Good Governance - Effective use of IT

Written evidence submitted by Conservative Technology Forum (IT 44)

The main points in the following response include:

· Clarity on EU Procurement rules is long-overdue

· Open standards are essential and should be enforced upon suppliers

· All services must include clear routes of engaging those not digitally connected

· User groups and innovators should be consulted before policy formation, not after procurement

· The movement of staff between Government and service providers must be significantly slowed

· Government must drive the innovation agenda and do more to challenge the assertions of existing suppliers

· There should be no "commercial in confidence" clauses in any contracts involving public funding, or settlements to end contracts [exceptions only for security rated clauses in defence contracts]

· Benchmarking clauses should be enforced vigorously, and failure not rewarded with further work

· Any intellectual property arising as a result of a Government-commissioned scheme should absolutely remain the property of the UK taxpayer

1. How well is technology policy co-ordinated across Government?

1. Since Lloyd George’s "Land fit for heroes" and the Haldane Report, service delivery has been fragmented by departmental barriers between policy areas. This often fails to reflect the complex and fast-changing lives of the public. Technology policy, while one of the areas in which pan-Government strategy can deliver the most, remains equally fragmented with a seeming preference to re-invent the wheel than re-use technology infrastructure.

2. Government infrastructure remains a steam-age endeavour in a digital age. Projects like online self-assessment or tax disc renewal have a major impact on Government back-office, yet are simply seen by the public as Government catching up with Amazon or their personal bank.

3. Localism and decentralisation is underpinned by a belief in returning power to the people. Technology has a huge role to play in this, supporting local delivery, meeting community priorities (including those of non-geographic communities) and reducing administrative costs while widening participation. However, the current web of purchasers, centrally and locally imposed specifications and differing objectives for the implementation of technology does not deliver anywhere near the full benefits of technology investment the private sector is able to harness.

4. For too long, Government has allowed a small fragment of the IT industry to dictate capability, cost and the pace of change. This has been possible because rather than acting as a unified, informed and clear user or buyer it has been fragmented, indecisive and all too often uninformed, relying on consultants whose own vested interest frequently differs from that of the taxpayer.

2. How effective are its governance arrangements?

5. The traditional approach to Government technology projects has been to rely on external consultants to specify the project, before running tendering exercises for the build and subsequent operation of the system. Scrutiny comes via the relevant department, and subsequently by the appropriate select committee.

6. While the Gateway Process did seek to introduce external (and non-commercially interested) opinion, it commonly came after the course of action was decided upon. Where criticism of the technological route contradicted policy objectives, the political force of policy invariably rode roughshod over the concerns of experts.

7. Government has suffered because the governance of project stages – from pre-procurement to dispute resolution following implementation – is crippled by a lack of expertise. Furthermore, the driver for senior staff is often to outsource a problem for long enough to allow their own career to move on, leaving the rapidly escalating service costs and technology failures for their successor.

8. Often this cycle is repeated for the most challenging systems, a ‘sticking plaster’ approach that perpetuates Government’s inability to tackle the underlying problems and deepens Government’s reliance on the outsourcing provider, as domain expertise and technological understanding is gradually lost.

9. Little or no governance arrangements exist to prevent the loss of understanding of existing system functionality. As a result Government can find itself forced to choose between a costly rebuild project, paying ever-escalating service costs or terminating a service.

10. The movement of staff between Government and outsourcing providers is particularly acute here. The decision of whether to outsource a project is the point at which Government begins to lose its domain expertise – once this process begins it is extremely difficult to claw back, as employees are transferred and other staff retire. There must be restrictions to prevent those making long-term outsourcing decisions benefiting at any point in the future from contractors they commission.

11. Governance can only be as strong as the expertise and objectiveness of those in governance roles. For too long, Government has failed to deliver either an objective or expert oversight of technology throughout specification and implementation.

12. Commercial confidentiality arguments have frequently stifled discussion of why projects have failed, and indeed the cost to the taxpayer of failures. While undermining the transparency agenda, they also make it harder to propose alternative solutions in future and should be avoided.

3. Have past lessons from NAO and OGC reviews about unsuccessful IT programmes been learnt and applied?

13. The underlying way Government specifies and procures IT has not changed significantly despite well-informed criticism and repeated technical failure. It could be argued this is because while the criticism of such bodies is uncomfortable, there lacks the political, media and indeed public interest in finding an alternative. IT project failure has become so commonplace that is seen as almost inevitable – and as long as those responsible manage to keep everything ticking over and discomfort is minimised, there is no clear will to address the fundamental problems.

14. There continues to be a tendency towards large projects based on expectations rooted in sales language and not technical viability. The language of transformation dominates discussion, yet technical solutions are growing ever more remote from tackling the underlying issues of an ageing, fragmented architecture.

15. Frequently stated concerns around flexible specifications, open standards and interoperability, continuity of project management and supplier dependence remain as significant as they have ever been.

16. International experience and best practice has frequently been overlooked amid cries of ‘we are different’ and ‘that would never work in the UK’. Britain continues to fall behind competitor economies in the value levered from technology investment and this certainly impacts on the success of the UK technology sector, particularly homegrown SMEs.

4. How well is IT used in the design, delivery and improvement of public services?

17. The historic – and continuing - trend is to develop policy, legislate and then implement the necessary IT changes or new systems required. The policy development and legislation stages are pursued largely in isolation to the technical environment or implications. As a result, the technical solution is often dictated by time or legal constraints. A more thorough interrogation of existing systems to establish ‘where we are’ during the policy making progress would not only help inform debate, but highlight technical challenges and unforeseen opportunities.

18. IT has the potential to deliver potentially huge back-office cost savings. However, the subsequent job losses in admin-heavy departments, and loss of revenue to existing community facilities like post offices, gives rise to a tension at the heart of the use of IT in the delivery and improvement of public services. Indeed, it could be argued the failure of IT in a range of public services is the result of conflicted interests.

19. For example, a programme to move a specific benefit from a paper-based system, administered in a job centre, to a web-based system would result in administrative over-capacity in the relevant back office, loss of activity in the job centre and a reduced need for complex IT changes to manage the existing system. While it would deliver budget savings, it is arguably not in the interest of the IT supplier, local MP or civil servants for such a scheme to succeed if it were to result in a significantly smaller department, loss of a job centre or lower maintenance revenues. Magnify this to the scope of large-scale projects (e.g. Universal Credit) and it is fair to question whether the best interests of many existing stakeholders would be better served by the failure of the IT scheme required to deliver the policy.

20. From electronic invoicing to the online provision of services and use of off-the-shelf solutions, too many vested interests – masquerading as best practice - are served by the preservation of the status quo.

21. The only way this conflict of interests will be broken is if the success of genuinely transformative IT is in the best interests of those in critical positions in the design, delivery and improvement of public services.

22. Benchmarking clauses are a key tool in ensuring the ongoing improvement of services while controlling costs. They should be a central part of all contracts and their enforcement pursued vigorously.

5. What role should IT play in a 'post-bureaucratic age'?

23. An overwhelming majority of the public have seen the way they interact with consumer services transformed by the internet. In a post-bureaucratic age, IT must deliver the same transformation to their experience of interacting with Government.

24. Government’s brittle systems are often unable to adapt to the pace of change in modern life, with the underlying systems that have churned for decades simply wrapped with a glossy website. If Government is to truly move beyond a bureaucratic age, IT should serve the people. IT should be the means by which Government becomes more responsive, informed and efficient.

25. The foremost challenge should be to reconcile the fact that those who most frequently interact with the state are the least likely to be digitally active, whether that is through a lack of ability or a lack of access.

26. The wider populous can be engaged online, but there will remain a need to bridge this digital divide. The goal should therefore be for the state to bridge that divide, enabling the disenfranchised to use the same service gateways as the rest of the population. This could be provided by job centres, post offices, charities or the private sector, but IT cannot be relied upon as the means to post-bureaucratic Government. It is an enabler, but ultimately society as a whole must achieve the end itself.

27. Intellectual property will remain the primary currency of the post-bureaucratic age, and Government must ensure that it retains ownership of any IP which is created as part of public projects.

6. What skills does Government have and what are those it must develop in order to acquire IT capability?

28. Many of the systems Government is entirely reliant upon have long since become the exclusive bastion of outsourcers, with Government possessing little or no knowledge of the underlying system. In the event of a dispute, Government could be forced between risking a critical system or database going off-line and paying the price of the supplier. Government is a hostage to fortune, and at present lacks the ability to overcome this.

29. The question is whether Government should aim to build a skill set which enables it to subsume suppliers, or whether it needs to recognise the need to look further ahead and take a more strategic approach. Recapturing domain knowledge is equally as important as contract management or dispute resolution.

30. Government must become an intelligent customer. Government all too often, with little justification, relies on the supplier community to highlight best practice and where innovation should be adopted. Government appears to lack the skills and knowledge to challenge supplier assumptions about why approaches are not suitable and frequently appears all too keen to accept the argument that ‘Government is different’ and therefore bespoke solutions are required.

31. At a strategic level, Government needs to look at the skills that are needed to transform the existing infrastructure into one that is manageable, flexible and efficient. This requires a robust management skill set of existing contracts, but also a broader shift to lateral thinking and innovative exploration. Government at present is not naturally suited to conducting small pilot experiments or demanding suppliers come up with alternative proposals. If any kind of transformation is to be achieved, it needs to be far better at both.

7. How well do current procurement policies and practices work?

32. Current procurement policies perpetuate the weaknesses in the system. As well as following a process that invariably excludes user input or lateral thought until after policy and framework have been specified, it is also heavily reliant on incumbent suppliers and consultancies.

33. At present two key problems exist: firstly, the tendency to roll several small projects into one large project and secondly the preference for ‘primary’ contractors. An ancillary challenge has been the interpretation of European rules and the proliferation of procurement frameworks.

34. The net effect of these issues is to make it prohibitively expensive for many small and medium sized businesses to even get onto frameworks, let alone actually tender for projects, while the Government has failed to ensure that supply chain maturity is achieved on the supplier side. This has resulted in large suppliers having the ability to block innovation that threatens their own revenue stream, while in fact such innovation could be hugely beneficial to the Government.

35. Finally, there is minimal – if any – investment in thorough testing of innovation or alternative approaches to inform the procurement (or indeed policy making) process.

36. One alternative is a greater use of ‘Pre-Commercial Procurement’, which encourages user data driven solutions while providing a clear incentive for supplier innovation. It has been shown to support the growth of new companies and provide royalty income to the public purse through shared intellectual property.

8. What infrastructure, data or other assets does government need to own, or to control directly, in order to make effective use of IT?

37. Government needs to understand what it owns, and then be able to take a strategic view of where existing intellectual property and infrastructure can be re-used. It also needs to be far more robust in demanding that existing infrastructure is re-used wherever possible,

38. The nature of IT is that the physical infrastructure is becoming less important, and the shift to standards-based approaches should be seen as an opportunity to reclaim control of systems. As a result, Government should ensure the data held within systems is not in proprietary formats and can be extracted without huge costs or risk.

39. Crucially, Government needs to own and protect the domain expertise of systems and staff. Without this knowledge, the maintenance and modernisation of systems is dependent on suppliers.

9. How will public sector IT adapt to the new 'age of austerity'?

40. Key to success is Government becoming an intelligent – and extremely robust – customer.

41. A huge amount of existing budgets are tied up in long-term service agreements and PFI contracts. These deals cannot be sacrosanct. Supplier performance should be monitored closely and benchmarking clauses exercised ruthlessly. Litigation should not be avoided to protect the reputation of civil servants.

42. The greatest opportunity exists where Government and service providers are willing to think outside of the box – while demanding 10 per cent savings from existing suppliers is a short-term solution, who is responsible for seeking out and testing the transformative ideas that could deliver 50 per cent savings and beyond?

10. How well does Government take advantage of new technological developments and external expertise?

43. Rather than pursuing bespoke systems and large-scale projects, Government should focus on replicating best practice and testing successful innovations for their value in the public sector.

44. Overseas governments, for example Sweden, are far quicker to adopt new technology and this is driven by a combination of small pilot schemes and continuous engagement with user groups.

45. There is no one group across Government who have responsibility for finding and testing innovation or new technological developments.

46. There is a critical architectural issue here, with many Government systems operating far beyond their expected lives and based on hardware and software that is difficult to maintain and integrate. This will continue to hamper the uptake of new technology.

11. How appropriate is the Government's existing approach to information security, information assurance and privacy?

47. Arguably the last Government sought to centralise personal data to deliver a single view of an individual. The Coalition has signalled this will not continue, although there lacks a coherent strategy to address the clear challenges that exist in this field.

48. Policy should be based on the concept that, as far as possible, individuals should own their own identities and personal data and be the ultimate arbiters of whom they trust with it and whom it should be shared with. Government also needs to proactively identify whom, and in what circumstances, can bring together different data sources and cross-reference them. In a host of areas, from tackling welfare fraud to improving the electoral roll, this approach would improve information assurance without compromising personal liberty or increasing security risks.

12. How well does the UK compare to other countries with regard to government procurement and application of IT systems?

49. Many studies exist which highlight the UK’s comparatively poor performance in this area, based both upon the returns gained from investment and technological measures (for example, high speed broadband coverage).

50. Co-ordination at a national and local level appears weaker than many international competitors, with Britain failing to implement (for example, the difference in implementation costs of the Rural Payments scheme, where England’s solution was almost three times more expensive than the Scottish solution, yet proved a catastrophic failure in many regards of its implementation.)

51. One clear trend across the EU is that Britain conducts far more large procurement exercises for IT systems than similar economies. Many argue this is due to an over-zealous interpretation of European rules and a failure to grasp the connection between project size and the probability of project failure.

52. The Coalition has done much to accelerate the open Government agenda, but like many areas this has been a catch-up exercise with competitor economies.

This submission is made by Malcolm Harbour MEP, Chairman, on behalf of the Conservative Technology Forum. The Forum provides a platform for Conservative Party members to influence the use and introduction of new technologies in both government and the wider economy, and to assist in the preparation of policy for the Conservative membership of the coalition government. It also holds discussions and debates on technology-related issues.

January 2011