Latest Public Sector News

20.05.16

Clear leadership needed as Cabinet Office scheme fails to deliver savings

An outsourced shared services scheme from the Cabinet Office has not been properly implemented and has failed to achieve value for money, the National Audit Office (NAO) said in a new report.

Only two out of 26 organisations have signed up for the Next Generation Shared Services Strategy, and while the project has saved £90m, it cost £94m.

The NAO said that the Cabinet Office changed the contract to include a requirement for a single operating platform when the bidding process was down to the final three contractors, meaning that there was no guarantee that the bidders were equipped to deliver it.

The contract was awarded to two private companies, arvato and Steria, despite the fact that arvato had little experience with working with central government. Arvato assumed responsibility for the Department of Transport, while shared services for other departments were transferred to SSCL, a joint venture owned 75% by Steria and 25% by the Cabinet Office.

Both companies said they expected the Cabinet Office to take a more active role in the process than it did, and the Cabinet Office did not set up a design authority to manage customers of the scheme’s requests for design changes.

Amyas Morse, head of the NAO, said: “The Cabinet Office’s failure to manage the risks around the move to two independent shared service centres from the outset means that the programme has not achieved the significant anticipated savings and benefits to date. 

“The Cabinet Office has begun to find its role in leading the programme but the delays have meant that technology has moved on significantly. The programme will only achieve value for money in future if the Cabinet Office shows clear leadership, and government accepts the need for collaborative and flexible behaviours from all departments involved.”

Government departments also told the auditor that they were not consulted in implementing the programme and felt pressured into taking part.

The Cabinet Office also failed to properly manage the contract with SSCL, leading to problems such as delays in moving the processes for the scheme offshore.

It has now acknowledged that there is a justified lack of confidence in its Crown Oversight Programme to lead a project of this nature, and has appointed senior finance and HR individuals to develop a process for dealing with similar contracts – but this is still at an early stage.

The NAO warned that confidence in the programme is low and that government efforts to recover it will involve more payments to suppliers.

It added that the government “has repeatedly failed to learn the lessons from its experiences of shared services”.

The auditor also said there is a risk that the technology used in the programme is now outdated because of the delays, and the Cabinet Office should try to introduce new software, such as cloud computing.

Mark Serwotka, general secretary of the Public and Commercial Services Union, said: “This is an all-too familiar story of Tory ministers cutting and privatising, only to find they have wasted money and damaged services. We opposed the privatisation of shared services because we did not believe it would deliver the savings that were promised and we have been proved right.”

(Image c. Syniq)

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