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Monday 2 February 2009 |
By Alexi Mostrous
It is costing the taxpayer almost as much as the autumn bank bailout. But the huge amounts being spent by the Government on information technology — £16 billion this financial year — are barely noticed.
With no central regulation by one ministry, civil servants enter into contracts worth billions with a few select companies. The details are protected by confidentiality agreements and periodic progress reviews in Whitehall are kept private, despite calls by MPs and anti-privacy campaigners for their disclosure.
The cost of most large projects balloons. The Government admits that only about 30 per cent are completed on time and on budget.
An investigation by The Times and Computer Weekly shows that the overrun of the largest IT projects totals £18.6 billion. Those include a controversial plan to computerise all NHS patients’ records, originally estimated to cost £2.3 billion over three years but the cost of which has grown to £12.7 billion.
Two companies have dropped out of the project, which is already four years behind schedule. Hospitals left with obsolete equipment have had to up-grade on their own.
Yesterday Whitehall sources told The Times that the NHS programme, which aims to link more than 30,000 GPs to nearly 300 hospitals, would be reviewed. Non-foundation-trust hospitals would be allowed to opt out and buy from smaller providers.
Nigel Edwards, director of policy at the NHS Confederation, which represents 90 per cent of NHS organisations and which welcomed the review, said: “You can’t do modern healthcare without a computer system. But the Care Records system at the heart of the programme isn’t working. The software isn’t functioning. There is a growing pessimism among the people I represent that it can actually deliver.”
The Government will spend more than £100 billion on IT over the next five years, according to Kable, a public sector research company. Since most projects overrun, the actual amount spent could be much higher.
The main suppliers, EDS, BT, Capgemini and Fujitsu, reap hundreds of millions in profit. Accenture, one of the smaller suppliers, earned a profit margin of at least 30 per cent on a recent contract with HM Revenue & Customs to record national insurance numbers, the National Audit Office found. The average return in private industry is less than 15 per cent.
But public sector work holds pitfalls for suppliers, who often find government departments difficult customers.
Fujitsu pulled out of the NHS programme for IT in May after receiving 650 requests to change its product. Peter Hutchinson, the group director of Fujitsu, told the Public Accounts Committee this summer: “There were a lot of delays in getting paid for things, which was quite frustrating, and there is no question that local trusts withheld agreement to payment in order to force us to make further changes to the system and keep us under pressure.”
The Japanese company, which is now in mediation with the Department of Health, refused to comment on reports that it is seeking £600 million in compensation.
More bills were paid by the Government last year when QinetiQ, which provided the National Policing Improvement Agency with a system called the Police Portal, sued the agency for £6.6 million after the project was cancelled. QinetiQ’s lawyers said that the agency had “failed to provide consistent and timely data” and was “routinely failing to return telephone calls, or answer e-mails and correspondence.” The claim was settled out of court and beyond the gaze of the public eye.
An analysis by The Times of the main government IT contracts reveals a succession of problems, delays and overruns.
Almost 5 per cent of IT projects have been given two consecutive “red flags” by independent experts employed by the Office of Government Commerce. It said that these 45 projects had consistently “unachievable” aims but it would not reveal which contracts were in trouble.
Next month officials at the Ministry of Justice expect to receive a scathing report from the National Audit Office after a multimillion-pound prison project almost tripled in cost.
The audit office is expected to question why the cost of the National Offender Management Information System shot up from £234 million in June 2004 to £690 million by August 2007 at the same time as its scope was scaled back.
The project, to link up records for each offender across the criminal justice system, is now being installed only in prisons and not shared with the Probation Service, as originally planned.
There are many successes in government IT, including the efficient online system used by thousands to renew their car tax, but they are overshadowed by the many calamities. Among their number are delays in marking school SAT tests, delays of four years in the Scope system to combat terrorism by linking intelligence services and the failed online Medical Training Application Service, which has angered junior doctors.
Progress in a multibillion-pound project to replace more than 300 systems used by the Armed Forces, the Defence Information Infrastructure, has also been slow. In its first three years the MoD spent more than 90 per cent of its original budgeted costs but received less than half of the computer equipment and software that it expected.
Last month the Public Accounts Committee criticised the programme’s “severe underperformance” and said that MoD officials had made “major miscalculations” about the buildings in which the new system would be installed.
In 1998 Fujitsu bid £146 million to provide IT for the magistrates’ courts, in a project known as Libra. It ended up being paid £232 million for only part of the original system. The whole project is now expected to cost in excess of £500 million, a 352 per cent cost overrun.
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The cost of computing
£18.6bn overspend on key IT contracts
Enough to . . .
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build 61 new critical care hospitals
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complete Heathrow’s new runway and terminal twice
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host the 2012 Olympics twice
£17bn is the original estimated cost of the ten largest IT contracts currently under way
As long ago as 1984, MPs on the Public Accounts Committee warned senior civil servants against being too optimistic in setting budgets and time frames on large computer projects.
The response of governments to IT failures has been to set up internal committees and programmes to identify problems early in a project’s life. These initiatives are always well intentioned — and there are many of them — but they have had little effect on the biggest and riskiest schemes.
Almost every time there is a failure of a large project to deliver what was promised within the original budget or time frame, the heads of departments and agencies say that the lessons have been learnt. But they have not, or have been pushed to one side because each project is regarded as unique. So ministers, encouraged by potential suppliers and other enthusiasts, approve incrementally larger and riskier schemes, while potential suppliers reach for their calculators and ministers look forward to a series of press releases on the (potential) benefits of the new technology.
None of the problems is the fault of thousands of civil and public servants and contractors who work in information technology for government and keep its uniquely complex machinery running smoothly. One cause of the almost predictable failure of big, risky projects is the way they are approved in the first place — without anyone seriously or effectively challenging whether a scheme is too ambitious.
Overoptimism is Whitehall’s euphemism for offering ministers a project with short timescales, capped costs and in-built simplicity to get the scheme approved. The project’s risks are not considered seriously because those pushing the original concept want the money to be approved — and for all the right reasons. Nobody can argue with the need for an electronic health record to replace paper records that are often lost or unavailable when needed. But the potential for a project to be simple often loses out to complexity.
There needs to be a different way of doing things — the introduction of parliamentary scrutiny before the main contracts are awarded. MPs should scrutinise IT projects and programmes before they are approved formally, instead of when constituents complain.
MPs are not computer experts. But they don’t need to be. They could challenge assumptions about costs and time frames, and test whether officials understand fully the commitments they are about to make. They could soon discover whether the complexity has been underestimated.
The preference of government, however, is for continued secrecy over its biggest schemes — what it calls “mission-critical” projects. The Government is even willing to go to the High Court to stop the publication of early “gateway” reviews — which assess risky projects — on the ID cards scheme. This culture of secrecy and lack of parliamentary scrutiny before a project starts to implode can only contribute to the cycle of failure.
Tony Collins is executive editor of Computer Weekly
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