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MoJ accused over “catastrophic waste of public money” on tagging programme 

Matteo Natalucci Published 24 January 2018

Critical PAC report argues Ministry “took an all-singing, all-dancing approach to what could have been a relatively simple procurement exercise”

 

The Public Accounts Committee (PAC) today described the Ministry of Justice’s (MoJ) delivery of a new generation electronic tagging programme as being fundamentally flawed. 

In a critical report, the PAC described the programme as “a catastrophic waste of public money which has failed to deliver the intended benefits” adding that the Ministry had “was pressed ahead with the programme without clear evidence that it was to be operated or that it was deliverable”.

Electronic monitoring allows the police, courts or probation services to monitor an offender’s location and their compliance with home curfews.  When used appropriately, offender-monitoring tags can be a cost-effective alternative to custodial sentences, the government has argued. The difference between the cost of a custodial sentence and using offender tags can be substantial. Holding an offender in prison costs around £90 per day, compared to offender tags which was estimated to cost around £12−13 per day.

In 2011, the MoJ launched a programme to develop a new ankle tag, employing GPS technology to be used by all tagged offenders.  The programme was intended to reduce the annual cost of tagging by between 9% (£9m) and 30% (£30m) as well as provide wider benefits and more sentencing options for courts.

The new tags were originally due to be rolled out from November 2013. Owing to a series of delays, the new tags are now expected to be rolled out from early 2019, more than five years late. The MoJ has so far spent over £60m on the programme, including £7.7m of losses which cannot be recovered, yet it still relies on the same form of tagging technology that was commercially available when the programme first started.

PAC considers the programme as “a catastrophic waste of public money which has failed to deliver the intended benefits” and that “was pressed ahead with the programme without clear evidence that it was to be operated or that it was deliverable”.

The MoJ, however, has insisted that here has been no loss of service to the electronic monitoring service as a result of this programme.

In its report, the Parliamentary watchdog argued that both the selection of a high-risk approach to procure the new electronic tags, and its poor management of the programme and potential suppliers, exacerbated these problems. Indeed, the PAC maintained that the MoJ “has ultimately wasted a huge amount of time and taxpayers’ money to end up with an approach which uses the same types of tags and supplier it had when the programme started”.

The MoJ told the committee that the programme had been “startled and stunned” by the over-optimism of the original project. It continued by saying that “the electronic monitoring services had been outsourced since their introduction and no one in the ministry had any direct experience of running them before the programme was introduced”.

The MoJ admitted that it did not know enough about how offender tagging worked or how it was delivered before it started the programme and that not enough research was done before the programme was approved.

The PAC report “ Offender-monitoring tags ” says that the MoJ “chose a high-risk and unfamiliar procurement strategy by adopting the ‘tower model’ for delivering the programme, which split the end-to-end service into a four-supplier tower structure, with an integrator to bring the four contracts together”.

The MoJ told the committee that it chose the approach becauseIt thought that it would be a good way of providing greater flexibility in electronic monitoring services, particularly in the light of criticism that it was paying too much money for the existing services and not allowing smaller technology firms to enter the market

PAC believes that the MoJ’s decision to adopt a ‘tower’ approach for the programme led to serious difficulties and delays during its delivery which it lacked the capacity and capability to manage.

During the procurement process, the MoJ discovered that it had been overbilled by the existing suppliers of electronic monitoring services, Serco and G4S, who  subsequently re-paid the Ministry £179m. The case has since been referred to the Serious Fraud Office, whose investigation is ongoing. Neither Serco nor G4S were allowed to continue in the procurement for the programme, and the contract for providing field services was awarded to Capita.

The MoJ admitted that it should have known what it was paying for and not relied on the new procurement process to uncover issues of overbilling. It accepted that this showed poor contract management and that its oversight of previous contracts for electronic monitoring had been too light.

The PAC said it believed that the discovery of the overbilling diverted attention from the procurement process and led to delays as bidding for the new contracts was halted.

 The Ministry also contracted Capita to be the systems integrator for the programme. As it was responsible for one of the four ‘tower’ contracts, this, the PAC said, created a potential conflict of interest within the company. Capita had a single contract with the Ministry for these two parts of the service so the Ministry relied on Capita to put Chinese walls in place between the two teams working on the programme.

PAC maintains that the potential for conflicts of interest in the programme was exacerbated when Capita also took over the delivery of the existing electronic monitoring services when the contracts were removed from Serco and G4S following their overbilling of the Ministry.

The MoJ accepted that in retrospect, its arrangements with Capita meant that it did not have sufficient transparency of the services being delivered in other parts of the programme. As a result, the ministry has now brought the role of programme integrator back in-house.

Also, the MoJ added that it has increased accountability so that it is absolutely clear which contractor, team or individual is responsible for every deliverable.

The PAC also suggested that “the MoJ’s approach to involving small and medium sized enterprises (SMEs) in the programme meant that they were set up to fail”. It argued that the decision to adopt a ‘tower’ structure for the programme was driven in part by the Ministry’s aim to increase competition and participation by small and medium sized enterprises; but the terms it imposed on SMEs were unreasonable and its approach ultimately failed.

The MoJ appointed an SME, Buddi, as its preferred bidder to develop and produce the new tags in August 2013, but ended the company’s involvement in March 2014 after being unable to resolve fundamental differences on intellectually property rights and contractual relationship issues.

Then the MoJ contracted another SME, Steatite, to develop and produce the tags in July 2014, despite the fact Steatite had scored below the minimum benchmark in the procurement. The Ministry then ended its contract with Steatite in November 2015 after growing delays to the programme. The committee said that “the MoJ failed to adapt its approach to help smaller suppliers, or to take into account their more limited staffing arrangements and financial resources”.

The MoJ told the committee that it regretted that it had been unable to agree a contract with Buddi, and accepted that it would have been better to re-open the procurement exercise rather than to rely on Steatite as the last remaining bidder. The PAC expressed its concern that the electronic tagging programme is a bad advertisement for SMEs working with government and could be extremely damaging to SMEs’ confidence in government programmes. 

The MoJ suggested that additional scrutiny is being provided by a specialist government auditing team which will regularly review the contract delivery. The findings of any work or assessments undertaken by these groups are passed to the contractors and their implementation is directly overseen by the contract management team, it said.

The PAC said it wanted the  MoJ to publish the lessons it has learned from the programme and how it has used these to improve delivery of its current portfolio of programmes by the end of March 2018. The committee said it does not expect to see similar failings in any of the other 16 major projects currently being undertaken by the MoJ.

The MoJ assured the committee that this situation would not be allowed to happen in future. It told the committee that it had introduced two new governance mechanisms to better challenge its investment decisions and commercial and contract management.

The MoJ also insisted that there has been no loss of service to the electronic monitoring service as a result of the problems with the  programme. It indicated that as a direct result of the challenges to the programme, it has “significantly expanded and strengthened” its commercial teams across the department. It said it had also increased the numbers of staff, providing additional training and recruiting experienced staff with experience of similar projects.

The MoJ also said it has strengthened oversight procedures so that potential problems are spotted and can be addressed much earlier. It has also increased accountability so that it is absolutely clear which contractor, team or individual is responsible for every deliverable. It said, it has already partially moved to the new model, with the ministry  directly managing separate suppliers for field officer and monitoring services; tag supply, and communications.

A Ministry of Justice spokesperson said, “Electronic Monitoring is a valuable tool in supervising offenders and protecting the public, but we have been clear there were a number of challenges to our expansion of the electronic monitoring programme.

"As a direct result, we fundamentally changed our approach in 2015, expanding and strengthening our commercial teams and bringing responsibility for oversight of the programme in-house.

"We are now in a strong position to continue improving confidence in the service and providing better for value for money for the taxpayer.”







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