Friday, 29 June 2012

Francis Maude, the UK government's major IT suppliers and the empty chair

Hat tip: Tony Collins, Poor IT suppliers to face ban from contracts?
The Cabinet Office minister Francis Maude is due to meet representatives of suppliers today [28 June 2012], including Accenture[,] BT, Capgemini, Capita, HP, IBM, Interserve, Logica, Serco, and Steria.

They will be warned that suppliers with poor performance may find it more difficult to secure new work with the Government ...
The suggestion is that up to now "suppliers with poor performance" haven't found it hard as a result to "secure new work with the government".

Apart from Atos, DMossEsq and Fujitsu, who's missing from that list?

CSC. Computer Sciences Corporation, share price today $23.76 compared with $37.96 a year ago, nearly 40% off, DMossEsq is not licensed to give investment advice and is not giving investment advice.

Last heard in these parts, CSC were picking up a fortune from the UK taxpayer for collecting useless biometrics on UK visa applicants, upgrading the UK passport system expensively and unnecessarily and failing to deploy the UK National Health Service National Programme for IT scheme, NPfIT. That's the good news.

We also heard that they were facing a class action brought by the Ontario Teachers' Pension Plan, they'd been docked $250 million by the US Armed Services Board and they had failed to install their Lorenzo software at Pennine Care NHS Health Trust.

Some of that news is six months old. How are they doing now?

Another hat tip: Mark Ballard, Soldiers nail data for agile offensive on $6bn cock-up:
Supplier Computer Sciences Corporation finished the US Army's 1999 Logistics Modernization Programme [LMP] last year, six years behind schedule [good job the US wasn't fighting any wars at the time].

LMP went on the record as being done on budget after the Army accepted an offer on a $2bn compensation claim it had against the supplier. After seven years of contract arbitration in which CSC filed $861m of counter claims against the Army, CSC settled the matter with a $269m payment last year. The settlement also cleared another $1.2bn of outstanding contract complaints, said the Army spokeswoman.
Six years late and $269 million down the tubes seems a fair summary.

And that's not all, as Mr Ballard tells us in CSC finance director exits as fraud probe hits UK. Their 10-K, filed with the SEC, makes absorbing reading:
On May 2, 2011, the Audit Committee commenced its investigation into certain accounting errors and irregularities, primarily in our Nordic region and in our operations in Australia. This investigation is also reviewing certain aspects of our accounting practices within our Americas Outsourcing operation and certain of our contracts that involve the percentage of completion accounting method, including our contract with the U.K. National Health Service (NHS). As a result of this investigation, we have recorded certain out of period adjustments to our historical financial statements and taken certain remedial measures. The SEC is conducting its own investigation into the foregoing areas as well as certain related disclosure matters ...

As noted above, during fiscal 2011, the Company commenced an investigation into accounting irregularities in the Nordic Region. Based upon the Company's investigation, review of the underlying documentation for certain transactions and balances, review of contract documentation and discussions with Nordic personnel, the Company attributes the majority of the $92 million pre-tax adjustments recorded in the Nordic region in fiscal 2011 to accounting irregularities arising from suspected intentional misconduct by certain former employees in our Danish subsidiaries. The Company attributes the $13 million in pre-tax adjustments recorded in the Nordic region in fiscal 2012 to miscellaneous errors and not to any accounting irregularities or intentional misconduct other than a $1 million operating lease adjustment noted in the first quarter of fiscal 2012 which was a refinement of an error previously corrected and reported in fiscal 2011 ...

In the course of the Australia investigation initiated in fiscal 2012, accounting errors and irregularities have been identified. As a result, certain personnel in Australia have been reprimanded, suspended, terminated and/or resigned. Based upon the information developed to date, and the Company’s assessment of the same, the Company has identified and recorded during fiscal 2012, $23 million of adjustments reducing income from continuing operations before taxes relating to its operations in Australia. Such adjustments have been categorized as either intentional accounting irregularities (“intentional irregularities”) or other accounting errors (“Other Errors”). Other accounting errors include both unintentional errors and errors for which the categorization is unclear ...

Between June 3, 2011, and July 21, 2011, four putative class action complaints were filed in the United States District Court for the Eastern District of Virginia, entitled City of Roseville Employee's Retirement System v. Computer Sciences Corporation, et al. (No. 1:11-cv-00610-TSE-IDD), Murphy v. Computer Sciences Corporation, et al. (No. 1:11-cv-00636-TSE-IDD), Kramer v. Computer Sciences Corporation, et al. (No. 1:11-cv-00751-TSE-IDD) and Goldman v. Computer Sciences Corporation, et al. (No. 1:11-cv-777-TSE-IDD). On August 29, 2011, the four actions were consolidated as In re Computer Sciences Corporation Securities Litigation (No. 1:11-cv-610-TSE-IDD) and Ontario Teachers' Pension Plan Board was appointed lead plaintiff ...

On September 13, 2011, a shareholder derivative action entitled Che Wu Hung v. Michael W. Laphen, et al. (CL 20110013376) was filed in Circuit Court of Fairfax County, Virginia, against Michael W. Laphen, Michael J. Mancuso, the members of the Audit Committee and the Company as a nominal defendant asserting claims for breach of fiduciary duty and contribution and indemnification relating to alleged failure by the defendants to disclose accounting and financial irregularities in the MSS segment, primarily in the Nordic region, and the Company's performance under the NHS agreement and alleged failure to maintain effective internal controls ...

CSC was informally advised by the Danish Justice Department on February 3, 2012 that the project known as POLSAG, a document and records management modernization program for the Danish police, will be abandoned, which affects CSC's contract with the Justice Department ...

In addition to the matters noted above, the Company is currently party to a number of disputes which involve or may involve litigation ...
Bit mean of Mr Maude not to invite CSC along for tea and biscuits with the other suppliers.

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