned. Q615 Mr Drew: Did this have any impact whatsoever in the contract itself in terms of any money? Did it make any difference at all to the overall amount you were going to be paid or not going to be paid? Mr Shine: To clarify, there were two types of contingency systems. As Andy has been talking about, the first one was during 2005, if the primary system for whatever reason cannot deliver, is there another way of delivering payment? That was being built and, as Andy said, we had to provide some input and advice into that. As we shifted in and as RITA was live and everything was working, then the second part - and in fact was the part that was used in the last number of weeks - was that if we need to make an advance payment using all the data from within RITA. So we were involved in the second part as well in providing some input into that. There was a series of change requests around providing a degree of support in that and the cost to the RPA of those series of change requests was in the region of £200,000. Q616 Mr Drew: The RPA did this work itself on partial payments and in reality that made no difference to the contract. Mr Shine: As I said, there was a relatively a minor cost. Q617 Mr Drew: The RPA paid that. Mr Shine: Yes. The reason for that was that there was additional work that they were requesting us to do around extracting the data and ensuring that we were providing the files for the right way. I think, as was discussed last week, the actual partial payments - the advance payments that were made a number of weeks ago - were as a result of some changes that we did and worked with the RPA to ensure that we executed those payments very quickly once the decision had been made to do that. Q618 David Taylor: The partial interim payment system is not conceptually all that complicated, is it? Here we have the Land Register and Customer Register, claims processing engine; we have the historic data there. Yes, we are waiting for a precise figure for the area component but we can get very close to that can we not? Is it that difficult to slide into the payment module something which says, "Halve this for the time being" and "Hold that as an advance payment to be recovered when the final payment is made"? Is that difficult, Mr Naish? Mr Naish: Not conceptually. Mr Holmes: Except you have 50 per cent of the claimants who are first time claimants so you do not have historic data there. Q619 Mr Drew: I understand that, but that is not difficult, is it? Mr Holmes: To do what? You do not have any history. Q620 Mr Drew: I understand that as well. It is not conceptually difficult. So why on earth were ministers being advised by whomsoever that it really would lead to problems with delivering the final system were any effort or priority to be given to interim payments, which is a relatively straight forward thing to do. Why were you not asked to do that? Here you are, you are the delivers of this contract. You have the credibility on the line of delivering the whole contract, but somebody then comes to you in 2005 and says, "We've got to have a contingency; we've got to have a plan B". We are always in this Committee looking for what plan B is, and yet they say, "No, we're going to do plan B, we just want you to assist them." Why do you think they did that? Why did they not come to you to do plan B? Mr Holmes: I am not answering the question directly, but I will do. The concerns about partial payments were not about the ease of how you make the software change in order to make partial payments, it was more about best practice saying that people should be kept focused on the main objective and, secondly, understanding all the EU implications of disqualification and all those kinds of things. It was not technology issue. Q621 Mr Drew: Were you not a bit miffed when you know that they were using their own people to develop a partial payment system when they had to use your system to deliver that? Did you not say to them, "We of course could do the partial payment system? You will have to pay us a bit more money but we can do this?" Mr Holmes: Not at all. As was said earlier, our system is one of a number of IT systems that co-exist with other systems in what is going on outside our area. Chairman: Before I bring Peter in, you will let us know when the first test on the partial payment system was conducted so that you knew that the interface between the RPA software systems worked. Q622 Sir Peter Soulsby: Can I just play back to you what I understand you to have been saying to us. Correct me if I am misrepresenting what you have said. Is it fair to say that you are telling us that your IT systems worked perfectly and in good time? The pre-existing related IT systems worked well and were not the cause of the problem. The problems were with what you described as the business processes and that despite your intimate relationship with the project you could not reasonably have been expected to realise these problems nor could the permanent secretary. The only person who might have spotted these was the chief executive of the Rural Payment Agency. Let me stop there and see whether I have correctly understood what you are saying? Mr Holmes: We are saying that our IT systems worked against the specification as a group. Earlier Andy said that he was not aware that there were any issues with the rest of the IT system. The rest of your comment we are not saying. Q623 Sir Peter Soulsby: Let me try those other bits and you can tell me what you disagree with. Are you saying to us that you could not reasonably be expected to have seen the problems that were emerging with the system? Mr Holmes: Yes, we are saying that we did not have oversight and were not in a position to do so. Q624 Sir Peter Soulsby: Nor could the permanent secretaries because they were taking advice from you and indeed from others. You were intimately involved with them and if you could not spot it you could not expect them to either. Mr Holmes: I am not in a position to say that. Q625 Sir Peter Soulsby: I think it is probably a fair inference. You are also stopping short of saying that the only person who could have spotted it was the chief executive of the Rural Payments Agency. I understand why you might want to stop short of that. We understand that at least as far as you are concerned you did your job perfectly. You are then saying that the problem was with these business processors and you are saying that the particular thing that gummed-up the system was the validation and approval element of what was necessary. Am I right in understanding that? That is a particular part that you focus on as being the cause of the problem. Can I just explore that? Are you saying that in that particular element there was a lack of people to deal with it? Was there a lack of information for those who were dealing with it or that there was some problem with the processors? Mr Holmes: I am not sure that we are saying that. I am not sure we are in a position to say that. Mr Shine: Our view would be that it could be any or all of those issues, but as we have said we are not managing that process and your question to us is quite precise. It could be any of them or all of them but we were not involved in managing that process. As I said, we already have our hands full in building and testing the IT systems and delivering goals and supporting them so we are focusing on this. We have observed that one of those assets you mentioned was slower than the target would have been, but in terms of the causative reasons for that we could not speculate specifically. Q626 Sir Peter Soulsby: Can you remind the Committee of the value of this project to your company? Mr Shine: The total value of the original contract is £54 million. Q627 Sir Peter Soulsby: So this was a £54 million project for your company. Your company was intimately involved with it, indeed was right at the heart of the delivery of a system that would make this project deliver and you are not able to tell us what actually went wrong with the business processes that failed to deliver it on time. Mr Shine: Not specifically. Let us go right back to where we started. There is a jigsaw of multiple components involved in ultimately delivering payments to farmers. We have specific responsibility for certain IT components for that. Obviously our focus is to ensure that we deliver that to specification, which we have done. The costs for those components was £53.8 million to be precise. While we are aware of the delays in the business process we are not specifically involved in managing that and in monitoring that on a day to day basis. Q628 Sir Peter Soulsby: You are saying that despite having a contract here for £53.8 million you, as a company, did not show an interest in what was actually causing the thing to become gummed-up and failing to deliver? Mr Holmes: We did show an interest but our contract is very clear about what is in scope and what is not in scope and the contract is very clear about what our authority is and what our responsibilities are. Q629 Chairman: I think I understand where you three are coming from. You are saying that you will speak about the things that Accenture were contracted to do and for which you have direct management responsibility. Notwithstanding the fact that sitting where you are you would have seen what was happening in the landscape around you, you are not prepared to comment or express a view about what was happening on the bits that were peripheral to the areas for which you were directly responsible. Is that fair comment? Mr Holmes: No, I do not think it is fair comment. If you take what happens on a day to day basis in the RPA offices dealing with those business processes we did not have visibility. Q630 Chairman: Were you ever asked - by Mr Addison, Mr McNeil or Helen Ghosh from your standpoint as experts in systems and what makes things tick and with the knowledge you had of this process of the single farm payment - to give any opinion or express any view about the problems at all to anybody who had a senior responsibility from the customer side for this process? Mr Holmes: I do not believe we were. Mr Shine: We have actually discussed earlier on where we have given views and when we sat in sessions with the permanent secretaries in terms of focusing on our aspects we would have frequently talked about the fact that this is our responsibility. There are a whole number of other areas that we are not responsible for. In order to deliver the entire process successfully you need to focus on all of those. As I say, we have discussed that already. We would have had those generalised discussions. Mr Naish: We would also have been asked if there was anything we could do to change the IT system that might help. We were also asked to do a workshop which Mr Addison organised. We were asked if there were things we could do to the IT system in quick order that might make a difference to speed those things up. Q631 Sir Peter Soulsby: Did you not think with a £53.8 million stake in this contract you had a moral responsibility if not a contractual responsibility for understanding why it was not delivered? Mr Holmes: We cannot have a responsibility because you cannot have responsibility without authority and without resources and we had none of those things. Q632 Sir Peter Soulsby: You did not even have a responsibility for understanding why the project was not going to deliver never mind actually having responsibility to do something about it. I accept that was somebody else's. Did you not have a responsibility for understanding what was going wrong? Mr Holmes: It is impossible to have a detailed understanding when you are not actually on the ground. Q633 Sir Peter Soulsby: I would suggest with a contract of £53.8 million you do not just have a contractual responsibility you have a moral responsibility for understanding why it is not delivering and for telling people what it is that is going wrong. Mr Holmes: I disagree with that because we did not have the oversight to do that. Q634 Lynne Jones: Mr Naish, you mentioned workshops. When did these take place? Mr Naish: There was a specific one very early on after Mr Addison came on board. Q635 Lynne Jones: What date are you talking about? Mr Naish: I do not have a specific date, but quite quickly after Mr Addison came on board. Q636 Lynne Jones: What year? Mr Naish: This year. Q637 Lynne Jones: The increase in the volume of the land parcels, did that in any way contribute to the increase in the contract value on the revenue side? Mr Shine: There would have been some changes round the IT both hardware and software in the late summer of last year to increase capacity to the new level and so there would have been some costs there. I do not have the specifics here but there would have been some as a result. Q638 Lynne Jones: Can you give us some idea of the increase that led to? Mr Shine: I will get back to you on that. Q639 Chairman: When Mark Addison came into post to sort the job out, did he gather together in one room all of the key players and tell you what he had found and what he thought needed to be done? Mr Shine: As I have said already, I met with him individually with other officials to ensure that we were doing whatever he wanted us to do. As Andy has already pointed out there was a series of workshops that he could have convened. However, at the time our focus was to ensure that the system was doing what it needed to do. His request in that first meeting was to ensure that the system remains available for as much as he requires. Our job was to ensure that that happened and that in fact happened. We continued to make the system available as we had done since October from 6am to 9pm, so 15 hours a day, five days a week plus 10 hours a day over both weekend days. So there was quite a long time of availability during every week which was a requirement in order that the users could subsequently use the system in order to do the work that they wanted to do. That was the primary request, to ensure a stable system and an available system and that is what we delivered. Q640 Chairman: What were the amendments aimed at achieving that Mr Addison asked you to look at? Mr Naish: He was interested in finding ways of improving the speed with which validations could be addressed and also was there anything that might make payment authorisation slicker. Q641 Chairman: Were there? Mr Naish: The primary changes associated with the payment authorisations were made through changes to the business process rather than changes to the IT system. We did support - and are supporting for next year - some changes to alter the way tasks are delivered to make them claim-based rather than task-based. The change to the RITA system to support that is something that will happen at the beginning of 2006. Q642 Chairman: You were saying that the system is now stable and working correctly at all stages of the process. Mr Naish: Yes. Chairman: Gentlemen, thank you very much indeed for the evidence. There are a number of points which the Committee were not able to touch on which we will address in correspondence to you. We welcome the offer of further information and in particular the clerk will also be writing to you with reference to some of the meetings you may well have had with permanent secretaries and others so that we can get a complete picture of your exchanges with both the RPA and with Defra. Thank you for giving your time and coming before us as witnesses this afternoon. |