Omnishambles Update 53

First off, I'm grateful to Napo Greater London Branch for flagging up this remarkable piece of PR fiction from the Capita website:-

Our electronic offender management system saves over £16 million per annum.

The National Offender Management Service’s role is to commission and provide offender services in the community and in custody in England and Wales, ensuring best value for money from public resources.

NOMS works to protect the public and reduce reoffending by delivering the punishment and orders of the courts and supporting rehabilitation by helping offenders to change their lives.

Coordinating data

NOMS approached Capita for a solution to the operational issues that they were experiencing, including divergent data, offenders slipping through the net and major processing overheads.
We developed, trialled, and introduced a secure electronic application across the 42 probation areas that could link with the prison service and enable data sharing.

Our fully-integrated electronic Offender Assessment System enables the most complex information handover in the criminal justice sector, often involving as many as 3,000 items per case, each of which must be individually signed, credited and authenticated.

Perfecting secure and accurate methods for passing information across agency boundaries has opened the potential for further efficiencies through cross-agency working. NOMS can now track a wider range of offender behaviour and identify more efficient use of resources. Capita has since been awarded the contract to provide long-term maintenance and support to the system.

Benefits

• £500,000 saved with transfers between different probation areas
• £1.5 million saved on transfers between probation and prisons
• other efficiency savings of £4.5 million
• total of over £16 million cost savings per annum
• re-offending reduced.

"... a key offender management application which is delivering significant business benefits and seamless management across the prison and probation services."

John Glanville
Portfolio & programme management, Ministry of Justice ICT

The latest online Napo online newsletter is full of interesting stuff and I'd like to particularly highlight two articles. The first is all about the costs of TR and the timing couldn't be more appropriate coming on the day the BBC break the story about how ESA isn't saving any money.

Towards the end of May, the Government’s own Major Project Authority published it’s Annual Report. This is a review of the progress of all major projects across all government departments during 2013-14. The Authority is a part of the Cabinet Office under Francis Maude and it promises a candid insight using red/amber/green (RAG) ratings with record to progress and viability. It also provides cost information for projects.

Under the MoJ section we find, amongst other projects, the Rehabilitation Programme – better known to its aficionados as TR. Apart from a 69 word description of the project’s ‘aim’, the only other words that appear in the entire column for the project are these: ‘Exempt – Section 43 (2) of the Freedom of Information Act 2000 (Prejudice to Commercial Interests)’. Prejudice to commercial interests? More like an affront to common sense and an insult to our collective intelligence. No accountability whatsoever regarding a project whose periodic BRAG assessments (they can’t even decide whether to use a RAG or a BRAG rating – ‘B’ stands for ‘Black’ or maybe ‘Bloody Awful’ and signifies that a project is in deep doodoo) have recorded Red and Black ratings on many fronts. Not even a report of the £9m spent on consultants and admitted earlier this year to the Justice Select Committee.

CRC Contracts
The whole life value of the contracts for the CRCs was advertised at the start of the process as being between £5 billion and £20billion – to get the bidders salivating. Not small beer then. One might accept that details of the, yet to be let, contracts might need to remain confidential – to prevent a prejudice to commercial interests but that is only half the story and why could the ballpark value of the contracts not be reported since it was advertised openly? Napo’s own assessment of contract value is nearer £5billion than £20billion but what’s the odd £15 billion between friends, contractors and ministers?

Set-up costs
But let’s look at the other half of the story which is equally unreported, apparently also on account of Section 43(2). MoJ/NOMS maintain that the set-up costs for the project (i.e. governmental costs as opposed to contract costs) are subsumed within existing Probation budgets and therefore the whole project is being achieved at no extra cost. What balderdash! Having been engaged in consultations with MoJ/NOMS since project inception, Napo is only too well aware of the enormous costs, in time and money, associated with this Rehabilitation Programme. We estimate these costs as running at between £120 and £150million to date and rising. Had the project not been undertaken these costs would not have been incurred. Indeed the money might have been available to Probation to manage risk and protect the public and maybe even supervise under 12 month prisoners on release. A cynic might say that with this approach to cost accounting – ‘I’ve got the money in this pocket, just use that’ – maybe taxpayers money would be safer in somebody else’s hands.

Analysis
Let us provide just a brief analysis of where the money has gone. Sadly this has to be rather short on actual evidence because whenever Napo has made requests under Freedom of Information, these have been blocked by the MoJ. It’s those commercial sensitivities again. Start with upwards of 200 civil servants and secondees from Probation moved into the TR programme. Estimated annual cost £10million, and we’re in year two now. Double the time and the costs associated with those Programme staff by estimating the costs to Probation Trusts of staff time.

That is then another £10million and let’s be very clear – if that staff time had not been spent on the TR Programme, it would have been spent on maintaining an efficient and effective Probation Service and thus protecting the public. Then there is the already admitted cost of consultants. It was £9million when reported and will be nearer double that by the conclusion of the project. But let’s be generous in a conservative way and call it £15million. Don’t forget bought in legal costs. Again conservatively £2million. So that’s £37million so far and mainly only Year One costs. Add the £61million set aside for additional redundancy costs associated directly with the Programme and we reach nearly £100million.

Napo is still trying to find out and/or estimate the ICT costs associated with the Programme but again a current conservative estimate puts this at £20million. There are then huge costs associated with the estate ‘rationalisation’ which have probably yet to materialise and many other costs which could be identified if only the MoJ would disclose them – pension costs, security costs and many many more.

None of this has anything to do with commercial interests. It is sheer obfuscation. Napo would more than happily be challenged on this analysis by the MoJ/NOMS. Just provide the evidence. Meanwhile perhaps the press, the public and the Public Accounts Committee should be told. Perhaps also the Information Commissioner should be approached on the basis that there is a failure here of a public duty to disclose?

In conclusion, a quote from Chris Grayling, admittedly talking about the legal aid budget, but the principles are the same: ‘It is not free money. It is paid for by hard-working taxpayers, so we must ensure we get the very best value for every penny spent’; but first, you must know how many pennies there were.

Mike McClelland, National Official

The second article concerns the bidding process:-

Private companies like to make money and NOMS are famous for throwing plenty of it away when negotiating contracts, sometimes described as like playing cards with a drunk – you can’t help but make money out of it, especially if the rest of the table work together.

So why is the Great Probation Sell-Off generating such a nervous reaction from the ‘market’? Why are so few bidders looking to play at NOMS table? In the week of the split the biggest charity bidding independently, the Shaw Trust, became the latest to announce a withdrawal from the Devon and Cornwall CPA. In May, both the right of centre Social Market Foundation and the NCVO criticised draft TR contracts for scaring off smaller, third sector bidders. A senior NOMS official admitted that in many CPA’s ‘tendering exercise’ was a more accurate term than ‘competition’ as the latter implies more than one bidder. NOMS have confirmed at least some Trusts would have needed more quotes to let a window cleaning contract than their area will have bidders to deliver the whole service!

The most obvious reason why the market is thin is it barely exists in the first place. However, there are several key reasons why it isn’t eager to play – all of which highlight how Napo’s campaign has impacted on the process and can still work to prevent the sell-off.

Wary of TR risks
Chief amongst these is that, whilst even the most cavalier companies can be greedy they are rarely stupid. The risks of TR are enormous. Both SERCO and G4S suffered huge fines, losses and even more difficult reputational damage from spectacular contract failures. They blame NOMS for not being clear enough about exactly what was required and not paying them enough to overcome unforeseen difficulties when taking on work they never professed to be experts in before winning the contracts. In other words, the drunk has a sharp bite if things go wrong. Few fancy being the next SERCO.

As a result of past NOMS’ failures identified by the Public Accounts Committee, NAO and others, NOMS is being a little more careful this time – at least in that the draft contract has at least 25 termination clauses whilst offering no get out of jail free cards to bidders who run into trouble when the contract becomes more difficult than anticipated. But whilst this may reassure the PAC, it increases the risk for bidders, who’d invest heavily in winning contracts only to see them taken off them before getting even close to making a profit. This risk is amplified by NOMS still not being able to tell them exactly how or what they’ll be expected to deliver – the under 12 months work’s not even being introduced until after contracts are signed.

Added to this is the general economic climate. Whilst we read we’re coming out of recession, bidders can see as clearly as probation staff struggling to recall their last pay rise, that the Government is showing no sign of increasing public spending. A government would expect these contracts to deliver more for less, with tight unrealistic margins. Again all the financial risk is stacked against the bidders.

Staffing problems
Now add in the restrictions upon the contract from the staffing situation. Probation is a people business with a reputation for delivering excellent results that any company will be measured against. But probation is difficult. Companies will need staff who are trained, knowledgeable and willing. There are 500 vacancies across the country and still no arrangements in place to train new PO’s any time soon. Companies will already need to pay 16% employer pension contributions (not usual in the private sector) or huge extras to agencies. Recent examples of untrained Anzacs being recruited at almost double the usual PO cost will terrify bidders looking at the tight margins on the contract.

Of course Grayling’s dream had all the innovation and saving coming from new experts joining the market –charities desperate to access his funds and do things the current system didn’t allow. Again, these were the delusions of someone drunk on power. The reality is firstly, charities involved in probation who know what they’re doing don’t want to make a personal profit from rehabilitation – those are not the motives of people attracted to help offenders. They don’t see the need for a hugely risky experiment not least because the barriers Grayling talks about hadn’t stopped them getting involved and like staff, they saw the introduction of multi-nationals as something that would strain the relationships with probation and other agencies vital to what they do. Secondly, charities have been squeezed hard by the recession, most having exhausted reserves just to survive the Coalition’s grant freeze. Charities are snookered by Grayling’s payment by result scheme. The multi-national primes have no margin to pay charities except out of the frontline PbR budget based on results.

NOMS are paranoid they’d be criticised for wasting taxpayers’ money so a PbR scheme only comes on line several years into the contract, if and when reoffending falls. Very few charities can survive the wait and are effectively forced out of the market by the PbR mechanism.

Nervousness
Napo intelligence tells us that most of those who remain interested are nervous. Only the hardened cowboys remain gung-ho. Bids will mostly be high and cautious. NOMS may not be able to afford the bidders asking price but have left themselves little time to entirely restructure the contracts and little scope to increase the public and taxpayer risk – not least because of Napo’s campaigning raising awareness amongst the public and parliament. And every £ more that CRC’s cost then at least a £ more gets taken off the NPS budget to make the Treasury’s books balance.

This was always ideologically driven and the question now is what to do. There are 3 options. The first is ploughing ahead despite the economic risks to business and the taxpayer. The second is drawing back from share sale and (from the Coalition viewpoint) hoping to start again after the next election. The third is completely drawing back and reassessing how probation should be organised, including talking to local charities and combining local delivery with commissioning freedoms.

At least a few bidders will be looking at their hand and quietly hoping the share sale folds.

Dean Rogers
Assistant General Secretary