ID: bid risk and the vulnerability of IPS

According to an August 2007 article in the FT, contracts will be awarded for suppliers to the NIS this Spring. Now. But will any suppliers bid? After all:

• The NIS may turn out to be a smaller system than suppliers expected and there may be less money to make out of it as a result. Crosby has ruled that the high volume of transactions that go through the banks and the big retailers are not on the menu. There is no reason for suppliers to expect the NIS to be involved in DWP benefit claims nor in the health service nor education. Scotland may refuse to use the NIS, and Wales, too. Its advocates always claim that the NIS will be used to prove everyone’s right to work in the UK but IPS failed to provide the ID checking service they promised. And it may be that, far from everyone aged 16 and over, only certain sections of the population will be fingerprinted.

• The timescales are stretching. Far from starting at the end of 2009, as previously planned, the NIS will not start to be rolled out in earnest now until 2012. And given IPS’s track record, suppliers would be well advised to allow for more delays.

• As the economy dips, people will want more assurance that their stealth tax money is being well spent. Hard to provide that assurance, when a number of prospective suppliers have already pulled out of the bidding, the House of Commons Science and Technology Committee are just as unimpressed with IPS’s plans as Crosby and the biometrics on which the NIS depends are unreliable.

• There are alternatives to the NIS. Identity assurance could be provided by the banks and/or the mobile phone companies and/or the utility companies and/or the credit referencing agencies. The NIS could become irrelevant. These other systems could be more effective and could come on-stream earlier than IPS’s 15-year timetable – a surprisingly relaxed timetable, given that we’re talking here about the UK’s response to crime and terrorism.

• Suppliers to the NIS would be victims of the lack of trust in the government identified by Crosby – they would be tarred with the same brush.

• IPS is not some unstoppable behemoth with a mandate to monitor everyone in the UK. On the contrary, it is a supplicant, in sales talks with prospective customers, and it hasn’t closed a single deal yet.

• Suppliers will be dependent on IPS and IPS are vulnerable. They are dependent on Labour and Labour treat the NIS like a political football. If the Lib Dems or the Conservatives come to power, the NIS will be cancelled, as its equivalent was in Australia, and suppliers cannot expect to be bailed out.

So now how sensible does it look for a supplier to invest in this project? Which sensible chief executive would commit the funds? Why? What return is sensibly to be expected? What price risk?

(This article is the summary of a longer paper on the subject, ‘A risk assessment for prospective suppliers to the UK NIS’, which first saw the light of day on IdealGovernment.com in November 2007.)

Published by David Moss on 13/04/08 at 2:37pm

Comments

  1. "Suppliers will be dependent on IPS and IPS are vulnerable.. If the Lib Dems or the Conservatives come to power, the NIS will be cancelled, as its equivalent was in Australia, and suppliers cannot expect to be bailed out”

    Wrong.  I was at a meeting less than one month ago where the IPS representative clearly said that the contracts to be awarded this year would include compensation in the event of the scheme being cancelled.

    Reply by Dave Birch  on  04/14/08  at  12:13 pm

  2. Dave Birch, 14 April 2008, 12:13 pm:
    “Wrong.  I was at a meeting less than one month ago where the IPS representative clearly said that the contracts to be awarded this year would include compensation in the event of the scheme being cancelled.”

    It remains the case that “suppliers cannot expect to be bailed out”.

    Suppliers enter into contracts rationally, in the expectation of making profits and enhancing shareholder value.

    For the 23 reasons stated [1], that expectation is low in the case of the NIS and it is surprising that any supplier would invest all the time and money required, and risk their reputation. Even if IPS can deliver some compensation – and they don’t have a good record on delivery – that isn’t a rational argument for entering into the contract.

    Remember that David Davis is on the warpath. He wrote to the Cabinet Secretary over a year ago to tell him so, and to some of the more likely suppliers [2]. He even got into an argument with Intellect about pork barrels [3].

    He, and indeed any right-minded public servant, will be checking to make sure that the public do not lose out on these contracts. There is a risk that claiming on IPS’s compensation clauses could take years and could be subject to determination by the courts.

    The whole idea of PPP and PFI is that the private sector take the risks. If they turn out to be cushioned from reality at public expense, that defeats the purpose, as Richard Granger understood with NPfIT and Ken Livingstone understood with Metronet and Private Eye remind us every issue.

    ----------

    1. http://dematerialisedid.com/BCSL/Risk.html
    2. http://www.independent.co.uk/news/uk/politics/tories-warn-firms-bidding-for-id-card-scheme-we-will-scrap-the-whole-idea-435236.html
    3. http://www.no2id.net/newsblog/?p=532

    Reply by David Moss  on  04/14/08  at  3:23 pm

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