1.The Ministry of Justice’s unjustified and overly ambitious scope for the programme has proved to be undeliverable. The Ministry of Justice (the Ministry) told us that it had been “startled and stunned” by the over-optimism of the original project. It accepted that not enough research was done before the programme was approved and that it should have piloted the programme. The programme received limited external challenge because at the time it was seen as just a simple re-procurement of an existing service. Earlier reviews would have provided opportunities to examine the justification for the programme and explore whether it was achievable. This combination of failures resulted in requirements for the programme that were far too ambitious, including the development of a bespoke tag, and a timetable for delivery that was unachievable. The Ministry accepted that it should be more ready to use off-the-shelf products where these are already available and appropriate rather than re-inventing the wheel and seeking to develop ground-breaking, untested technology. The Ministry assured us that this situation would not be allowed to happen in future. It told us that it had introduced two new governance mechanisms to better challenge its investment decisions and commercial and contract management.
Recommendation: The Ministry should ensure that it has a full understanding of the complexity and deliverability of future programmes and that estimates are tested for optimism bias and subject to proper levels of external challenge.
2.The Ministry’s weak management of the programme meant that it failed to spot and manage problems. The Ministry had a fundamental lack of knowledge of electronic monitoring services or how they operated when the programme started as the service had always been outsourced. Yet it chose the highest risk procurement strategy in adopting the ‘tower model’ for delivering the programme. This split the end-to-end service into a four-supplier ‘tower’ structure, with an integrator to bring the four contracts together. The Ministry was unprepared for what emerged to be a transformation programme rather than a simple re-procurement. It lacked the capacity and capability to manage the difficulties and delays that it created. The Ministry discovered during the procurement process that it had been overbilled by the existing suppliers of electronic monitoring services, which better contract management by the Ministry would have addressed. This has resulted in a repayment of £179 million from Serco and G4S. This matter has been referred to the Serious Fraud Office. The programme lacked continuous leadership, having been led by five senior responsible owners (SROs) in its six-year life. The Ministry now recognises that the model it had adopted will not deliver the system that it wants. It has brought the integrator function in-house and strengthened its commercial and project delivery functions. The Ministry accepted that its oversight of the early stages of the programme and previous contracts for electronic monitoring had been too light but told us that it was confident that it now had the skills to succeed.
Recommendation: The Ministry should ensure that it puts the right skills in place to properly oversee future projects from their outset and keeps them there, particularly those being delivered by private contractors.
3.We are deeply concerned that, despite the programme already running five years late, further delays are now expected. The Ministry originally expected the new tags to be deployed from November 2013. But the programme has been subject to serious and successive delays, including two failed attempts to procure the new tags. At the time of the Nation Audit Office’s report in July 2017, the Ministry expected to start rolling out the new tags from the end of 2018. The Ministry told us that owing to further delays, the new tags are now expected to be ready in early 2019. While the Ministry assured us that it was “absolutely confident” that the programme will succeed, we remain to be convinced that the programme will be delivered to the new timetable.
Recommendation: The Ministry should, by the end of March 2018, write to the Committee with a full breakdown of the timetable for the programme, and write to us with details of any further slippage as the programme progresses.
4.The Ministry of Justice’s approach to involving small and medium sized enterprises (SMEs) in the programme meant that they were set up to fail. The decision to adopt a ‘tower’ structure for the programme was driven in part by the Ministry’s aim to increase competition and participation by small and medium sized enterprises. But the terms it imposed on SMEs were unreasonable and its approach ultimately failed. The Ministry appointed an SME, Buddi, as its preferred bidder to develop and produce the new tags in August 2013, but ended the company’s involvement in March 2014 after being unable to resolve fundamental differences. In particular, the Ministry expected Buddi to hand over its intellectual property for nothing. Also, different companies in the supply chain were supposed to work with each other but there was no contractual relationship between them, only with the Ministry. It contracted another SME, Steatite, to develop and produce the tags in July 2014, despite the fact Steatite had scored below the minimum benchmark in the procurement. The Ministry ended its contract with Steatite in November 2015 after growing delays to the programme. The Ministry failed to adapt its approach to help smaller suppliers, or to take into account their more limited staffing arrangements and financial resources. The Ministry told us that it regretted that it had been unable to agree a contract with Buddi, and accepted that it would have been better to re-open the procurement exercise rather than to rely on Steatite as the last remaining bidder. We were concerned that this programme is a bad advertisement for SMEs working with government and extremely damaging to SMEs’ confidence in government programmes.
Recommendation: The Ministry of Justice should, by March 2018, write to the Committee with details of where it has adapted its approach to working with SMEs to ensure that they are able to participate in similar projects in future.
5.The programme has so far failed to deliver the intended benefits and potentially undermined confidence in electronic monitoring services, wasting at least £9 million of taxpayers’ money. The Ministry spent £60 million on the programme up to the end of March 2017, yet still relies on the service that was available when the programme started in 2011. The costs it has incurred so far include paying Steatite £4.4 million (plus VAT) in compensation for ending its contract for the programme, on top of the £3.3 million (plus VAT) paid during Steatite’s contract. The programme was originally expected to reduce the cost of tagging by between £9 million and £30 million a year but has failed to deliver any tangible benefits so far. The Ministry over-estimated the number of people who would be subject to tagging. The number of offenders who are subject to tagging orders has been falling and is now well below expectations, which could suggest that confidence in electronic monitoring has been undermined. The Ministry of Justice does not know why the take-up of offender tagging has declined. It told us that it was working with stakeholders so that they better understand the role of tags to ensure that they are used more fully as an alternative to custodial sentences where it is appropriate to do so.
Recommendation: The Ministry should, by the end of March 2018, write to the Committee with an update on how it is working with decision makers in the criminal justice system to ensure they have confidence in the electronic monitoring service and understand their options to use tagging as an effective alternative to custody.
6.The Ministry has paid dearly to learn lessons which should have been common sense, and we are not assured that this situation could not happen again. We were not convinced that the Ministry should have paid such a high cost to learn the lessons it described. The fundamental over-ambition of the programme should have been self-evident. The Ministry accepted that it did not have sufficient knowledge of electronic monitoring services or how they operated as they had always been outsourced. It told us that it was now piloting GPS tagging to understand better where decision makers within the system will choose to use location monitoring as a sentencing option. The pilots should have been undertaken at the beginning of the procurement process, not four years later. The Ministry asserted that it was learning lessons from the pilots which will inform the future delivery of the programme, but it did not explain what these were or how they would change the programme in practice. The Ministry currently has 16 major projects in addition to electronic monitoring, almost all of which are rated as amber or less in terms of confidence in their ability to deliver.
Recommendation: The Ministry should, by the end of March 2018, publish the lessons it has learned from the programme and how it has used these to improve delivery of its current portfolio of programmes.
23 January 2018