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April 02, 2006

Government IT Contracts

Y’What?

The only public sector computer project to be working properly is London’s congestion charge, commissioned free of Whitehall involvement.

Pretty damning fact, if true. Red Ken’s lot more efficient than central government? Isn’t it supposed to be the other way round? The brightest and best do the big jobs, the duffers mess around with the local rubbish?

April 2, 2006 in Your Tax Money at Work | Permalink

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Comments

It is certainly true that Whitehall has a long and lamentable record of managing IT projects resulting in the loss of literally billions of taxpayers' money. There is absolutely nothing novel about recognising this persisting problem. To my knowledge, there has been media reporting and editorialising about it for years.

Computer Weekly, the regular read for IT professionals which focuses on the market, the industry and jobs took the lead years back in tracking, documenting and openly reporting the progress and failings of government computer contracts. HoC select committees have routinely lambasted Whitehall departments for the succession of failures. But no one seems to have resolved why it continued and continues to happen.

Years ago, CW was saying that the personnel put in charge of these projects by Whitehall lacked sufficient prior experience and skills in computer project management. OK - but surely that would have been remedied by now.

Certainly - and reassuringly - there is clear evidence that Whitehall has more recently been obliging IT contractors to bear the cost of much or most of the technical risk of bespoke projects.

It would be invidious - and personally risky - for me to mention company names here and now although diligent searching through back numbers of CW will undoutedly reveal an astonishing fact, namely, that a series of absolutely top notch, major IT companies have all come croppers in their time over large, multi-million government IT projects. Virtually, no company of any significance in software development for government bespoke projects has an unsullied reputation. As to why seems to remain a mystery in all that I've ever read in maintaining something of a personal watching brief on this for years. I would appreciate it if anyone here can shed light.

Posted by: Bob B | Apr 2, 2006 5:28:58 PM

Am I being cynical here or is the reason that the congestion charge system working while others do not simply down to the fact that the CC system is designed to extract money from the public while the others are supposed to provide a service?

Under the old civil service rules the top percentile of those passing the civil service exam always went to the treasury and it's a given that the tax collection service will always be the most effective branch of government.

RM

Posted by: The Thought Police | Apr 2, 2006 9:06:33 PM

RM - I'm almost desperate in my unremitting quest for any remotely credible, robust theory to account for, or excuse, the long history of failing government IT projects but exonerating the government's revenue collection services from blame by virtue of their office, so to say, simply isn't credible in the light of recent, damning news reports:

"The minister in charge of tax credits has said the system is getting better at dealing with overpayment problems.

"'Accuracy is improving,' Paymaster General Dawn Primarolo told the Treasury Select Committee.

"But the minister admitted that her department was still failing to meet its target of dealing with tax credit overpayment disputes within four weeks.

"The tax credit system has been dogged with problems ranging from clawbacks of overpayment to organised fraud."
http://news.bbc.co.uk/1/hi/business/4671108.stm

"Low risk. High reward. Easy hours. And all from the comfort of the internet cafe just down the road.

"Who could resist such an inviting prospect?

"Certainly not the organised criminals who - it now emerges - have been assaulting the government's tax credits system so effectively that they forced the closure of its online portal on 1 December.

"The victims of the scam are legion. Not only have numerous legitimate, and often needy, recipients of tax credits found themselves out of pocket; thousands of civil servants are now discovering that their personal details have been stolen and abused.

"And then, of course, there's the entire UK population, whose taxes help support the £14bn tax credit system."
http://news.bbc.co.uk/1/hi/business/4532682.stm

The Treasury may be virtually beyond challenge within Whitehall -- if only because of its control over purse strings -- on issues of high economics theory but not necessarily so on implementation and administration as we can tell from the above news and knuckle wrapping in HoC select committee reports.

All credit is undoubtedly due to the Treasury for resisting the prevailing political orthodoxy about the widely claimed benefits of joining the Eurozone but as a generality the Treasury's prevailing orthodoxy on issues of high economics has a history of changing by twitches for all the undoubted departmental talent at its disposal.

In the 1920s, the Treasury notoriously favoured returning the Pound to the Gold Standard at the pre-WW1 parity - which hugely contributed to the depressed state of Britain's economy during the 1920s.

In the mid 1930s, the Treasury famously rejected the Keynesian prescription of public works as a policy for reducing unemployment -- because spending on public works would supposedly inevitably "crowd out" an equivalent amount of private investment spending (GC Peden (ed): Keynes and his critics (2004)). Fortunately, the National Government in 1931 abandoned the Gold Standard and Britain was less afflicted as a consequence by the international depression of the 1930s than many other market economies.

After WW2 through to the 1970s, Britain's Treasury was absolutely sold on Keynesian fine-tuning demand management by fiscal means as mainstream stabilization policy - hence what was dubbed at the time: Butskellism, the post-war consensus, for maintaining "a high and stable level of employment" regardless. That was at a time when West Germany was successfully achieving the "German economic miracle" to overtake Britain's per capita GDP by the late 1950s in a context where the independent central bank, the Bundesbank, was successfully pursuing what was essentially a monetarist policy to curb inflation. Arguably, an essential ingredient for the West German economic miracle was an under-valued exchange rate for DMark for much of the time whereas Britain had an over-valued exchange rate, hence the unplanned devalutaions of 1948 and 1967.

From May 1979 through to the autumn of 1985, Treasury policy changed course to adopt an explicitly monetarist policy under the tag: Medium Term Financial Strategy. That didn't work in terms of its own declared objectives -- money supply growth doggedly refused to remain within the policy targets. Deregulation of the financial system, notably liberalization of external capital movements, had changed the context and demand for money functions ceased to behave predictably. In 1995, the IMF wrote off monetarism - and so did Milton Friedman a little later.

Targeting the Pound exchange rate with the DMark -- "to maintain a competitive exchange rate" -- became the focal objective of stabilization policy in autumn 1985. That led to schizophrenia -- or cognitive dissonance, in the professional jargon -- over monetary policy since low interest rates were required to resist appreciation of the Pound whilst higher interest rates were needed to curb inflation. By the end of the 1980s, the economy progressed to an unsustainable boom and Britain chose the moment to join the European Exchange Rate Mechanism (ERM) in October 1990 with the wide acclaim of the Labour front bench and much of British business. In September 1992, Britain dropped out of the ERM. Fortunately, at that point Norman Lamont (Chancellor from November 1990 - May 1993) with Alan Budd as chief economic adviser introduced the sanity of staying with a floating exchange rate and adopting a monetary policy geared to targeting inflation. Norman Lamont was fired. Fortunately, Alan Budd wasn't.

I've left out some detail - like the hike in VAT rates in 1979 when the government (rightly) made curbing inflation its premier policy objective but the Treasury's story through to 1992 isn't exactly one of unalleviated glory on issues of high macro theory.

By end 1995, Britain's standardised unemployment rate was lower than that of France, Germany or Italy and its employment rate of working-aged people higher. Famously, Britain negotiated opt-outs from European Monetary Union in the Maastricht Treaty signed at December 1991.

Posted by: Bob B | Apr 3, 2006 4:50:27 AM

In today's news. Here we go again:

"The government wants heads to roll at Accenture, as its multi-billion pound IT project hits trouble again

"The body in charge of the £6.2bn NHS IT project has called for 'key personnel changes' at Accenture after the outsourcing company announced a $450m (£260m) loss on its health service contracts due to delays in hitting delivery deadlines.

"Accenture said in its second-quarter financial results this week it expects to take a $450m hit on its NHS IT contracts over the next three to four years. Accenture is the prime contractor for the North East and Eastern regions in two contracts originally estimated to be worth around £2bn over 10 years."
http://news.zdnet.co.uk/software/applications/0,39020384,39260991,00.htm

And Patricia Hewitt, the present health minister, used to work for Accenture.

Posted by: Bob B | Apr 3, 2006 11:47:46 AM