Examination of Witnesses (Questions 80
MONDAY 12 NOVEMBER 2001
GIEVE CB, MS
80. In paragraph 3.15 it says, "The Home
Office was told "presumably by its lawyers, "that although
the enabling agreement was entered into in 1994 . . . the Year
2000 problem did not emerge until around March 1996. Bull had
failed to meet industry best practice by continuing to provide
non-compliant equipment". You continued to provide it after
it had become a problem which was generally understood "and
had failed to provide an assessment of the extent of the Year
2000 problem before January 1998". Do you agree with that
(Mr Crade) I agree to a certain extent. What we were
trying to do was to get warranties from software suppliers about
their Y2K performance and in the absence of those warranties before
we could come up with a strategy on how to take action on that,
we were continuing to supply those systems.
81. In summary I think you have told us that
the interface could pose a health and safety problem, CRAMS failed,
you were not very proud of it, you continued to provide equipment
which did not comply with Y2K after it had become an industrywide
problem and you failed to provide an assessment of the Y2K risks
by January 1998 as the industry expected you to.
(Mr Crade) We did provide an assessment in early 1998.
82. January 1998.
(Mr Crade) Yes.
83. Was that by January 1998 or was it early
1998; January is not necessarily early 1998?
(Mr Crade) That is my understanding from the report.
84. The NAO report stands and I have just read
it into the record. I think you have been an extremely poor contractor.
You must be delighted that you have found an even worse client.
What is your evaluation of the way in which the client has operated
in relation to all this?
(Mr Crade) In dealing with the Home Office it has
been quite variable over the seven different programme directors.
85. I think "variable" is a euphemism
for being even worse than yourselves. I want now to turn to the
Home Office and ask one or two questions about the quality of
procurement advice which you have received and presumably have
been continuing to receive until quite recently according to the
evidence here. The procurement function seems to have failed on
every count. First of all you failed to find who the client was
inside the department. It is inevitable that you failed to get
a detailed client specification. You then failed to receive adequate
legal advice and then you failed to project manage the system
for the installation of this in an adequate way. Once you were
in the hole you continued digging. You continued to let further
and further contracts to a contractor who by his own confession,
according to how I read his words, was failing. Do you think that
is an accurate summary of the situation?
(Mr Gieve) No, I do not think it is a summary of the
whole situation, although there certainly were failures.
86. You were in the middle of a contract, you
were in a hole which it seemed to me you had to continue digging
because you were dependent on hardware and software which only
one supplier could provide. Then you suddenly discovered that
legally you had no power to continue to let the contract. That
is barely competent. Can I ask whether the legal advice comes
from within your department or is it provided from elsewhere in
the Civil Service?
(Mr Gieve) This legal advice came from outside the
Civil Service. It came from Bird & Bird, from chambers.
87. Private sector legal advice.
(Mr Gieve) Yes.
88. What kind of cost would the Home Office
have incurred in receiving that legal advice which was clearly
not correct, was it?
(Mr Gieve) I meant the advice that we may have breached
89. No, I was trying to find out how you got
into this mess.
(Mr Gieve) The original advice. I do not know who
advised us on that. I would guess we would normally have relied
on our own lawyers.
90. Let me take you back to this famous paragraph
3.15; famous because I have just read it into the record. This
Y2K problem. It seems to me that you had two options: one was
a short, quick fix, which would have been relatively inexpensive
and one was to dig a huge great further hole inside the hole you
were already in. The legal advice you were receiving seems to
me to have been fairly nebulous. It was not clear whether or not
you had an enforceable case against Bull. Is that how you see
it? Am I reading that paragraph right?
(Mr Gieve) Yes. It was a slightly `either/or' opinion.
As I read it, it said that we did not have a legally enforceable
case against Bull at the time, but on the other hand if they continued
to run a system which did not work we would have one. It was a
case for negotiation. In terms of quick fix versus digging deeper
into the hole, what we decided to do was first of all to make
sure we were Year 2000 compliant and secondly, in the process
to upgrade some of the functionality of the system and that upgrade
worked. We did upgrade it and that was useful so I do not think
we regret investing in improvements around Y2K.
91. It does make it clear that you get some
benefit from doing the two things together. Nevertheless Bull
by their own confession just now accept that they were not providing
the highest quality service imaginable, particularly at this time,
post-January 1998, certainly post-1996 when the Y2K problem emerged.
Legal advice the department was receiving does not seem to have
been very good in relation to Y2K problems, does it?
(Mr Gieve) I am not criticising the legal advice here.
It was probably correct as it says here.
92. You get lawyers saying on the one hand this
and on the other hand that and leaving it to the client to make
a decision. The fact is that the contract they were interpreting
in that way had been poorly framed, it must have been to leave
you as the client at the mercy of another £15 million hit,
or another £15 million hole, to continue the analogy. That
is what it cost you, did it not?
(Mr Gieve) It did. As a non-computer person, I think
it is a bit odd that in 1993 and 1994 people had not foreseen
that the date was going to change and the implications of that.
Nonetheless that was the situation right across industry as well
as in government and we did not have a choice about whether to
make the system compliant. It is not a problem of our legal advice.
93. It is the nature of the contract which you
entered into with Bull, which I might describe from their point
of view as a sprat to catch a mackerel. Whatever they say about
the contract, they started off with a relatively small contract
and ended up with a fairly large contract. From the point of view
of the Home Office though, this was a relatively small contract
which became a very large one and caused a great deal of embarrassment
to the Home Office, yet it is failing still to deliver everything
which it is required to do. I notice that CRAMS has cost another
£1.6 million to bring it up to Year 2000, notwithstanding
the fact that it barely works anyhow.
(Mr Gieve) It works in some areas.
94. To some extent it works in some areas. It
is not working as it was intended in every respect in any single
part of the country.
(Mr Gieve) That is true, especially as regards the
intercommunication of case work, but there are some areas which
are using it extensively.
95. Yes, but not fully. It is back to this question
of procurement function and legal advice when you get locked into
a single supplier, as you were with Bull. That cannot have been
a contract which was enforceable; it clearly was not, judging
by the advice which you have received subsequently. Do you see
Bull as partners or sharks?
(Mr Gieve) We have now just signed a further agreement
for the next two and a half years. We see them as successful and
we hope collaborative contractors.
96. That is not how this document reads. I just
wonder whether you feel on reflection that your words sound slightly
(Mr Gieve) My words now?
97. The whole of your presentation since you
sat down, to be honest.
(Mr Gieve) I am not trying to be complacent. I said
right at the outset that there are many lessons to be learned
from this and a lot of things went wrong and that is absolutely
98. Do you accept the point I am making which
is that the procurement function itself inside your department
or wherever you received that advice in legal technical terms
and then in project management terms was fundamentally flawed
given the state of this contract?
(Mr Gieve) The procurement was faulty at two points.
Clearly the contract management and project management was faulty
too. I would just say that when we set out on this and indeed
up until April this year, we were holding a framework contract
but the actual contracts for the kit were with the separate local
99. My own view is that to describe a contractor/client
relationship in the way you just did as "collaborative"
. . . Certainly it is collaborative, but it must be more than
that as well. I just do not get the impression that you have been
sharp enough here. I just worry still that the culture which I
think you are partly expressing, reflects more emphasis on the
collaborative part and perhaps less on the eagle-eyed part, which
any good client function should exercise.
(Mr Gieve) What I was referring to was the fact that
we have now let a new contract starting in January for two and
a half years, extendable. That is a very different sort of contract
from the one which is just coming to the end. We have enormously
increased our investment in our procurement and project management
capability within the National Probation Service. We have now
put right the mistakes. We would not have chosen Integris as the
company for that contract if we had not believed that they could
offer us good value for money. Clearly we do believe they offer
us good value for money. I was talking about the future contract
at that point.
Jon Trickett: My record is in the minutes.
3 Note by witness: Bull has met all of its
contractual commitments under the NPSISS framework agreement,
and the implementation of the IT was described by the NAO as "a
notable success". Back