Lack of direction and spiralling costs delay e-govt strategy

19 Dec 2002

A rift between the Department of Finance and Reach reveals a lack of confidence in the management of the Government’s online public services strategy and operating costs.

Reach, the cross-departmental agency charged with the task of implementing the Public Services Broker (PSB), the one-stop hub at the centre of the proposed interaction between State and citizen, has come under fire from the Department for Finance for the planning, management and excessive expenditure of the programme.

In correspondence dated 27 September, obtained through the Freedom of Information Act, 1997, an official at the Department of Finance wrote: “Of primary concern is the distinct lack of progress to date, despite expenditure by Reach of over €4m. This raises serious value-for-money concerns and also quality project and resource management issues that are central to the success of a project of such strategic importance and magnitude.”

It went on: “Over-dependency on and inappropriate use of highly expensive consultancy arrangements, currently running at €70k per week, is a major contributory [factor] to overall costs…The project continues to lack focus and priorities.”

Oliver Ryan (pictured), the director of Reach, had defended the programme to the Department of the Taoiseach outlining “major obstacles and blockages to the Reach programme”.

Inadequate resources

This document includes wide-ranging criticism of the Government’s online strategy and talks of: “Inadequate resources in terms of overall numbers and skill; lack of certainty concerning budget and resources going forward; lack of operational independence to be able to implement programmes and projects once agreed/adopted at strategic/policy level; absence of strong political direction and co-ordination of the e-government programme; absence of effective, speedy but consultative, decision-making process; and lack of clarity and certainty of roles and responsibility across the e-government programme.”

Speaking to, Ryan argues that Reach can’t make any significant decisions because there are three major stakeholders involved – the Department of Finance, Department of the Taoiseach and the Department of Social and Family Affairs.

“Up to recently and certainly up to the time of the appointment of Mary Hanafin [as Minister for the Information Society in June this year], there wasn’t any political figure that was essentially delegated to advance the whole e-government agenda. The point I was making was that things are tending to be done by committee rather than a very strong central direction,” he says.

Inter-department wrangles have resulted in a delay to the PSB, according to Ryan, which will now launch in September 2003, some four months later than planned.

At present, Reach is still in the tendering process for the e-broker and it is believed that the six remaining bidders — Accenture, Hewlett-Packard, KPMG Consulting, Logica, PA and Siemens — have now been shortlisted to two firms.

Some €14.3m was earmarked to Reach for the implementation of the PSB to be spent over a three-year period.


The agency sought funding of €10m of the money for 2002 at the start of this year, but was only allocated €2.5m by the Department of Finance.

In May, Reach looked for a further €2.4m top-up but the department was initially unwilling to invest any more funds into the programme for 2002. The reasons it gave were that it needed to be “satisfied as to the level of consultancy required and that adequate procedures were in place for the management of consultants”.

Ryan puts this down to staff shortages in Reach: “Consultants, in many cases, were simply carrying out work that would be better done by civil servants, but it had proved impossible to recruit additional internal staff.” The current staff levels in Reach is 12 people.

Reach significantly scaled back on its programme for the remainder of this year, though the Department of Finance did approve another €600k for Reach in July – considerably less than the new request from the agency for €1.538m.

By September, the cost of the Reach programme was running over its budget for the year by €694k (€654k in consultancy fees and €40k in non-salary purposes) and still needed more funds.

Ryan outlined the crisis in a blunt request to the Department of Finance: “We are in serious trouble on funds for the remainder of the year”, adding that he was “reluctant to stand down the consultants as it would wreck the broker schedule and we might never get the same people back again to pick up the threads”.

A compromise came when the Department of Finance allocated an additional €1.2m to the programme in September, for the remainder of the year. This, however, was based on a number of key conditions, mainly that “consultancy costs be kept to an absolute minimum” and that Reach should “actively renegotiate consultancy rates”.

Speaking to, Ryan confirms that Reach began discussions at this stage with the only consultants on its payroll, Cap Gemini Ernst & Young, “to see if we [Reach] could get reductions or discounts or something”. He says that Reach came to a satisfactory conclusion with the IT consultant group.

In October, the Department of Finance was still expressing concern over the rate of progress and “on the negative impact that delays would have on public services agencies abilities to progress their information society and eEurope objectives”.

Staff Shortages

Throughout the wrangles, Reach cites staff shortages as a core problem. Although it was established in July 1999, its director was not appointed until May 2000 and it had to wait until March 2001 to receive its sanctioned staff numbers.

Additional internal staff members were not sanctioned, therefore Reach, with approval from the Department of Finance, engaged in an external company – Cap Gemini Ernst & Young – to provide the resources and skills needed for the implementation of the PSB.

Ryan still contends that Reach is within its “overall” budget allocation, but ponders on the progress of the programme. “The PSB can’t be built on a shoe-string. We have to build heavy duty systems that do the transaction volumes and be secure, resilient and all those good words, so there is always tension between those who would like to do it on a low cost and those who want to do it in a more robust way.”

The troubled history of the e-broker

There were some 47 versions of the Statements of Requirements issued to bidders for the construction of the main broker system. The document was started in November 2001 and not signed off until July 2002.

Reach’s resources were simultaneously being stretched with its direct involvement in software development. In April 2001, the Department of the Taoiseach and the Department of Finance directed the agency to advance an online registration and authentication service that could gain the Government better scores in the EU Benchmarking Exercise. The software was developed and delivered on schedule by KPMG for €340k, but it proved too expensive to implement.

In December 2001, again on the insistence of the Department of Finance and the Department of the Taoiseach, Reach was asked to work with the Local Government Computer Services Board (LGCSB) to build another online registration and authentication service. Reach’s Cap Gemini Ernst & Young consultancy bill for this programme was approximately €490k.

The system went live in April 2002, but documents reveal that the system was “seriously flawed” and “not suitable for a public launch in that it delivers very little value to customers”.

Reach director Oliver Ryan says that the resources spent on these projects “diverted attention away from what should have been the main focus of Reach, the development of the broker architecture and the engagement of an external partner to build and deploy the broker systems”.

By Lisa Deeney