Examination of Witnesses (Questions 180
MONDAY 12 NOVEMBER 2001
GIEVE CB, MS
180. Nobody knows the size of the penalties
for something which was between 69 and 91 per cent when the target
was 95 per cent. Subsequently in the first ten months of 1999
the performance was between 76 and 91 per cent and the contractor
still made money out of the whole contract. Have I summarised
that correctly? I think so.
(Mr Gieve) Over the whole contract, yes. We can only
apply the penalties we have in the contract.
181. I understand. Mr Crade, did you make a
profit on this section of the contract?
(Mr Crade) Difficult for me to tell with that aspect,
but what we are talking about here in these paragraphs is the
Helpdesk service particularly, nothing else.
182. I understand that.
(Mr Crade) The total value of the Helpdesk service
in relation to the overall contract was quite small.
183. Do you think you made a profit on this
(Mr Crade) I do not know. Unlikely, I would say.
184. So you must have made even bigger profits
somewhere else to balance that. If I look at paragraph 3.6, we
have here in the first sentence, a fascinating suggestion that
"Before the start of this examination", presumably by
the NAO, "the Home Office had not reviewed the total costs
and achievements of the NPSISS programme against the business
case. There has been no overall reporting of expenditure and no
comparison made against the budget in the business case".
Does that seem right?
(Mr Gieve) No. I assume it is accurate but no, it
is not right.
185. How did this happen then?
(Mr Gieve) What happened was that each year we set
an individual budget in the light of where we had got to and how
many people were taking the NPSISS programme. As this report shows,
we simply did not run the sort of project monitoring and management
that we should have done.
186. Did the Treasury notice this?
(Ms Constable) We did not set any specific proposals
for us to monitor this particular project, so we did not notice.
187. That is a no. Thank you.
(Ms Constable) We did not notice.
188. Am I right in thinking that until the NAO
looked at this, in fact if the NAO had not looked at this, we
would never have had any of this. Is that a fair assessment?
(Mr Gieve) Do you mean you would not have had a report?
189. We certainly would not have had a report
from the NAO if the NAO had not looked at it.
(Mr Gieve) No; in fact that is not true because the
independent Inspectorate of Probation decided anyway to look at
the use of IT and the system and much of this report is based
on an inspection report.
190. Let me be slightly more specific then.
What I was interested in was reviewing the total cost and achievements
against the business case. That would not have been the role for
the Inspector of Probation would it though?
(Mr Gieve) No, although they did cover costs and benefits
in their report.
191. Yes, but not against the business case.
I shall come on to costs and benefits in a moment.
(Mr Gieve) No, I do not think so.
192. I think I understand what the position
is there. Paragraph 3.7, where we have in the third sentence,
"The Audit and Assurance Unit identified an overpayment to
Bull of £395,000 . . . The funds were repaid". On how
many other occasions has there been an overpayment and refunding?
(Mr Gieve) In this contract?
(Mr Gieve) I am not aware of any others.
194. How do you know that there have not been
any other repayments?
(Ms Wallis) There has been another repayment for work
195. How much was that?
(Ms Wallis) Forty thousand pounds.
196. We have no way then of assessing whether
or not there are any other overpayments in the system. Is a thorough
review undertaken to make sure you have not paid them more for
stuff they have not done?
(Mr Gieve) There are two regular reviews: internal
audit and then our external audit by the NAO.
197. That is what, just short of half a million,
and the company still made a profit on the contract. May I turn
to paragraph 3.11 which has a wonderful phrase? "The Home
Office told us that the negotiation had had to be completed under
severe time pressure because Bull was withdrawing resources from
support functions which it considered were not covered by existing
purchase orders." Is another way of putting that, that Bull
had you over a barrel? Is that a yes?
(Mr Gieve) You could put it like that.
198. That is sufficient for my purposes at the
moment. That is not really the action of a partner, is it? You
had to negotiate a contract with them quickly, which is hardly
the best negotiating position to be in, because they were saying
that if you did not negotiate it quickly, they were going to stop
(Mr Gieve) As I understand it, the situation was that
neither the Home Office nor Bull, nor the probation boards which
were separate, were happy with the way the contract was going.
We had just had a report that there were overlapping and perhaps
duplicating purchase orders. We wanted to rationalise it and therefore
we wanted in effect to enter a consolidated new contract with
Bull. They were saying they were doing lots of stuff which they
had never contracted to do, so we were in a normal negotiation
which we were trying to do quickly.
199. You have agreed this statement.
(Mr Gieve) Absolutely.