A combination of IT failures and management incompetence have prevented the Rural Payments Agency (RPA), which administers UK farm subsidy payments, from successfully executing its core mission despite years of effort. This extremely negative assessment is based on a new report issued by National Audit Office (NAO). Accenture is implementing the IT system on behalf of RPA.
SUMMARY AND BACKGROUND
Rural farm subsidies in the UK are handled by the RPA, under a system known as the Single Payment Scheme (SPS), which was established by EC Council Regulation 1782/2003; SPS replaced most existing UK crop and livestock payments from January 1, 2005 and marked the UK's efforts to align with broader European farm subsidy policies.
Here's a summary of this deeply unfortunate situation, from the 2007 National Audit Office report (emphasis added below):
The single payment scheme was introduced by the Member States of the European Union as part of Common Agricultural Policy reforms which replaced 11 separate crop and livestock based production subsidies with a single payment based on land area. In the first year of the scheme (the 2005 scheme), the agency had experienced considerable difficulties in capturing and processing the data required to process payments, and as a result failed to meet both its own target to pay 96 per cent of the fund by the end of March 2006 and the European Union legislative requirement to pay 96.14 per cent of the fund by the end of June 2006 to avoid late payment corrections. Many farmers experienced financial hardship as a result and the then Chief Executive of the Agency was removed from post. The Agency made a commitment to pay outstanding payments on the 2005 scheme by the end of December 2006 and to implement its recovery plan by April 2008. The Department agreed to provide an additional £40 million to help the Agency recover and make changes to its IT and processes.
For additional background, it's helpful to look at the 2006 National Audit Office report (emphasis added below):
The single payment scheme is not a large grant scheme compared to some government programmes, but the complexity of the EU Regulations, the complex way in which the Department planned to implement them in England, combined with the deadlines required to implement the scheme for 2005, made it a high risk project. By choosing to integrate the scheme into a wider business change programme, the Agency added to its already considerable challenges.
Many of the Agency’s difficulties arose, however, from:
- underestimating the scale of the work needed to implement the scheme;
- over optimistic progress reporting; and
- governance structures which, in practice, proved overly complex, and the absence of clear metrics, arising from the lack of appropriate management information that would have allowed the oversight boards to measure progress objectively.
By the end of March 2006 implementation of the single payment scheme had cost £46.5 million more than the Agency had anticipated in its November 2003 business case. The implementation of the single payment scheme and the wider business change programme had cost £258.3 million, will not achieve the level of savings forecast, and there is risk of substantial costs for disallowance by the European Commission. The farming industry has also incurred additional costs, 20 per cent of farmers have experienced stress and anxiety as a result, and five per cent of respondents to our survey said they have considered leaving farming.
The level of RPA mismanagement can hardly be over-estimated. As a small example, representing a broader pattern, see this House of Commons testimony (section EV8), by Johnston McNeill, former RPA boss, during an inquiry into the SPS debacle (emphasis added below):
Had we known that there was going to be that [level of claimant and land registration] volume, we could have looked at the volumes that the system could handle; whereas we could only look at the normal requirements. When we specified this system in 20034, when we were talking to Accenture, we had had a lengthy contract procurement and specification. We were specifying without any understanding of SPS requirements. We were specifying on our normal business requirements.
Although government incompetence has played a role, Accenture's involvement in this mess should not be ignored. Commenting on Accenture, a House of Commons investigating committee stated on page 5 (emphasis added below):
Accenture witnesses appeared to have been well schooled in not venturing comment on matters which they deemed were beyond their contractual observations. This attitude denied the Committee an important perspective on the way the SPS project was being run from the standpoint of a company at the heart of the venture. We regard this as an unacceptable attitude from a company of international repute and which may still aspire to work with UK government in other areas.
In evidence submitted to the House of Commons, Accenture denied responsibility for the problems, saying that (emphasis added below):
As has been widely acknowledged by numerous commentators and experts, significant IT enabled business change programmes can be difficult to manage. There have been many examples of problem projects in the public and private sectors in recent years with difficulties attributed to poorly defined requirements, changing business needs and lack of business involvement and preparedness that can lead to delivery difficulties.
To address the issues, the National Audit Office offers these suggestions:
We recommend that the Agency:
- recovers high value overpayments to farmers (such as those over £25,000) as soon as practicable;
- brings its key offline databases into the single payment scheme IT system to make its forecasts more accurate and reliable;
- in the event that the European Union makes policy changes to the scheme, explores whether its existing IT systems would be able to accommodate such changes without the need for major redesign of the application. If the system is unlikely to be able to accommodate such changes, the Agency should notify its Management Board and the Department of the risks accordingly and update farmers once a revised timetable can be defined;
- draws on the good practices we identified from the IT systems supporting the German model of the single payment scheme on how to keep claimants informed about the progress of their claims, and the online processes already available to German farmers to transfer entitlements; and
- learns lessons from implementation of this IT system, to take account of best practice. In particular, the Agency should:
- use appropriate off the shelf rather than bespoke software whenever practicable, after considering business needs and scheme complexity, because bespoke software is costly to develop, needs to be thoroughly tested, and takes more time to implement;
- avoid offline systems, on which the main IT system depends;
- align the system to business needs, rather than the business to the system needs, applying caution to any significant movement away from tried and trusted business methods to accommodate the IT system; and
- ensure the system specifications retain a realistic level of flexibility to cope with future changes.
The National Audit Office recommendations listed above illustrate the extent to which basic IT best practices were not followed. Consider this as well:
- RPA developed custom software, rather than use off-the-shelf products. What was Accenture's role in this decision? It's precisely the kind of issue I addressed in a blog post called Consulting's dirty little secret, which explained how consulting companies can gain financial benefit when a project becomes larger and more complex than expected.
- RPA created databases in which data was stored in computers disconnected from the main system, despite the fact the main system depended on that data to function properly. Such issues force questions around who designed this system, from both technical and business perspectives, and how experienced these folks actually were.
- In general, the entire situation represents poor planning and project management taken to new heights of incompetence. Despite complexities in aligning UK practices with EU policies, both RPA and Accenture designed and executed a system based on poor practices, lack of experience, and world-class levels of bad planning.
IMPACT ON VICTIMS
This situation is different from many government IT failures, where money is wasted but innocent victims don't suffer personal injury. In this case, delayed and incorrect payments have directly affected farmers depending on subsidies to maintain their operations. In the words of Roger Williams, Liberal Democrat from Wales:
Farmers have found it difficult to accommodate problems with cash flow. Mention has been made of paying bills, but at the end of this week interest payments will be due on most accounts. That money will be taken out of the farmers' accounts. They will not have to make a conscious decision about it; the money will be removed from their accounts. That may take them above the level that they have agreed with their banks, and they will suffer the financial consequences—not just additional interest, but the other costs involved.
The BBC further reports on the damage caused to farmers:
Farmers in the East are being forced to the brink of bankruptcy by the Government's failure to pay their subsidies.
Many are struggling to survive while awaiting money from the Single Payment Scheme (SPS).
Johnston McNeill, former head of the RPA, eventually apologized for his agency's role in the disastrous situation:
"I deeply regret that we in the RPA and I as chief executive were not able to make payments to farmers in the targeted timetable". He said he was "saddened by the consequences".
Unfortunately, apologies coming from a man who earned £250,000 per year (about US$500,000), while inflicting such damage on his constituency, leave only a bereft and hollow sound.