A second progress update on the administration of the Single Payment Scheme by the Rural Payments Agency - Public Accounts Committee Contents


Supplementary memorandum from the Department for Environment, Food and Rural Affairs

QUESTION 14 (CHAIRMAN): ACTION PLAN ON WHAT DEPARTMENTAL AO INTENDS TO DO IN RESPONSE TO EACH OF THE REPORT'S RECOMMENDATIONS (BY THE END OF JANUARY 2010)

  As requested, an action plan will be sent to Committee at the end of January detailing actions planned and already taken in relation to the NAO's recommendations. Given that the RPA review will not have been completed by that point, the plan will inevitably be a working draft that will evolve over the subsequent months. However, we are happy to commit to also providing a final version of the plan when the review is complete and to share our thinking with the NAO in the intervening stage.

QUESTION 21 (MR CURRY): LENGTH OF TENURE OF PREVIOUS CHIEF OPERATING OFFICERS AND REASONS FOR DEPARTURE

  The requested information is provided in the table below:


Name
Length of TenureReasons for Departures


Simon Vry (Interim)
March 2006-1 July 2007 Replaced by a permanent appointee-Mr Vry had previously been working in the RPA as Business Development Director
Hugh Taylor11 June 07-30 April 08 Not retained by the Agency beyond probationary period
William Burton
(Interim)
19 May 08-31 October 08 Appointed as a permanent Chief Executive in another organisation
Steve Pearce (Interim)from 16 October 08-to date N/A


QUESTION 35 (MR CURRY): ACCENTURE CONSULTANTS—DETAILS ON NUMBERS INVOLVED IN SCHEME WORK, ROLE THEY PLAY, DAILY FEES AND COSTS OVER THE LAST SIX YEARS, WITH REFERENCE TO NOTE PROVIDED TO COMMITTEE AFTER JANUARY 2008 HEARING

Supplementary Evidence

  The RPA's contract with Accenture provides for three different types of services.

    —   Support and Maintenance of the RITA System

    There is a fixed annual fee paid to Accenture for the ongoing support and maintenance of the system. This ensures that the system is kept running and that any bugs are addressed and the system operates as designed. This agreement was put in place in 2003 and the scope of services and cost basis has largely remained the same since the start of the contract.

    —   Upgrades and Enhancements to the RITA System

    In order to meet CAP regulatory changes, the RITA system may require enhancements. Such changes are provided through different projects and these are delivered on an outcome basis. RPA and Accenture enter into an agreement to deliver an upgrade to the system and this is done on a fixed price basis for each project. This agreement is not entered into on an individual day rate basis but as an overall price to deliver an outcome. RPA and Accenture have agreed to a risk sharing contract, as previously reported by the PAC and the NAO. In terms of this contract Accenture carries some of the risk and are rewarded for successful achievement against RPA objectives. This forms the majority of work performed by Accenture at the RPA.

    —   Ad-hoc Consultancy Services

    Accenture occasionally provide ad-hoc consultancy services to RPA, mostly in project management services for the successful delivery of projects within RPA. These services are procured on a day rate basis as and when required through the RPA procurement process. The cost of ad-hoc consultancy in FY 08/09 was £5m (VAT inclusive), with daily rates ranging from £838-£2,095 per day (VAT inclusive). However, Accenture did undertake some key business support activities during this period on a non-chargeable basis. The average rate per person in this period was £931 (VAT inclusive).

  The table 1 below shows the number of people working in each of the Accenture teams at the RPA over the last three years.

TABLE 1


FY06-07 FY07-08FY08-09
TeamFTE's FTE'sFTE's


System Support and Maintenance
212221
System Upgrades and Enhancements177 178153
Ad-hoc Consultancy17 2522


NB—as per the description of how the contract works, the fees paid do not change based on the number of FTEs in each team and it is the responsibility of the supplier to staff the right number of people to complete the contracted work.


  Table 2 below provides the total payments made to Accenture since the commencement of the Solution Supply Agreement (RITA Contract) until the end of FY 08-09. The total of £177.91m is gross of recoverable VAT; the net figure is circa £156m.

  The figure of £122m provided to the Committee following the last hearing was a snapshot at that point in time and, therefore, included within the Table 2 figures.

TABLE 2
Financial PeriodTotal Payments (£)


January 03-March 04
      19,642,781
April 04-March 05        7,752,406
April 05-March 06      29,708,088
April 06-March 07      39,406,689
April 07-March 08      46,563,870
April 08-March 09      34,832,812


Total
      177,906,646 (inclusive VAT)—circa
      £156m* (net of recoverable VAT)


*In his response to Q.39 Mr Cooper referred to a figure of £148m which is the figure recorded on RPA's current finance system. The £156m additionally includes some payments from 2003 which were recorded on an earlier system.


  The spend to-date (31 October 2009) in FY 09/10 totals £36,201,562 (inclusive of recoverable & non-recoverable VAT). Future spend will fall into one of two categories, namely: 1) fixed and known contractual obligations and; 2) activity to support future policy change. By their nature we have a high degree of confidence in respect of future costs regarding the former, whereas the latter is subject to a number of variable factors, so figures are based on current working assumptions.

  Future spend for the remainder of the Contract term (31 December 2011) is estimated as follows:

  Remainder of FY 09-10 (i.e. 1/11/09—31/3/10)—£199,456 (fixed) + £2,000,000 (variable) = £2,199,456 (£2,584,361 inclusive of recoverable & non-recoverable VAT)

  FY 2010-11—£3,647,346 (fixed) + £12,500,000 (variable) = £16,147,346 (£18,973,132 inclusive of recoverable & non-recoverable VAT)

  FY 2011-12—£2,649,258 (fixed) + £5,000,000 (variable) = £7,649,258 (£8,987,878 inclusive of recoverable & non-recoverable VAT)

  Therefore the total estimated outturn spend until Contract term is calculated at £244,653,579. The equivalent figure net of recoverable VAT would be circa £214 milion.

QUESTION 44 (MR CURRY): COPY OF INTERNAL AUDIT REPORT ON RURAL LAND REGISTER REFRESH

  Attached with this memorandum are both the summary report of the audit of the RLR programme and the second interim report of the programme (the first interim report only covered the system upgrade element.)

  Please note that, as with all internal audits reports, these are restricted documents and while we are happy to provide them to the Committee we request that they should not be published.

QUESTION 127 (MR BACON): QUOTES FROM EFRA SELECT COMMITTEE HEARING ON WHO SAID "NIGHTMARE" AND WHO SAID "MADNESS" IN DESCRIBING THE DYNAMIC HYBRID POLICY

  The quotes referred to at the Committee hearing were attributed to Defra and RPA members of staff during evidence given by representatives of the Tenant Farmers Association to the Efra Select Committee in 2007. That evidence can be found at the following links:

Oral evidence (Q.2-Q.8)—

http://www.publications.parliament.uk/pa/cm200607/cmselect/cmenvfru/107/6042401.htm

Supplementary written evidence (points 17-18)—

http://www.publications.parliament.uk/pa/cm200607/cmselect/cmenvfru/107/6042408.htm

  Given the passage of time and the fact that both of the members of staff concerned have now retired, it is not possible to comment further on those quotes. However, it should be noted that the stakeholder meeting referred to in the evidence occurred at a very early stage of the analysis work on SPS models.

QUESTION 133 (MR WILLIAMS): EX -GRATIA PAYMENTS MADE TO FARMERS

  The total numbers of ex-gratia and consolatory payments made by the RPA are given in the table below. Ex-gratia payments are made when, for example, an incorrect application was made as a direct result of the Agency's actions. Consolatory payments are made to reflect, for example, the distress and inconvenience arising from mis-handling of applications but which did not affect the value of scheme payment due. The average payment in such cases is generally much lower (around £200) than for ex-gratia payments.

  The payments are listed in the table according to financial year in which they were made rather than the scheme year to which they relate, which will generally be earlier. First payments in respect of SPS were made in financial year 2006-07.


Financial Year
Number Value (£)


2006-07
6 8,428.74
2007-08914,595.02
2008-091931,522.55
2009-102150,194.59
Total55104,740.90


QUESTION 155 (MR BACON): GARTNER BENCHMARKING DATA ON SPS IT SYSTEMS

  The following independent review reports produced by Gartner are attached to this Memorandum:[10]

    —  Independent Review of RPA Information Systems Appropriateness (February 2007)

    —  Epsilon Release Value for Money Review of Accenture Fixed Price Estimate (May 2008)

    —  Zeta Release Value for Money Review (January 2009)

    —  SPS Systems Appropriateness Review (July 2009)

  In respect of the two RITA Releases, Gartner concluded that Epsilon "does represent Value for Money", whereas Zeta "falls outside the bounds of a fair market price". RPA accepts that there were a number of contributing factors which drove the Zeta outcome, primary amongst these were: 1) a conscious decision to de-scope functionality within the release to protect CAP Health Check policy changes and; 2) commencement of the project was delayed owing to that decision making process. Notwithstanding these issues, RPA subsequently negotiated a £100,000 discount with Accenture with regard to the cost of Zeta. RPA believes that this together with the above mentioned factors provided a reasonable VFM outcome.

  In response to one of the main Gartner recommendations, RPA and Accenture have revised the approach for estimating development activity costs. The new approach means that costs for any proposed activity are calculated on a bottom-up basis, a top-down basis and a functional basis to ensure a sound estimate is derived.

ADDITIONAL NOTES

  In response to Q.29, Mr Cooper was considering Board members and overlooked the customer director referred to by Mr Curry who was not a member of the Board. The individual in question was a long standing member of RPA staff who, following agreement with the previous senior management in RPA, departed under the exit arrangements in place during the Change Programme with a package worth £337,000. RPA is currently in the process of recruiting a Customer Compliance Director on to the Agency Management Board.

  In response to Q.132, Dame Helen Ghosh gave a figure of "about £5 million" for interest payments made to farmers a result of their SPS payments being made after the end of the regulatory window. The actual figure is £3.7 million.







10   Not reproduced here. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 16 December 2009