Examination of Witnesses (Questions 280-299)
MS HELEN
GHOSH, SIR
BRIAN BENDER
AND MR
ANDY LEBRECHT
15 MAY 2006
Q280 Mr Williams: I can understand
why Defra wanted to decouple fully in 2005, but if you had used
that zero area system, you would have achieved decoupling and
had a much simpler scheme to deliver. Was that option ever considered?
Mr Lebrecht: With respect, I do
not think it would have made things easier. The critical issue
is establishing definitive entitlements, in other words what each
farm's entitlements are worth. Even if you have a coefficient
of zero in relation to payment in the first year, you still have
to go through the process of establishing entitlements, which
is about linking to ownership or control of land. I do not think
it would have eased the problem.
Q281 Mr Williams: May I offer another
solution, that you should use an historic system for the first
year and then go to a hybrid system involving area payments in
the second year? Is that something which could have been considered?
Was that something you could have questioned the Commission on?
Mr Lebrecht: In theory it is something
we could have asked them about, but it is the point I made a few
minutes ago. What that would have meant doing would have been
putting in a new system—because we had to put in a new system
anyway—for an historic scheme and then a second new system.
Q282 Mr Williams: But you have to
have the historic scheme now because it is part of your hybrid.
It was not as though you would have to have something different
or something in addition. At the moment you are running two schemes,
are you not? You are running an historic scheme and an area scheme
because your hybrid payment has components of both those.
Mr Lebrecht: You are doing it
once and there are also issues of the reference years. An historic
scheme is based on reference year 2000-02, whereas a hybrid scheme
is based on the reference year of 2005. If you are suggesting
that we have one scheme for a period and then move to another
scheme, I am sure it could be done. All I am saying to you is
that I do not think that would have relieved the complexity. I
fear it may have added some.
Q283 Chairman: According to Accenture's
further evidence they claim "Although it was originally expected
that the rules for the reformed payment scheme would be finalised
before the end of the calendar year 2003, in fact this did not
happen until late 2004". Once you got that far you were locked
into what you wanted to do. Are you effectively saying that once
you had designed the IT system that was what you had to proceed
with? You could not then at some subsequent point change your
mind and have the system which Mr Williams described. You had
decided by 2004 that was what you were going for.
Sir Brian Bender: My recollection
of events and the bit to which Accenture are referring picks up
something Andy Lebrecht said some minutes ago. In the context
of the EU regulations there were some bits of fine print which
were being resolved and they were leading to change requests to
the IT which were themselves risking further delay and indeed,
at the risk of quoting the Office of Government Commerce again,
one of their recommendations in January 2005 was "Stop making
change requests. You have to freeze this now".
Q284 Mr Williams: Really you are
blaming the other nation states by saying that, because they did
not have to decouple in 2005, they could put it off to 2006 therefore
there was no urgency in agreeing the detail of the scheme.
Mr Lebrecht: I am not blaming
other Member States. We as the UK, not just England, certainly
had the option of implementing in 2006 or 2007, but there was
unanimity amongst our stakeholders that we should implement in
2005. They perceived the benefits of decoupling.
Q285 Chairman: The Committee are
trying to get at this. Mr Williams has put to you that there were
other ways of introducing this process. You have made it clear
that you decided you wanted to go down the route of the dynamic
hybrid model right from the beginning. So there comes a point,
when you have instructed your IT partner what you want to be delivered,
when he cannot suddenly then go back and build you a new system.
When was that point of no turning back achieved? When could you
not unpick and do something else? When did you decide that?
Sir Brian Bender: I would have
thought that it was pretty early in 2004, because the decision
was taken on the basis of advice on what was implementable. At
that stage there was both getting on with putting that IT system
together and finalising the contract details, the contract revisions
with Accenture. To stand back and say you wanted to do something
else almost at any stage after that would have been difficult.
That is my recollection.
Q286 Chairman: In other words, however
much commentators today ask why you did not do something else,
from that point in 2004 you were locked into an irrevocable process
which has led to where we are now. That was the point of no return.
Ms Ghosh: Not least with the Commission
as I understand it.
Sir Brian Bender: The absolute
lock-in with the Commission was July of that year.
Ms Ghosh: In July 2004 we had
to say what we were going to do.
Q287 Chairman: So no going back in
July 2004. That is the point at which the die was cast and there
was no way you could change it.
Sir Brian Bender: And that was
legal and technical by that stage.
Q288 Chairman: Would I be right in
assuming that when you cast that particular die you obviously
at that point had no real idea of what lay in store in terms of
the practical problems we have been discussing?
Ms Ghosh: To put it the other
way about, there was no suggestion, whether from RPA or from the
external quality assurance, that it was undeliverable.
Q289 Mr Williams: Having taken that
decision, do you now look at it and say that there was no way
in which RPA could deliver once that decision was taken?
Mr Lebrecht: No.
Ms Ghosh: No; absolutely not.
I come back to the point that we almost did it in terms of payments
starting in February, but not actually moving out as fast as we
would have hoped they did. That is some evidence that it was not
unachievable.
Q290 David Taylor: Departments, like
Defra, are a dream customer, are they not, for companies like
Accenture? Do you think they are?
Sir Brian Bender: No.
Ms Ghosh: No. I think we are pretty
tough customers actually.
Q291 David Taylor: Do you? Do you
really?
Ms Ghosh: When you see Accenture
in a week's time and you ask them whether they are making money
hand over fist out of our contract, you will discover that they
absolutely are not, indeed they are effectively working—I
have an interesting statistic, which is that we recently, as part
of our ongoing commercial negotiations asked an external reviewer
about the difference between a contract based on time and materials,
that is, what we would be paying if we had a contract which enabled
them to pay for their time as they clocked it up and their materials
as they used them and what we have, which is a fixed price contract.
The answer is that paying for time plus materials would be twice
as expensive. In that sense the contract we have with Accenture
is saving the taxpayer a significant amount of money.
Q292 David Taylor: That is an absolutely
risible comment, it really is. That should be deleted from the
record. Carry on.
Ms Ghosh: In that sense we are
not a dream customer. Ask Accenture that question and I suspect
you will get that reply. I know you have explored with Lord Bach
and previous witnesses the issues around the apparent increase
in the contract price. As I think Lord Bach explained, we are
now probably at a total contract price of around £54 million
for the totality of the contract with Accenture, which is very
close to the tender estimate to which we signed up in the first
place. The original price which Lord Bach quoted, which is around
£18 million, did not include CAP reform. That is the difference
between the two contracts. In terms of the nature of the contract
and the controls we have had on them, we think it is a pretty
tight contract.
Chairman: Was it?
Q293 Lynne Jones: The revenue costs
more than doubled from £18 million to £37.4 million.
Ms Ghosh: From £18 million
to £37 million and the capital remained more or less the
same.
Q294 Lynne Jones: Yes. So you were
anticipating that kind of increase in the revenue cost when you
renegotiated in 2004.
Ms Ghosh: Because the revenue
cost is the kind of additional cost you would expect in building
a new CAP system, because that is people time in terms of writing
code and testing and all those sorts of things. That is where
you would expect the increase to be.
Q295 Lynne Jones: So that increase
was entirely expected.
Ms Ghosh: That was pretty nearly
our original contract price assumption.
Q296 Lynne Jones: Are there documents
which can be checked to demonstrate that?
Ms Ghosh: Absolutely; yes.
Q297 David Taylor: A minute or two
ago you said that the driver of the extra cost was not particularly
the volume of claims, although you later acknowledged that volume
had its part to play, it was the volume of mapping changes which
were involved. Is that a fair summary of what you said?
Ms Ghosh: No, I was not citing
cost. I was saying that in terms of the operational challenge
the main driver of problem was mapping, not the essential volume
of the applications made. The number of applications made was
pretty nearly exactly what we were expecting, so it was the mapping
and land register issues.
Q298 David Taylor: Here is this tough
customer, Defra, which is going to get a really good deal for
the British taxpayer and the British farmer and the British consumer
from this computer outfit in front of it.
Ms Ghosh: Yes.
Q299 David Taylor: Did you actually
take any pilot area of the country, sample area, early on in the
process and home in there and see by examination and therefore
extrapolation what was likely to occur in terms of volumes of
changes? You said that you were taken aback by the volumes of
changes which resulted. Did Defra or RPA do a pilot exercise of
that kind and if not, why not?
Sir Brian Bender: I cannot answer
on the volume point, but the mapping exercise began much earlier
as part of a predecessor regime which started in 2002 to deal
with the establishment of the land register. In that process both
software and associated business processes for the rural land
register were piloted and were piloted in Reading and Northallerton
as well as having stakeholder feedback.
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