Government And IT - "A Recipe For Rip-Offs": Time For A New Approach - Public Administration Committee Contents


Written evidence submitted by Rt Hon Francis Maude MP, Minister for the Cabinet Office

This Memorandum answers questions submitted by the Public Administration Select Committee for the Cabinet Office evidence session on 30 March 2011.

Question 1:  A summary of recent Government initiatives and policies aiming at reforming how it uses IT

Answer:

The following represents the relevant commitments made in the Structural Reform Plan included in the Cabinet Office Business Plan. The detail is included in Annex A.
1.3Cut the costs of existing government contracts and improve long term supplier management
1.4Change the process for managing large projects
1.9Integrate ICT infrastructure across central government, and improve value for money in ICT
1.10Create new ICT procurement process
1.11Identify ICT projects and programmes to terminate and ensure that these are decommissioned
1.12Improve the rules around designing and running ICT projects and services
1.13Create a new government channel strategy to increase engagement, lower costs, and improve the delivery of online services
2.3Create a new "right to data" in conjunction with the Ministry of Justice

The following table lists the announcements that have been made.
DateSource of Statement Summary of statement
24 May 2010HMG announcement As part of the Chancellor's drive to save £6.2 billion of public spend in 2010, Government announced the formation of the Efficiency and Reform Group (ERG), whose board would be chaired by Chief Secretary to the Treasury and Minister for the Cabinet Office. With immediate effect, their priorities to ICT were a freeze on new ICT spend above £1m, a review of all large ICT projects and renegotiations with major suppliers.
30 July 2010Cabinet Office announcement As part of the Government's commitment to transparency, the Programme for Government (PFG) would drive forward a number of initiatives. Treasury's COINS database of public spending has been released to the public; Government has drafted its Public Data Principles on data.gov.uk and announced the intention to publish details of all ICT contracts above £1 million in value. Government has also announced its commitment to Open Source and Open Standards, with Guidance for Procurers to be published in September 2010.
18 October 2010Minister for the Cabinet Office Stated his intentions to leave "No stone unturned" in the push for efficiency savings, with ERG leading the drive. In addition to ERG controls which stipulate that ICT projects over £1 million must be approved centrally, a review of over 300 ICT projects has taken place, with estimated savings of £1 billion coming from their re-scoping or closure.
16 December 2010Cabinet Office announcement Government expects to save £3 billion in one year as a result of the efficiency and reform measures implemented in 2010. Around £1 billion has been achieved so far, with £500 million coming from the moratoria on consulting, ICT and recruitment. Furthermore, details of all ICT projects over £1 million as of 31 July 2010 have been published by Cabinet Office, as have the Operational Efficiency Programme Benchmarking report for April 2009 to May 2010, which highlights the poor quality of previous government data.
31 January 2011Cabinet Office announcement Announced that from 1 February 2011, Joe Harley CBE will be Government Chief Information Officer (CIO). He takes the role alongside his duties as DWP CIO and Director General. Bill McCluggage, Deputy CIO will report directly to Joe. His new role will cover the ICT agenda for data centre, network, software and asset consolidation and cloud. He will also recruit a Director of ICT Futures, who will be responsible for directing agile methods and skunkworks.
2 March 2011Minister for the Cabinet Office and Chief Secretary to HMT Announced new governmental-wide spend controls on recruitment, consultancy, property, advertising and marketing and ICT. All new ICT spend above £5 million will now be subject to Cabinet Office approval and the newly formed Major Projects Authority will oversee all large projects.
3 March 2011Ian Watmore Government needs to look to make more use of "agile" methodology in its implementation of IT projects. He said it needs to, where appropriate, adopt agile—which involves modular and iterative developments with heavy user involvement and feedback—along with building a "platform" for a government-wide approach to IT.

Question 2:  An assessment of why the Government has found it so difficult to reform IT in the past

Looking at previous Governments policies toward IT, the documents contain similar analysis of the problems and proposed solutions. For example, the 1999 Modernising Government White Paper the Government needed to bring about:

"a fundamental change in the way we use IT. We must modernise the business of government itself—achieving joined up working between different parts of government and providing new, efficient and convenient ways for citizens and businesses to communicate with government and to receive services."[1]

This language doesn't seem too different from what the Government is saying at the moment. This leads to the question "Why has Government found it bring about change in the way it uses IT?"

Answer:

Large organisations in both the Private and Public sector suffer delay and failure in the delivery of big projects and programmes with substantial ICT elements. Given the greater profile of the public sector failures, and the general lack of information on comparable failures within the private sector, issues with government projects and programmes seem significantly more prevalent than their private sector counterparts.

Nonetheless, there have been significant failings in government projects and programmes.

The reasons why the Government has found it difficult to reform IT in the past are:

—  projects tend to be too big, leading to greater risk, complexity and limiting the range of suppliers who can compete;

—  departments, agencies and public bodies too rarely reuse and adapt systems available off the shelf or already commissioned by another part of government, leading to wasteful duplication;

—  systems are too rarely interoperable;

—  the infrastructure is insufficiently integrated, leading to inefficiency and separation;

—  there is serious over-capacity, especially in data centres;

—  procurement timescales are far too long and costly, squeezing out all but the biggest, usually multinational, suppliers; and

—  there has been too little attention given at senior levels to the implementation of big ICT projects and programmes, either by senior officials or by ministers. Similarly, Senior Responsible Owners (SROs) often move on due to change in roles.

Question 3:  How will the Government's current approach address the problems it has faced in the past?

This follows on from the previous question. Given the Government has faced these challenges before, and has not made as much progress as it would have liked, how will the current Government's approach avoid repeating old mistakes?

Answer:

Government is determined not to repeat the mistakes of the past. In order to do this Government recognises that ICT is important for the delivery of efficient, cost-effective public services that are responsive to the needs of citizens and businesses. We want government ICT to be open. Open to the people and organisations that use our services. And open to any provider regardless of size.

To address the challenges listed in question 2, we have done, or will do, the following:

—  introduce new central controls to ensure greater consistency and integration;

—  take powers to remove excess capacity;

—  create a level playing field for open source software;

—  greatly streamline procurement and specify by outcomes rather than inputs;

—  create a presumption against projects having a lifetime value of more than £100 million;

—  impose compulsory open standards, starting with interoperability and security;

—  create a comprehensive asset register;

—  create a cross-public sector Applications Store;

—  require SROs to stay in post until an appropriate break point in project/programme life; and

—  encourage boards to hold ministers and senior officials to account on a regular basis for the progress of projects and programmes with substantial ICT elements.

It is planned that these initiatives will be funded from within existing spending plans. They are all about spending money better, rather than spending more, and will be used as exemplars of the Government's major projects methodology.

Question 4:  What is the Government's current policy towards; Open Source, G-cloud, and Agile Development?

This may have been covered under 1, but if it hasn't it would be useful to have the most recent policy statements on the use of these technologies. They are raised quite often in the evidence as part of the "solution" to government IT.

Answer:

(a)  Open Source

Policy

Government Open Source policy is a commitment to ensuring a level playing field for open source and proprietary software, as outlined in the Cabinet Office's Business Plan.[10]

The current strategy on Open Source has three activities; namely:

—  educate the user; so that Government is an intelligent customer and knows how to articulate Open Source requirements;

—  update the procurement process; and

—  work with suppliers to ensure that they are offering appropriate Open Source solutions.

Progress to date

—  Ministerial Statement—"The days of the mega IT contracts are over, we will need you to rethink the way you approach projects, making them smaller, off the shelf and open source where possible". Francis Maude MP, Minister for the Cabinet Office, 2 December 2010.

—  Guidance for Procurers Document—Following the Minister's statement the Cabinet Office completed a review of the existing procurement rules and is now working to complete Guidance for Procurers—a document aimed at educating public sector procurement professionals on best practice for evaluating open source software. This will be published by May 2011.

—  Assessment Model and Options Paper—As part of the Guidance for Procurers, Cabinet Office is working on a model which assesses the maturity of a number of Open Source solutions and is compiling a catalogue of acceptable Open Source alternatives to their proprietary counterparts.

—  Supplier Forum—On 21 of February 2011 Cabinet Office hosted the first Open Source Supplier Forum, gathering representatives from the top ICT suppliers to Government (including IBM, CSC, Accenture, HP, Logica) to explain that Government is actively seeking out, but not mandating, Open Source-based solutions. These meetings will be held on a quarterly basis.

—  Open Source Implementation Group—On 21 of March 2011 Cabinet Office will be hosting its first Open Source Implementation Group, gathering departmental representatives to discuss where there have been successes and challenges with deploying Open Source across government. The outcomes will focus on building profiles of suitable Open Source options for government, troubleshooting and investigating opportunities for sharing capability on Open Source platforms.

—  Advisory Panel—In February 2011 Cabinet Office announced the creation of an Open Source Advisory Panel—a group of industry professionals who will provide ad hoc advice and support to procurement and technical officials on Open Source. The panel will also be available to offer technical advise around open source solutions to System Integrators.

(b)  Agile Development

Policy

Government is working to put the principles and structures in place to enable agile ICT delivery. The emphasis is on interoperability based on open standards, open data and increasingly mobile ICT platforms. Improved procurement processes will reduce costs to create a fairer and level playing field for ICT suppliers. In addition, where Government needs to commission a new ICT service or solution, it will look to apply lean and agile methodologies to reduce waste and risk of project failure.

Government's approach to Agile Development is for:

—  Diverse Range of Suppliers—A diverse range of service providers will enable rapid deployment of technologies to front line services. More agile and more open procurement rules will make the market more accessible to SMEs. The modularisation of larger ICT contracts will allow for multiple suppliers delivering on larger pieces of work, which in turn gives a more varied input into the project design, as per agile principles.

—  Open Standards—Open standards will enable interoperability across both government systems and data, allowing for quicker and more agile interactions between various components.

—  Digital by Default—Government is committed to making public services digital by default, delivered by Direct Gov. The drive is towards online personalised services, which are trusted and flexible. Section 1.13 ii) of the Cabinet Office Business Plan states a commitment to "Mandate channel shift in selected government services".

—  Open development—To be achieved via open data and encourage businesses and citizens to innovate new digital services and solutions. As per the Government's transparency agenda, opening up analytics and information will help people to make informed choices.

Progress to date

—  Creation of Skunkworks—Lead by Mark O'Neill (CIO of DCLG), the Skunkworks team has been created with the intention of assessing and developing faster and cheaper ways of using ICT in government.

—  Opening the market—The PPN 05/11 of February 2011 listed a package of measures to open up the market to SMEs (however, this is not specific to ICT SMEs), including streamlining procurement and engaging with suppliers. Measures taken so far include:

—  The appointment of a Crown Commercial Representative (Stephen Allott) to lead on strategic engagement with SMES; and

—  The launch of the Contract Finders website.

Furthermore, the PPN states that:

—  departments will be required to adopt greater outcome-based specifications as much as possible and not to over specify. For our most significant projects in government the Major Projects Authority in the Cabinet Office will systematically assess whether the specification has been gold plated and whether it is sufficiently based on outcomes. We will also seek to break requirements up into "micro lots" where possible. (PPN Information Note 05/11 February 2011); and

—  findings of the "Lean" Review of the procurement process and announcement of pathfinder projects which will use the Lean approach to conduct their procurement much faster than current norms (PPN, 6d—Package of Measures).

—  Transparency—The details of ICT projects over £1 million were published last year. By making this information available to the public, there is greater opportunity for interested parties to contribute to Agile development.

—  Open Standards—Government issued PPN 03/11 in January 2011—"Use of Open Standards when specifying ICT requirements" which stated that, "Government departments should ensure that they include open standards in their ICT procurement specifications unless there are clear business reasons why this is inappropriate".

G- Cloud

Policy

Cloud computing is the new technology approach that moves organisations away from separately procuring their individual dedicated infrastructure to one where they can consume ICT Infrastructure and Services as a utility. The growth of this "Cloud" approach allows organisations to be able to respond to rapid change and growth whilst also reducing operating costs and the need for significant upfront capital expenditure.

Public sector ICT will start to utilise the broad range of services becoming available from the Cloud. Cloud services that conform to Government Standards for security, service and availability, will become "G-Cloud Certified" and will be advertised on the Applications Store for Government. G-Cloud Certification will represent, trusted, secure and resilient services from shared common platforms allowing departments to gain significant economies of scale and allow operation at the best cost efficiency.

The G-Cloud will be focussed upon applications and services operating at IL3 or below, representing approximately 85% of all public sector applications. Applications operating at security level of IL3 will be maintained within the boundary of the Government Network (PSN), in a secure Private Cloud. Applications operating at security levels of IL2 or below will be targeted for G-Cloud Certified Public Cloud.

The outcome will be that wherever appropriate, all public sector organisations embrace the "cloud" approach to the delivery of ICT as the default, taking advantage of the enormous scale of economies available through the public cloud, where possible and consuming more sensitive applications from a secure platform shared by the whole of government.

Progress to date

The G-Cloud strategy was developed during 2009-10 by a team comprised jointly of representatives of public sector organisations and the ICT industry.

—  Phase 1 was focussed on the opportunities presented by Data Centre Consolidation (DCC) and report that significant cost savings and efficiencies could be gained by the consolidation of a significant proportion of the Government Data Centre Estate.

—  Phase 2 focussed more broadly across DCC and the additional opportunities represented by the Cloud approach to ICT. Phase 2 produced nine major reports, now published setting out the Vision, and baseline position across all areas impacted by the G-Cloud Programme.

—  The Phase 2 Vision sets out how the public sector will realise the benefits of the "cloud" approach to ICT through three inter-related initiatives:

—  The Government Cloud (G-Cloud) certification will provide a trusted, secure and resilient shared environment through which public sector bodies can resource ICT service at greater speed and lower cost, both within the Government's Network and also externally in the "Public" Cloud.

—  The Application Store for Government (ASG) will be a marketplace to review, compare and select online G-Cloud certified business applications.

—  The Data Centre Strategy will significantly reduce the number of data centres used by central Government to host ICT services bringing substantial savings in cost and energy consumption.

Establishing the G-Cloud, ASG and implementing Data Centre Consolidation will involve change in the way that ICT is procured and supplied, which will in turn require new ways of working in both ICT suppliers and public sector organisations.

Question 5:  What steps is the Government taking to increase the number of SMEs involved in delivering Government IT Project?

I'm aware that the Government has dropped the quota of 25% SMEs, possibly partial due to EU Procurement rules. However, it would be useful to hear what steps the Government will take to encourage SME to bid for Government contracts. Many organisations and businesses that submitted written evidence to the Committee complained about the current procurement system making it difficult to SMEs to bid, so any comments you have on this would be helpful.

Answer:

Government has issued two Procurement Policy Notices (PPN) about increasing the number of SMEs involved in government contracts:

—  10 November 2010: PPN 19/10—"Package of announcements to support Small Businesses".

—  5 February 2011: PPN 05/11: "Further measures to promote Small Business procurement".

These PPNs covered:

—  The Contracts Finder website—allowing all businesses to view details of live contract opportunities, closed tender documentation, contract awards and contract documents;

—  Streamlining the procurement process, by:

—  encouraging departments not to over-specify by adopting greater use of outcome based specifications (Major Projects Authority to assess larger projects);

—  introducing the Lean approach on pathfinder projects;

—  only requiring Pre-Qualification Questionnaire (PPQ) data to be submitted once; and

—  removing the requirement for the completion of a PQQ for contracts under ~£100 million.

—  Improving strategic relationships between SMEs and Government, by:

—  introducing a Crown Commercial Representative to deal specifically with the dialogue between the two groups. Stephen Allott has since taken on this role;

—  launch of SME product surgeries;

—  interchange programme to get more secondees from business into procurement teams; and

—  launching an extended Supplier Feedback Service.

Question 6:  How does the Government integrate IT into the policy development process?

This is possibly the most difficult question to express, but the intention of this question is to follow up on thoughts contained in the evidence about the stage in the policy process at which IT is considered? Is it an add on at the end or integrated from the start? Is the Government making any attempts ensuring that IT considerations are brought in earlier?

Answer:

Government recognises that its organisations have faced the challenge of keeping track of the fast changing landscape of policy and subsequent IT design and implementation.

The ownership of the government ICT policy rests with The Cabinet Office and, since May 2010, the Efficiency and Reform Group.

Therefore there are a number of Efficiency and Reform Group initiatives that contribute towards the objective of ensuring that government integrate IT into the policy development process. These include:

—  Strengthening governance by the formation of PEX (Efficiency and Reform) Cabinet Committee to provide increased Ministerial accountability and scrutiny and to ensure technology considerations are factored earlier in the process of formulating policy.

—  Spending controls and the creation of Major Projects Athority (MPA) to ensure that projects are both aware and aligned with policy.

—  Improving Governments' capability to exploit the benefits of new technologies by establishing new approaches—ensuring that informed decisions are being made at an early stage. Government will systematically scan the technology horizon to identify changes in technology and assess its opportunities and risks.

—  The appointment of a Director of ICT Futures to take responsibility for improving the Government's capability to meet the challenge of fast moving technology and to drive change in the way Government adopts a more rapid and open ICT development approach.

March 2011

Annex A

CABINET OFFICE—STRUCTURAL REFORM PLAN

1.3  CUT THE COSTS OF EXISTING GOVERNMENT CONTRACTS AND IMPROVE LONG TERM SUPPLIER MANAGEMENT

(i)  Identify list of contracts to be renegotiated and develop market intelligence (including unit pricing, supplier landscape and industry benchmarking).

(ii)  Realise the savings during central renegotiation of government contracts.

(iii)  Build capability to support large departmental supplier negotiations, particularly for outsourcings and ICT.

(iv)  Introduce centrally co-ordinated supplier management.

1.4  CHANGE THE PROCESS FOR MANAGING LARGE PROJECTS

(i)  Review all government funded major projects judged to be at risk, in order to maximise savings through stopping or re-scoping projects.

(ii)  Establish the Efficiency and Reform Group (ERG) as the central authority for the Governments major projects.

(iii)  Implement a new mandated integrated assurance and reporting regime for all major projects, including a system for working with all government departments.

(iv)  Publish first annual report on government funded major projects.

1.9  INTEGRATE ICT INFRASTRUCTURE ACROSS CENTRAL GOVERNMENT, AND IMPROVE VALUE FOR MONEY IN ICT

(i)  Increase the Chief Information Officer's power to integrate ICT across government.

(ii)  Draft ICT infrastructure strategy, including government cloud computing strategy.

(iii)  Begin regular publication of performance details of all ICT projects above £1 million.

(iv)  Complete the first version of a cross-departmental asset register.

1.10  CREATE NEW ICT PROCUREMENT PROCESS

(i)  Introduce moratorium so that no new ICT contract is signed without ERG approval.

(ii)  Agree with HMT conditions under which a project is released from moratorium.

(iii)  Identify cross-department pipeline of upcoming or ongoing tenders and negotiations through the moratorium and project review.

(iv)  Publish report outlining a new approach to ICT procurement enabling greater use of small and medium sized enterprises (SMEs), a much shorter timescale and lower costs to all parties.

(v)  Begin publication of status report on use of SMEs in procurement.

1.11  IDENTIFY ICT PROJECTS AND PROGRAMMES TO TERMINATE AND ENSURE THAT THESE ARE DECOMMISSIONED

(i)  Identify first tranche of projects and programmes to terminate through the major project review and the review of internal ICT projects.

(ii)  Agree which of first tranche of projects and programmes should be terminated or re-scoped and begin decommissioning.

(iii)  Develop process for ongoing review of future projects.

(iv)  Begin publication of regular status report on identified projects and programmes verifying decommissioning.

1.12  IMPROVE THE RULES AROUND DESIGNING AND RUNNING ICT PROJECTS AND SERVICES

(i)  Publish guidance on the presumption that ICT projects should not exceed £100m in total value and the aspiration to reduce the scale of large ICT projects.

(ii)  Evaluate existing procurement rules designed to ensure a level playing field for open source software and explore options for strengthening current practice.

(iii)  Establish draft government open standards (including those relating to security) and crowd-source for feedback.

(iv)  Establish IT skunk works to assess and develop faster and cheaper ways of using ICT in government.

(v)  Announce new open standards and procurement rules for ICT, including right for skunk works to be involved prior to launch of procurement.

1.13  CREATE A NEW GOVERNMENT CHANNEL STRATEGY TO INCREASE ENGAGEMENT, LOWER COSTS, AND IMPROVE THE DELIVERY OF ONLINE SERVICES

(i)  Carry out review of overall digital engagement strategy, including future role of Directgov.

(ii)  Mandate "channel shift" (move online) in selected government services.

(iii)  Review websites for decommissioning, working with relevant departments.

(iv)  Begin to implement new digital engagement strategy, including channel shift and website decommissioning.

2.3  CREATE A NEW "RIGHT TO DATA" IN CONJUNCTION WITH THE MINISTRY OF JUSTICE

(i)  Work with the Transparency Board to set requirements for departments to publish data in an open and standardised format, so that it can be used easily and with minimal cost by third parties.

(ii)  Require central government departments and arms length bodies to commit to implementing a "right to data" in their information strategies, giving the public access to datasets they request.

(iii)  Amend Freedom of Information guidance to extend "right to data" to public services.

(iv)  Introduce legislative amendments to Freedom of Information Act to strengthen "right to data".


10   Section ii) of action 1.12 of the Cabinet Office Business Plan 2011-15, published in November 2010 stated that Cabinet Office would "Evaluate existing procurement rules designed to ensure a level playing field for open source software and explore options for strengthening current practice" (completed in December 2010). Back


 
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Prepared 28 July 2011