Committee of Public Accounts

Press Notice No. 44 of Session 2002-03, dated 11 November 2003


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today condemned Libra as one of the worst PFI projects the Committee has seen and said that handling of the project by the Lord Chancellor's Department was disastrous at every turn.

Mr Leigh was speaking as the Committee published its 44th Report of this Session, which examined the development of the national Libra IT project for magistrates' courts; the Lord Chancellor's Department's handling of the PFI procurement; and the post-contract negotiations.

The Committee found that this is one of the worst deals the Committee has seen. The Department procured a contract to provide services to 42 Magistrates' Courts Committees over which it did not have real authority or control. It ran a poor competition, attracting only one bidder, and it failed to take decisive action when ICL did not deliver what was required. For its part, ICL did not understand the Department's requirements, took on excessive risk and underpriced its bid. It performed poorly throughout and could not meet the target dates for delivery of the core application. As a result of these failures the cost of the project has more than doubled in just four years to almost £400 million and magistrates' courts still do not have the IT systems they need to manage their workload properly.

Departments will not achieve the full benefits of introducing IT if they do not redesign business processes in parallel. The Department chose to develop IT to support existing processes rather than redesigning business processes in parallel with new IT. This approach contributed to the project's difficulties because the Department was unable to achieve a single view of requirements for the new system across Magistrates' Courts Committees.

Competitive procurements of PFI projects are essential. The Department was unable to maintain competitive tension as all potential bidders bar ICL dropped out during the procurement process and the Department was left with just one bidder. A single bid for a major complex project is seldom likely to achieve value for money. That only one bid was received should have alerted the Department to the fact that its project may not have been sufficiently well designed to attract competition.

Where contractors are not delivering what is required of them, departments should be prepared to terminate contracts. Despite ICL's poor performance, the Department decided to negotiate rather than terminate the contract when ICL was in breach of the contract. Departments need to make their contractors aware that termination is a very real factor in their relationship, which should not automatically be seen as the most difficult and risky option. Risk transfer does not really take place if departments are unwilling to terminate a PFI contract or take legal action when a contractor fails to deliver.

Mr Leigh said today:

"The Libra deal is one of the worst PFI projects my Committee has seen. It has failed to deliver the common IT solution for magistrates' courts that is so desperately needed and turned out to be an astonishingly poor deal for the taxpayer. The cost of the project has more than doubled to £400 million for fewer years of service than expected. The handling of this project by the Lord Chancellor's Department was disastrous at every turn. Departments must be willing to terminate PFI contracts or take legal action when contractors fail to deliver."

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