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Inquiry into CARD and INCIS

Report of the Justice and Law Reform Committee

SUMMARY OF RECOMMENDATIONS
CARD
1. We recommend to the Government that the Police obtain urgently the capability to monitor and report performance in receiving 111 calls and attending to related incidents, and that the statistical data collected and resulting analysis be included in its Annual Report to Parliament.
2. We recommend to the Government that the Police investigate establishing a "Hotline" or 0800 number to handle calls that are neither routine nor related to an emergency event requiring an immediate response.
3. We recommend to the Government that it investigate together with the Police and Telecom the need for a large scale publicity campaign to advise people about the proper use of the 111 emergency call system and to warn people against abuse of the 111 call system.
4. We recommend to the Government that it investigate strengthening existing legislation to cover a broader range of telephone abuse as a means for dealing with 111 call abuse.
5. We recommend to the Government that the Police ensure that training for new CARD staff is robust and comprehensive, and that all staff receive regular and effective refresher training.
6. We recommend to the Government that the Police ensure that its change management strategies, which facilitate the introduction of new technology changes, focus on allowing staff affected by a particular project to feel involved, and have a sense of ownership and acceptance.
7. We recommend to the Government that the Police should request call delivery reports more regularly to assess its performance, and to enable it to update and reassure Parliament and the public about the effectiveness of the CARD system.
INCIS
8. We recommend to the Government that government departments should make every possible effort to undertake smaller and less complex information technology projects.
9. We recommend to the Government that government departments should always attempt to favour "off-the-shelf" software applications where possible.
10. We recommend to the Government that in future large scale public sector information technology projects should be broken down into more discrete parts which should then be approved individually by the Cabinet on a part-by-part basis.
11. We recommend to the Government that tighter specification of deliverables should be required for public sector information technology projects.
12. We recommend to the Government that the monitoring of public sector information technology projects should be more transparent.
13. We recommend to the Government that the monitoring of public sector information technology projects should be strengthened and consider that monitoring of the progress of projects would be improved by the inclusion of specific milestones with time-lines in reports.
14. We recommend to the Government that the role of the State Services Commission should be enhanced in relation to large and complex public sector information technology projects, including the participation of officials from the central agencies in information technology project teams.
15. We recommend to the Government that the Treasury should be more closely involved with large or high risk public sector information technology projects from an earlier stage and take a more hands-on approach.
16. We recommend to the Government that the issues concerning the definition of the roles and responsibilities of the Commissioner of Police should be resolved promptly.
17. We recommend to the Government that the processes concerning the appointment, removal and performance assessment of the Commissioner of Police should be clarified urgently.
18. We recommend to the Government that, as part of its foreshadowed inquiry into the INCIS project, it investigate who is ultimately accountable for the difficulties with the project and advise Parliament accordingly.
INTRODUCTION
Introduction
Standing Order 192(2) provides that select committees have the power to inquire into the administration of government departments and organisations within their subject area. A central function of select committees is to examine and scrutinise the performance of government departments and organisations. Standing Order 193(8) specifies that the New Zealand Police (the Police) amongst others is an organisation within the purview of the Justice and Law Reform Committee. Therefore, using these powers, we initiated an inquiry into the Police computer systems CARD and INCIS in April 1997.
Terms of reference
The following terms of reference were adopted by the Justice and Law Reform Committee on 30 April 1997:
To inquire into the planning, design and implementation of the New Zealand Police Communications and Resource Deployment (CARD) System and the Integrated National Crime Information System (INCIS). In particular, to be briefed on:
1. The adequacy and effectiveness of the planning, design and implementation of the CARD system including:
  • Whether adequate consideration was given to problems experienced with other similar systems overseas;
  • Whether the system is suitable for Police needs;
  • Whether the training and human resource management for the system has been adequate.
    • 2. The cost effectiveness of the CARD system.
    3. The difficulties experienced with the planning, design and implementation of INCIS.
    Initial progress on the inquiry
    On 28 May 1997 we received our first submission from the Police regarding the inquiry.
    Submission from the New Zealand Police, dated 27 May 1997 (INQ/CARD/POL/1).
    Since that time we have received submissions and heard evidence from a variety of individuals and organisations.
    Originally, we started our inquiry because there were concerns about the way the CARD system had been implemented. In early 1997 an experienced Police officer complained publicly about the implementation of CARD.
    Submission from the New Zealand Police, dated 27 May 1997 (INQ/CARD/POL/1).
    For example, concern was expressed over the delay to dispatch Police resources quickly to a member of the public needing urgent assistance. Some of us had received other similar reports from constituents. We wanted answers to questions like why were delays occurring and was the newly installed CARD system to blame. For instance, was it a problem with resourcing of the CARD centres, could CARD deliver a better service than the previous system, and had enough been done to train staff at the CARD centres?
    In addition, we wanted to know if the difficulties experienced during and after the implementation of CARD could in any way assist in the efficient and effective implementation of the INCIS project. While we were aware that the INCIS project was experiencing some difficulties, we were only alerted to their significance following the resignation of the Police's Director of Information Technology in March 1997.
    Focus on the implementation of INCIS
    Over time the focus of our inquiry changed. In 1997 and 1998 we continued our consideration of the inquiry receiving evidence from submitters and advice from the Audit Office as issues arose. A number of these issues concerned the CARD project which had been implemented in 1996. During this period we used the inquiry to monitor the performance of CARD and the progress towards implementation of INCIS. Most of the responses to us from the Police were positive in outlook and conveyed, particularly with regard to INCIS, an impression that everything was on track.
    In 1999 we took a more systematic approach to the process of gathering evidence as we became aware that there were serious problems with the amount of progress being made on the implementation of INCIS. While we received updates on CARD from the Police and Telecom New Zealand Limited (Telecom), we cast a far wider net in our search for information on INCIS. We heard and considered evidence from key players, past and present, including the Police, the Minister of Police, the Treasury, the New Zealand Police Association, IBM New Zealand Limited and IBM Corporation (IBM) and various consultants. We also urged and requested a greater involvement in the scrutiny of the INCIS project from the Audit Office.
    Audit Office involvement
    On 25 February 1998 we received both a written and oral briefing from the Audit Office, which originated from a request for information we made on INCIS under the 1996/97 Financial Review of the New Zealand Police. On 24 March 1999 the Audit Office attended a meeting of the committee to discuss the nature and extent of advice that it could provide on the inquiry. Amongst other things, the Code of Practice for the Provision of Assistance by the Controller and Auditor-General to Select Committees and Members of Parliament (I.17 a , 1994) provides that:
  • The Controller and Auditor-General must agree with a select committee on the specific terms and conditions of any assistance to be provided.
  • The Controller Auditor-General will not agree to a level of assistance to be provided to the committee which would exceed $10,000 in cost or six months in duration without first consulting with the Officers of Parliament Committee.
    • Following our meeting with the Audit Office we indicated that we would like the Audit Office to be appointed as an official adviser on the inquiry. The Audit Office was able to indicate to the committee in August of this year that our request for assistance had been complicated by the negotiations between IBM and the Government, and the Audit Office was unable to commit to involvement in a substantive inquiry until after these issues were resolved.
    Legal proceedings filed
    On 17 August 1999 the Attorney-General filed proceedings against IBM in the High Court at Wellington following the withdrawal of IBM from the INCIS project. The Crown is seeking judgment in relation to three causes of action. It is seeking various forms of relief, including two sums substantially in excess of $3 million (excluding GST). A Statement of Defence and Counterclaim has since been filed by IBM. IBM is seeking $75 million and court costs in compensation for losses it says it sustained from the project. We sought advice from the Clerk of the House of Representatives about the status of our inquiry in light of the fact that proceedings had been filed and matters relating to our inquiry were before the courts. A copy of that advice is attached as Appendix G.
    Application of the sub judice rule
    Standing Order 115 provides that subject to the discretion of the Speaker (or the Chairperson in the case of a select committee) matters awaiting or under adjudication in any court may not be referred to in any motion, debate, or question, from the time that a case has been set down for trial or otherwise brought before the court.
    Standing Order 116 provides that Standing Order 115 has effect in relation to cases other than criminal, from the time when proceedings have been initiated by the filing of the appropriate document in the registry or office of the court. It also provides that the rule will not cease to have effect until judgment is given, which can be taken to include any settlement or lapse of proceedings. Furthermore, it provides that Standing Order 115 ceases to have effect when judgment has been given. Where a notice of appeal is given Standing Order 115 continues to have effect until the appeal has been decided.
    The sub judice rule is engaged with respect to our inquiry because proceedings have been filed in the High Court. Therefore, the Chairperson was required to consider whether continuing the evidence gathering process and reporting on the inquiry would pose "a real and substantial danger of prejudice to the trial of the case".
    Given that there is a matter awaiting adjudication, there are two ways in which "prejudice" might arise in respect of the legal proceedings. The committee could hinder or pervert the course of justice by leading the court to reach a "wrong" conclusion. In judge-only proceedings there is less danger of prejudice arising in this way than if a jury is involved. The second way, while not affecting the result that the court reaches, would be prejudicial if the committee effectively usurped the court's functions by determining a matter that more appropriately should be dealt with by the court. This is a more modern rationale of the sub judice rule and one that the Speaker has emphasised in recent comments in the House.
    Speaker's Rulings, New Zealand House of Representatives, 129/3
    Wider principle of restraint
    Apart from the sub judice rule, we also considered whether we should exercise additional restraint in the way in which we continued our evidence gathering process and the making of a report. We determined that it was important to be mindful of this principle. Therefore, in addition to considering the issue of sub judice, we also considered on a case-by-case basis whether there was any need to take into account any other matters that may have an impact on the legal proceedings. Although we were not necessarily obliged to do so, we chose to consider whether to exercise restraint on matters that lay outside the sub judice rule. This principle was applied before making decisions about hearing or receiving evidence, taking a certain course of action with the contents of any report and whether to make any report at all.
    In deciding whether to make a report we considered the effect of reporting in terms of the status of evidence which is currently confidential. All evidence and proceedings held confidentially by the committee would become publicly available as soon as any report of the committee was presented or when Parliament dissolved in October 1999. We considered whether in light of the court proceedings we should recommend that the House consider protecting some or all of that evidence, notwithstanding any mention of that evidence in our final report. This should not be done lightly, for it does, by definition, mean that evidence that might otherwise have been properly used and which could have assisted the court, would not be available.
    Other forms of privilege considered
    During our consideration we received official documents that were attached to written submissions for our information. These documents were not prepared specifically for the committee but were created by the submitters themselves or by other persons and organisations for other purposes. We considered whether any of these documents would be subject to legal professional privilege, solicitor-client privilege or could be withheld under the Official Information Act 1982. If any documents were so privileged and we released them, we would effectively be destroying the privilege. Decisions on whether these documents should be released are ultimately for the courts or an Ombudsman to make.
    Decision to report to the House
    In deciding to continue with our inquiry and moreover to report to the House, particularly on INCIS, we have had to weigh up the intent of the Standing Orders and the principle of restraint against our duty to scrutinise Police administration. We have resolved to make a report to the House that avoids commenting on legal issues related to the contractual matters in dispute. But we consider that Parliament has a constitutional duty to scrutinise the operations and performance of public bodies and it has not surrendered that duty in applying the sub judice rule. The duty to exclude matters awaiting adjudication does not extend to excluding material just because it might be relevant to determining those matters. We consider there needs to be a direct relationship to the legal issue for the matter to fall within the scope of the sub judice rule.
    While it is likely that the way in which the Police administration has conducted itself will be relevant to how the legal issues are resolved, they are not the matters for adjudication themselves. We consider that by reporting in this way, we will be fulfilling our constitutional role, while at the same time we will avoid performing a task that falls to the court.
    However, we also consider that in light of the fact that court proceedings have been filed it would be appropriate to exercise restraint in terms of the release of some of the confidential evidence we received. Therefore, before making our report we recommended to all parties of the House that certain evidence on the inquiry be protected until legal proceedings between the Crown and IBM are resolved. We also recommended to all parties that Parliament should not be the instrument for releasing one other document for which we were advised privilege would be claimed in the legal proceedings. Whether that document is released is a matter for the court.
    Order for protection agreed to by the House
    During the urgent debate that began on Tuesday, 5 October 1999 the House gave effect to our recommendation by ordering:
    "That the proceedings of, and evidence received by, the Justice and Law Reform Committee in the course of its Inquiry into CARD and INCIS namely,—
  • all uncorrected drafts and corrected transcripts of hearings of evidence from Tony Crewdson and Greg Batchelor and all written evidence provided by Tony Crewdson and Greg Batchelor:
  • a submission from the New Zealand Police, dated 8 May 1999, in response to allegations made by Tony Crewdson:
  • a submission from the New Zealand Police, dated 28 September 1999, responding to allegations made by Greg Batchelor:
  • a submission from Andersen Consulting, dated 28 September 1999:
  • a submission from the Secretary to the Treasury, dated 4 October 1999:
  • all advice from the Crown Negotiating Team:
  • any extracts of the above evidence or proceedings:
    • shall be retained in the custody of the Clerk of the House and may not, without further order of the House, be disclosed to any person by the committee or by any member of the committee or by any other person, notwithstanding any reference to such evidence or proceedings in any report of the committee on its inquiry".
    The Leader of the House also sought leave to move a further motion relating to the non-release of a document before the committee on the inquiry for which privilege may be claimed in legal proceedings. Leave was denied.
    Natural justice provisions applied
    Several key witnesses when giving evidence explaining their involvement in the CARD and INCIS projects made reference to the performance and probity of certain individuals and organisations. During the course of our inquiry we determined on a number of occasions that certain allegations made in evidence might seriously damage the reputation of various individuals or organisations involved in both projects. Pursuant to the natural justice provisions of the Standing Orders
    Standing Order 226
    , we informed those persons and organisations of the allegations, and gave them the opportunity to respond. The allegations and the responses to those allegations are dealt with in the body of the report.
    Adverse findings
    This report contains findings with respect to the performance of the Audit Office and the Police. These findings were identified as "adverse" findings pursuant to Standing Order 245 which requires any such findings to be forwarded to the relevant parties to give them an opportunity to comment. We forwarded a draft of these findings to the relevant persons and have subsequently received their responses which we took into account before presenting this report. These responses are appended to our report as Appendix H and I respectively.
    Committee procedure
    The conduct of our examination and the membership of the committee is attached as Appendix A. A list of submissions received is set out in Appendix B. We received advice from the Audit Office and a list of documents received is set out in Appendix F.
    Structure of our report
    This report consists of two parts. Each part addresses the planning, design and implementation of CARD and INCIS respectively. In addition, both parts contain recommendations on the projects they address. However, as mentioned above, our ability to make findings in relation to the INCIS project has been restricted to matters outside the scope of the contractual dispute between the Police and IBM. The main focus of our recommendations on the INCIS project concern Police administration and the lessons to be learnt from the project's non-completion that can be applied to future public sector information technology (IT) projects. Our recommendations on CARD focus on improvements to the system and its operation.
    PART ONE—THE CARD SYSTEM
    About the CARD system
    Operating technology used by communications centres
    The Communications and Resource Deployment System (CARD) is the operating technology used by the Police's new communications centres, which the Police share with the New Zealand Fire Service (the Fire Service). In an effort to make the most efficient use of policing resources in response to customer requests, the Police established three communications centres. The centres are located in Auckland, Wellington and Christchurch. CARD was introduced from October 1996 and replaced the previous system that had been developed approximately 20 years ago.
    CARD replaced existing outmoded systems and manual procedures. The Police formerly used a computerised dispatching system (CAD) for its operations in Auckland, Wellington and Christchurch. This system was developed on the Wanganui Computer Centre hardware platform in 1976.
    The three CARD centres are responsible for handling all telephone requests for Police service from external and internal customers throughout New Zealand, and for the dispatch and control of all Police patrols. Operators at the centres determine the most appropriate response to calls based on officer availability, skill set, proximity to the incident and established district operational priorities and protocols. Calls for Police service come to the centres from several sources. They include:
  • 111 emergency calls
  • *555 (emergency traffic)
  • general calls from the public telephone system
  • calls from other emergency agencies
  • calls from Police stations via the Police telephone network.
    • The new system was designed to replace two existing systems employed by the Fire Service, who operated from six control rooms, and the Police who dispatched from 20 control rooms. Accordingly, the system resulted in three joint centres dispatching both Police and Fire Service resources for the whole country.
    Chronological history
    Table 1—Chronological history of CARD
    6 February 1996 Business case prepared (Police component)
    13 February 1996 Approval by the Police Executive Conference (Police component)
    16 February 1996 Ministerial approval (Police component)
    1996 Tender process
    August 1996 Approved by the Police Executive Conference (Police and Fire Service components)
    August 1996 Contract signed by the Police
    March 1997 Police Complaints Authority conducts probity review of aspects of the tendering process
    April 1997 Justice and Law Reform Committee initiates its inquiry into CARD and INCIS
    13 and 18 August 1997 Cabinet approval (Police and Fire Service components)
    August 1997 Contract varied to include the Fire Service
    October 1996 Hamilton cutover
    November 1996 Wellington cutover
    December 1996 Christchurch cutover
    February 1997 Auckland cutover
    December 1997—July 1998 Nationwide cutover
    October 1999 Justice and Law Reform Committee reports on its inquiry to the House
    We note that the "cutover" of the implementation of the CARD system to the provincial control centres was ten months over its expected date. The Police considered that it was not ready for system cut over at an earlier stage, according to the Audit Office.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    Project cost and approval
    The Police had originally planned that CARD would be funded as part of its normal business operations. The original Business Case highlighted cost savings to the Police as well a number of technology and business benefits.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    In 1995 ministerial approval was granted to proceed with the development of CARD. At that time it was envisaged that the project, intended for Police use only, would cost $10 million. On 17 June 1996 the Police entered into an agreement with Intergraph Public Safety (NZ) Ltd (Intergraph) for the supply of the systems to be employed by CARD. However, according to the Commissioner of Police, Mr Peter Doone, in the course of the CARD development the nature and scope of the project changed. This resulted in the overall project cost exceeding the ministerial delegation for approval of capital projects ($10 million) and the project was referred to the Cabinet for approval.
    In August 1997, the Cabinet approved expenditure of $25.252 million on the CARD project. Expenditure to 30 November 1998 was $22.63 million and the contract with Intergraph for delivery of the CARD system was completed on time and within budget at $8.5 million.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    Table 2—Capital cost of the CARD project
    New Zealand Police costs $ millions
    Intergraph contract 8.7
    Other CARD costs 1.3
    Control room fit out 3.3
    Telecommunications facilities 3.352
    Radio communications 3
    Sub total 19.652
    (Less the Fire Service contribution) (6)
    Police total cost 13.652
    New Zealand Fire Service costs
    Contribution to the Police 6
    Internal expenditure 5.6
    Fire Service total cost 11.6
    Project total cost 25.252
    We note that approval for CARD was given by the Cabinet after work had begun on the project. This was at the request of the Cabinet, according to the Audit Office.
    Audit Office briefing report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    The Treasury raised a number of concerns about the funding approval process. It said that the approval of CARD represented a "fait accompli" for the Cabinet in that the new system was at the time in the process of being implemented and $16 million or 63 percent of the total cost of $25.6 million had been spent as at 31 March 1997. The Treasury said that the belated retrospective nature of the approval sought for CARD raised concerns about the Police's capital expenditure decision-making and project management. The Treasury's concerns, in particular, were:
  • that the initial Police estimate of $10 million for the cost of the system had increased to $14 million (excluding Fire Service related costs of $11.6 million)
  • the absence of a comprehensive assessment of the costs and benefits of the project at the outset
  • issues with the cost-benefit analysis which had a Net Present Value of $248,000 (the original NPV was $9.726 million)
  • there had been well publicised problems with the implementation of the new system.
    • Letter from the Minister of Police to the Chairperson of the Cabinet Committee on Expenditure Control and Revenue, originally dated 11 June 1997 and redated 19 June 1997 (contained in submission from the New Zealand Police, received 18 March 1999 (INQ/CARD/P/11A)).
    The Commissioner was subsequently advised by the Financial Controller at Police National Headquarters on 10 June 1997 that the Treasury had expressed an intention to pursue its concerns about the Police's capital expenditure decision-making with the Treasurer, with a view to limiting the Commissioner's delegation to $1 million.
    Internal memorandum from the Financial Controller to the Commissioner of Police, dated 10 June 1997 (contained in submission from the New Zealand Police, received 18 March 1999 (INQ/CARD/P/11A)).
    We are not aware of the outcome of the Treasury discussions.
    In his letter to the Minister of Police seeking approval for expenditure on CARD, the Commissioner said that additional funding was required for three reasons. First, CARD would now form the main resource deployment and management system for the Fire Service as well as the Police. Secondly, two communications projects, which were commenced prior to CARD and estimated to cost under $5 million (and therefore within the Commissioner's delegated authority to approve), were incorporated with CARD in the process of packaging the wider project for sharing with the Fire Service. Thirdly, as a consequence of the extension of the project to include the Fire Service, costs have been incurred in alterations to buildings to provide accommodation for the three communications centres.
    Mr Doone told the Minister of Police that the "somewhat negative Treasury comment" fails to recognise that a replacement for the old system was essential and that CARD is a much more comprehensive resource management tool.
    Letter from the Commissioner of Police to the Minister of Police, originally dated 10 June 1997 and redated 19 June 1997 (contained in submission from the New Zealand Police, received 18 March 1999 (INQ/CARD/P/11A)).
    Process when 111 is dialled
    The 111 system is operated by Telecom New Zealand Limited (Telecom). When 111 is dialled the call is directed through the Telecom Network to a Telecom operator in a national assistance centre at Auckland or Palmerston North. The operator answers the call with "111 emergency, fire, ambulance or Police" and asks the caller to state which emergency service is required. The operator then dials the appropriate emergency service provider based upon the service requested and the caller's geographical location. The operator monitors the call to ensure that the emergency service provider's operator answers and can communicate with the caller. If the call attempt is unsuccessful the Telecom operator will either retry the emergency service provider's number or try alternative numbers.
    111 calls forwarded to Police
    The 111 calls forwarded to the Police by Telecom are answered by trained communicators at CARD centres. They are tasked with quickly establishing the urgency of a call and recording the details of a caller's needs. The information is entered into the new Computer Assisted Dispatch (CAD) system. Calls that are not answered at the CARD centre in a caller's geographical region within 75 seconds or 25 rings are directed to the first alternative CARD centre. If that call is not answered within 75 seconds then the call is directed to the second alternative CARD centre. Should that call fail to be answered within 75 seconds then the call is presented back to the first CARD centre. This cycle is repeated as long as is necessary to obtain an answer.
    Before the installation of CARD, 111 calls were received at control rooms in 20 locations, comprising the three main centres and 17 provincial cities. Under the old system there were many occasions when Telecom was unable to connect the 111 calls to the relevant control room. Consequently numerous 111 calls were lost when callers hung up in frustration at being unable to be connected to the Police.
    Submission from the New Zealand Police, dated 16 April 1998 (INQ/CARD/POL/5).
    Control rooms were not aware how many calls were lost. However, some monitoring was undertaken; for example, for a nine month period prior to CARD implementation, Telecom provided performance reports to the Police which indicated 7800 calls were either abandoned or lost through ageing systems failure.
    Submission from the New Zealand Police, dated 11 November 1998 (INQ/CARD/POL/8).
    Foreign jurisdictions using similar technology
    The Police provided us with examples of its consultation on new communications technology with overseas law enforcement agencies. As part of the evaluation process 16 foreign Police agencies were contacted which used systems supplied by the three companies tendering for CARD in New Zealand. The tendering process took place during 1996. The three shorted listed tenders were Intergraph, Tandem/SCC
    The Tandem/SCC consortium comprised Tandem Computer Pty Ltd, SCC Communications Corporation, Telecom New Zealand Limited, and Eagle Technology Group Ltd.
    and Ericsson. Police at each agency were asked for their impressions of each company's implementation, system and support. A group of system users were sent to the United States to look at the proposed Intergraph system in a "proof of concept" phase and were satisfied that the system would meet New Zealand Police needs. In addition, extensive discussions were held with the Victorian Police in Australia who also use an Intergraph system. It should be noted that the Victorian system is different to the system in New Zealand, which is based on Windows NT.
    System suitability for Police requirements
    The Police selected CARD because it considered that the system is the most appropriate tool available to meet its requirements. CARD provides enhanced functionality to aid staff in the deployment of equipment and personnel. It provides a modern technology platform suitable for integration into other Police systems. It provides the Police with the ability to achieve communications and dispatch services to the whole country. Telecom considers CARD is capable of delivering superior 111 call answering performance to that provided by the system it replaced. It should be noted CARD is not designed for Civil Defence purposes nor for the direct control of responses to major disasters.
    Initial training of staff
    The Police trained 14 CARD trainers who then provided a one week course to existing CAD operators in the use of the new technology. Supervisors received additional training. Specialist staff, already deployed in the technical area to support other products, also received a one week course in CARD software.
    In addition, new non-sworn staff are given an additional four week course on business practices and legal aspects of policing. The Police indicated that it is working to provide a similar dispatches course, as it did not previously have a formal training programme to move communications staff to dispatch duties.
    Staff in the field are receiving training in the end user terminal products for CARD, for remote job entry and monitoring of events and reports. Remedial training is the responsibility of CARD centre managers.
    Conformity to State Services Commission guidelines
    In December 1998, we asked the Audit Office to review the implementation of CARD. It reported that overall the CARD project conformed to State Services Commission guidelines for project management and selection Selecting and Managing Information Technology Projects .
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    In particular:
  • a business case was completed
  • a risk mitigation plan and quality assurance plan were finalised
  • an established project management structure existed and responsibilities were clearly assigned to individual project staff
  • a project sponsor was appointed
  • there were weekly project meetings between the Police project managers and Intergraph
  • contract management for the CARD project was satisfactory.
    • However, the Audit Office did raise a number of issues. First, the Police could have undertaken the integration between the technical project management and overall project management functions in a more effective manner.
    Secondly, the Police did not consult comprehensively with staff over implementation issues, especially when CARD was being released. For example, in one region staff heard about the release of CARD through the media without any prior involvement or advice about how it would affect their position in the organisation.
    Finally, the Audit Office believed there could have been better consultation with district commanders over the level of resources needed in CARD centres. This meant changes to duties and designations, specifically of staff in those areas. For example, concerns were expressed by one District Commander about the impact of the changes on staff and on customer service in his district.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    Concerns about CARD
    Concerns about the performance of CARD have been raised by some of its customers, users and Telecom, who monitor it. The concerns focus on delays in the Police answering 111 calls and failures to respond adequately to requests for service and assistance. The Police have acknowledged that there have been "isolated occasions where Police have failed through one reason or another to provide assistance to the public when they should have."
    The table below depicts information the Police supplied to us about the number of official complaints made against the Police about delays in answering calls to CARD centres and inadequate responses to calls to CARD centres.
    Table 3—Official complaints regarding CARD centres
    Police delays in answering calls to CARD centres Inadequate Police responses to calls to CARD centres
    1997 9 59
    1998 19 257
    1999 (as at 30 September 1999) 8 140
    Totals 36 456
    We note that of the above 492 official complaints received, 216 were not sustained and 267 were sustained. Nine complaints are still under investigation.
    Response to question 13 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11) and submission from the New Zealand Police, dated 5 October 1999 (INQ/CARD/P/20).
    Delays in answering calls
    A major concern is the delay sometimes experienced by callers in having their call answered by the Police. Telecom has the technology to monitor how long it takes the Police to answer 111 calls. It provides the Police with 111 call delivery problem reports which are generated by Telecom operators at its national assistance centres. The reports are generated when operators are unable to establish a successful call to the designated emergency service provider's primary 111 acceptance point. This means that the operator repeatedly receives a busy signal, or no answer within a given time, or the emergency service operator and the caller are unable to hear one another.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/1).
    In its report to the Police in February 1998, Telecom concluded that the answering performance of the Auckland CARD centre was "abysmal". A total of 395 calls experienced problems. Telecom said this level of problems is "unacceptable". The 111 call volumes in Auckland are three times higher than at Wellington, and four times higher than at Christchurch. These problems were undermining the CARD system. A public perception was developing that "it is not worth calling 111 as you do not get a reply, which reflects very badly on the Police."
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/1).
    The inability of the Auckland CARD centre to sometimes cope with the volume of calls it receives means that calls are diverted to the other two centres. Telecom says problems at Auckland have a negative effect on the Wellington CARD centre, the first alternative.
    Evidence regarding length of call answering times
    We were provided with evidence on call answering times. Telecom is very quick and efficient in answering 111 calls. The average length of time a caller has to wait for an answer by a Telecom operator is 1.7 seconds. The problem arises after a call is forwarded to the Police.
    The Police objective is to answer 90 percent of calls within ten seconds and 99 percent of calls within 15 seconds. Prior to CARD the average time taken in answering 111 calls was 26 seconds. Since CARD was installed the average time in answering calls has been reduced to four to six seconds according to Police evidence provided to us in April 1998.
    Submission from the New Zealand Police, dated 16 April 1998 (INQ/CARD/POL/5).
    Telecom provided us with information on Police call answering times for the period 1 September 1998 to 15 October 1998.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/2).
    The average answer time in this period was 10.79 seconds. The longest answer time was four minutes and 46 seconds. There were 72.82 percent of calls answered within ten seconds and 81.58 percent of calls answered within 15 seconds. One in ten calls took more than 25 seconds to be answered.
    Telecom believes the main problem with Police 111 call answering performance is that a small percentage of calls take a very long time to be answered. As at 11 November 1998, Telecom understands that initiatives taken by the Police to improve answering performance have not significantly improved the answering of calls with extremely long answer times.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/2).
    Number of calls diverted between CARD centres
    Concerns have been expressed about the number of calls diverted from one CARD centre to another. Between 1 September 1998 and 15 November 1998 33,114 calls to 111 were forwarded to the Police by Telecom. Most callers had their calls dealt with by the first CARD centre they were forwarded to. However, 273 calls were forwarded to two centres and four calls were forwarded to three centres.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/2).
    Having a call diverted to another CARD centre means that the caller has waited a minimum of 75 seconds for their call to be answered. This can be very frustrating for the caller and stressful for the Telecom operator who must stay on the line and monitor the call. As a result some Telecom staff have received stress counselling.
    "111 computer breaks down again", The Evening Post , 12 November 1998.
    Telecom suggests that long answer times could be reduced by shortening the divert on no answer from 25 rings or 75 seconds to 15 rings or 45 seconds. However, this course of action would increase the volume of calls diverted by approximately 400 percent.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/2).
    Police not aware of call priority in certain cases
    Telecom informed us that 111 calls that are diverted to a second or subsequent CARD centre are directed to an alternative Direct Dial In (DDI) number that creates a separate queue for those diverted calls only. Telecom's understanding is that CARD operators treat the diverted queue with a higher priority than first time 111 calls. Telecom investigated the issue of alternative call signalling in conjunction with the Police and developed this method for distinguishing between 111 calls that have been diverted to a CARD centre and first time calls. The changes were implementated in August 1998.
    However, Telecom noted that a 111 call that has been delivered against one of the alternative numbers has been diverted one or more times. The arrangement does not distinguish between the number of times that the call has been diverted if it has been diverted more than once.
    Submission from Telecom New Zealand Limited, dated 17 March 1999 (INQ/CARD/T/6).
    We are concerned that the Police is unable to determine the priority of a 111 call that has been diverted more than once. At present the Police is not aware whether a diverted 111 call it receives has already been diverted. As a consequence the call receives the same priority as any other diverted 111 call. This means that a caller who may have been diverted from more than one CARD centre will not have their call answered any faster than a caller who has been diverted once. The way the system operates currently is very stressful for callers who are unsuccessful in having their call dealt with and are diverted a number of times.
    Failures to respond to calls
    There are concerns about the occasional Police failure to respond appropriately to a request for assistance. Some callers have experienced problems in receiving an adequate response to a 111 call once they have contacted a CARD centre.
    The most notorious case concerned the death of Auckland woman, Claire Hills. She died in her car in Mangere as the result of a fire on 28 April 1998. The Police took 40 minutes to respond to a 111 call about the incident. The then Minister of Police, Hon Jack Elder, declined to comment on the matter due to the instigation of two investigations into the issue.
    The new Minister of Police, Hon Clem Simich, expressed concern about the Police delay in responding to the 111 call and said in a letter written in September 1998 that "a call taker in the Police Communications Centre did not appear to have responded to information received . . .". The Police Complaints Authority has completed a separate inquiry into the incident and found that it was a case of human error.
    Report of the Police Complaints Authority, dated 20 July 1999 (INQ/CARD/GEN).
    The Police officer concerned was found to be in neglect of duty and has subsequently been disciplined.
    Other examples of delays in Police answering and responding to calls for help have been brought to the attention of the committee. They include:
  • June 1998—Police do not respond to a 111 call from a woman in Papakura following the theft of her car in her presence
    • "Police fail to respond to 111 says Labour MP", The Dominion , 25 June 1998.

  • September 1998-20 minutes for Police to respond to an incident in Porirua, three *555 calls and one 111 call were abandoned
    • "No answer from 111 as injured teen lies by road", The Evening Post , 11 September 1998.

  • October 1998—Police were sent to an address in Vivian Street, Wellington rather than its namesake in New Plymouth
    • "Police 111 blunder `no big deal"', The Evening Post , 2 October 1998.

  • September 1999—Police fail to respond to three 111 calls about the same incident at a boarding house in Auckland.
    • We questioned the Police about what statistical data it collects regarding the time taken between receipt of a 111 call at a CARD centre and the arrival of the Police at an incident scene. Apparently the Police do not collect this type of data. However, as part of developing performance measurements across the Police, a management analysis and reporting system is being considered to provide managers at all levels with individual Police unit (vehicle) performances. The system is a reporting application of CARD and will enable unit activity to be analysed. Analysis of this information, together with crime trend analysis, will enable managers to make informed decisions about dispatching Police resources and analysing performance standards.
    We recommend to the Government that the Police obtain urgently the capability to monitor and report performance in receiving 111 calls and attending to related incidents, and that the statistical data collected and resulting analysis be included in its Annual Report to Parliament.
    Backup system if CARD fails
    CARD provides technology which allows the system to operate even if part of the system fails. There is concern, however, about what happens to 111 calls forwarded to the Police when the system fails completely. As at 11 November 1998, the system has failed on five separate occasions and "hundreds" of 111 calls have been affected.
    "Computer glitch strikes again", The Evening Post , 11 November 1998.
    The Police say that in the event of system malfunction steps are taken immediately to restore capability and move to manual operations. In addition, the Police has performance standards in the relevant contracts with companies required to maintain the system, with financial penalties should service drop beneath required standards. At a hearing on 11 November 1998, the Police said that it is not a serious matter if CARD crashes from time to time. CARD enhances Police capability and the Police's system is not computer dependent.
    Reasons for delays and failures
    A number of reasons have been put forward to explain the delays in the Police answering some 111 calls and failing to respond appropriately to some requests for assistance. These include:
  • an increase in the number of 111 calls
  • hoax and false calls
  • technical problems
  • human error
  • lack of consultation with staff
  • lack of communication between the Police and Telecom
  • inadequate resources
  • lack of local knowledge.
    • Increase in the number of 111 calls
    Since CARD was installed there has been a dramatic increase in the number of 111 calls made to the Police. CARD centres handle approximately one million calls annually, of which 260,000 are 111 calls. At the Auckland CARD centre 111 calls have increased by 57 percent.
    Submission from the New Zealand Police, dated 16 April 1999 (INQ/CARD/POL/5).
    The centre receives approximately 3000 calls per week. The number of 111 calls CARD is processing is higher than the number of calls the former 20 control rooms had to contend with. The Police argue that there could have been hundreds of calls that were never received under the old system. There has also been a genuine increase in the number of 111 calls to the Police.
    CARD increased the number of 111 lines potentially available nationally from 50 to 240. The system automatically increases the number of 111 lines available in the three centres depending on the number of operators logged-on to the system. It is designed to match the number of operators available to take calls with the number of lines open. There is a potential for 120 lines for Auckland and 60 lines each for both Wellington and Christchurch.
    Submission from the New Zealand Police, dated 16 April 1999 (INQ/CARD/POL/5).
    The number of unanswered call attempts has increased significantly since October 1997, and corresponds with increased call volumes. The Police is reviewing the origin and nature of the 111 calls it is receiving to determine what proportion of 111 calls are not emergency calls.
    In June 1998, Telecom informed us that increasing call volumes meant that average answering times have increased in both Auckland and Wellington to the extent that call answering times are longer than before CARD was introduced. This is due to a small proportion of calls taking significantly longer to be answered.
    One potential contributing factor is the increasing usage of mobile phones. Such phones offer users a far greater degree of flexibility than phones reliant on fixed land lines. Between September 1994 and November 1997 there has been a 670 percent increase in the number of 111 calls made on mobile phones, according to Telecom.
    Submission from Telecom New Zealand Limited, dated 4 December 1998 (INQ/CARD/T/5).
    The Police say that "it is not possible to guarantee that there will not be some failure in the future given the volumes of calls received".
    Submission from the New Zealand Police, dated 16 April 1998 (INQ/CARD/POL/5).
    Some commentators believe a solution could be the establishment of an 0800 number or 311 number for incidents and matters of a lower threshold.
    In March 1999, the Police informed us that while there were initial difficulties with responding to the ever increasing volume of 111 calls, overall the three CARD centres are now achieving, and in some cases exceeding, corporate service delivery standards. This has occurred through a stabilisation of CARD and associated technologies and new staff now being familiar with operating systems.
    Responses to questions contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    Hoax and false calls
    Nearly 40,000 111 calls are made each week. This figure equates to 2.05 million calls per annum. Telecom says of these calls nearly 80 percent are "abandoned", "hoax", or "false". "Hoax" calls are calls that have been deliberately dialled when no emergency service is required. "False" calls are calls that are dialled by mistake or genuine error. "Abandoned" calls are calls where the caller hangs up before they are connected to a Telecom operator.
    We asked Telecom about the number of calls that were genuine and not hoax or false calls. In March 1999, Telecom informed us that it is obviously concerned about the volumes of hoax and false 111 calls it answers. Approximately 30,000 hoax or false calls are made every week. This volume jeopardises the level of service offered to genuine 111 callers. Only 20 percent of 111 calls are genuine, according to Telecom.
    Submission from Telecom New Zealand Limited, dated 17 March 1999 (INQ/CARD/T/6).
    Just over 14 percent of all calls are transferred to the Police and 4.2 percent of calls to the Fire Service. The Police has stated that only 30 percent of the calls that Telecom forwards to it are what the Police classify as emergency calls. The volume of emergency calls according to the Police's definition is 1700 calls per week or four percent of all 111 calls made.
    Submission from Telecom New Zealand Limited, dated 4 December 1998 (INQ/CARD/T/5). Further information on hoax and false calls is contained on page 5 of this submission.
    We questioned the Police about its response to hoax or false calls. The Police informed us that the majority of hoax and false calls are vetted by Telecom. Only a small number reach the Police. Where a hoax or false call is received and identified details can be recorded and follow-up action taken where appropriate by field staff, particularly where repetitive offenders are involved. The majority of hoax 111 calls are made by children.
    Campaign undertaken to reduce the number of hoax and false calls
    Telecom undertook a major 111 call campaign in 1994/95. The purpose of the campaign was to reduce the number of hoax and false calls. The campaign was of limited effectiveness in reducing abuse of the 111 system. Telecom does not intend to engage in any new mass advertising campaigns. However, Telecom provides public education material on the 111 emergency service in the form of "How and When " videos and pamphlets, which are made available to the emergency services for specific public education exercises. Telecom's strategy for dealing with abuse of the Telecom interface of the 111 system has focussed on education and deterrence, not on punishment. Given the continuing upward trend in hoax and false calls it would appear that these initiatives have resulted in only limited improvement, according to Telecom.
    Submission from Telecom New Zealand Limited, dated 17 March 1999 (INQ/CARD/T/6).
    In March 1999, the Police explained that most call centres, particularly those call centres associated with emergency services, accept that a percentage of calls will be hoax or false calls. The strategies developed in concert with other service providers, like Telecom, can only minimise the frequency of these types of calls. For obvious reasons, hoax or false calls must continue to be factored into communications centre call workload statistics. There is also potential for a media campaign on 111 hoax calls and appropriate intervention type strategies, but overseas anecdotal evidence suggests such public education needs to be ongoing to be effective. The Police told us that individual repetitive hoax callers are followed up on a case-by-case basis.
    Response to question 21 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    Options for deterring hoax and false callers
    We questioned Telecom about ways in which to deter hoax and false callers. A number of countries charge for emergency calls, according to Telecom. For example, in the United States, each state sets the charging regime to cover the costs of operating the emergency number service. The charges range from a flat rate surcharge on a subscriber's account (usually around US$2.00) to a percentage surcharge on the access line (ranging from three percent to 15 percent). Most states have local per-call charging, which includes charges for calling the 911 emergency number.
    Submission from Telecom New Zealand Limited, dated 17 March 1999 (INQ/CARD/T/6).
    In Singapore, adoption of separate "Hotlines" by the emergency services has helped reduce the inappropriate call volume by approximately 20 percent. In the United Kingdom, the Police are working with British Telecom on the introduction of a separate "Hotline" number for the Police. British Telecom is also running an educational presentation to primary schools specifically targeting hoax and false calls and vandalism to public phone boxes, highlighting the threat this represents for access to emergency services. The Police told us in March 1999 that it has been working with Telecom to re-design telephone directories to ensure the wider public access 111 only in emergency situations.
    Response to question 21 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    In New Zealand, section 8 of the Telecommunications Act 1987 provides penalties for a range of offences in relation to offensive or abusive use of a telephone. This section would have to be strengthened to cover the full range of hoax and false calls that presently impact on the 111 system. However, Telecom believes that many of the repeat and abusive calls currently received by Telecom operators are covered by the offence provisions of the Act. Telecom also believes that the Crimes Act 1961, the Summary Offences Act 1981, and the Fire Service Act 1975, amongst others, contain provisions that could be relied on by the Police in addressing 111 call abuse.
    Telecom has no statutory mandate to fine any person or party for abuse of the 111 emergency call system. Along with a number of other initiatives, Telecom has considered charging for abusive 111 calls. However, this option was rejected because Telecom considered that any charging associated with 111 calls may be perceived as a barrier to genuine 111 emergency callers. It is not Telecom's present intention to implement charges for hoax or false 111 calls.
    Submission from Telecom New Zealand Limited, dated 17 March 1999 (INQ/CARD/T/6).
    We recommend to the Government that the Police investigate establishing a "Hotline" or 0800 number to handle calls that are neither routine nor related to an emergency event requiring an immediate response.
    We recommend to the Government that it investigate together with the Police and Telecom the need for a large scale publicity campaign to advise people about the proper use of the 111 emergency call system and to warn people against abuse of the 111 call system.
    We recommend to the Government that it investigate strengthening existing legislation to cover a broader range of telephone abuse as a means for dealing with 111 call abuse.
    Technical problems
    Some of the failures in the Police answering and responding to requests for assistance were due to technical problems. For example, there were initially an insufficient number of lines, insufficiently detailed maps, and problems with the computer dispatch system. The Police told us that these problems were due to three technical issues:
  • CARD software running on a new operating system causing occasional error message and screen refresh problems
  • desktop radio application causing occasional outages for radio channels
  • desktop telephony application outage.
    • In summary, the initial technical problems with CARD, according to the Police, "related to the I/CAD system", the ability to transfer recorded events between communications centres resulting from overflow calls, and mapping. These technical problems impacted on the ability of the centres to handle call-flow volumes and, in some cases, promptly dispatch Police resources to incident scenes. The Police assured us that the technology difficulties mentioned above have been overcome.
    Response to questions contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    Human error
    Most failures have been due to human error on the part of staff in the communications centres or in the field.
    Submission from the New Zealand Police, dated 16 April 1998 (INQ/CARD/POL/5).
    CARD is dependent on the quality of the personnel who staff it.
    "Analyst points to more 111 problems", The Evening Post , 11 November 1998
    Ongoing training and up-skilling of staff has been identified as a problem by the Police. The Police informed the committee that the problem is being rectified within centres.
    The Victorian Police use a system similar to CARD. The system handles emergency calls for fire, police and ambulance services. The main difference is that the Victorian communications centres are staffed by Intergraph personnel. In comparison, the centres in New Zealand are staffed by sworn and non-sworn Police personnel. Intergraph has registered an interest in staffing New Zealand CARD centres. The Police informed us that "outsourcing" of the CARD centres was an area identified in a recent external review. We note that a review of Police staffing arrangements recommended contracting out or outsourcing the service. The Police told us that this will be acted upon as part of the outsourcing project but not for the next few years. No work to date has been done in this area.
    Response to question 9 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    The Police explained that, to some extent, the technical problems were also associated with human errors while new staff were being trained. The Police assured us that all staff have now fully completed the required training courses and with practical operator experience the competency levels in each of the three centres is high. The Police note that complaints against centre staff have dramatically decreased with a corresponding increase in the number of letters of praise.
    Response to questions contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    However, we note the information contained in Table 3 concerning the level of official complaints.
    We recommend to the Government that the Police ensure that training for new CARD staff is robust and comprehensive, and that all staff receive regular and effective refresher training.
    Lack of consultation with staff
    The Audit Office found that the Police did not consult comprehensively with staff over CARD implementation issues, especially when CARD was being installed. The Police admitted to us that staff, both in the communications centres and the field, felt that they were not adequately consulted about CARD implementation. It is accepted in hindsight that some internal change management practices could have been improved upon. District CARD user groups have now been established and this has improved the consultation process. In addition, at each centre quality improvement teams have been established with a focus on improving internal communications. Centre managers and customer quality service managers actively liaise with district staff to discuss issues and improve service delivery.
    We recommend to the Government that the Police ensure that its change management strategies, which facilitate the introduction of new technology changes, focus on allowing staff affected by a particular project to feel involved, and have a sense of ownership and acceptance.
    Lack of communication between the Police and Telecom
    We consider that during the development and installation of CARD communication between the Police and Telecom was not adequate. In February 1998 Telecom advised the Police that there were serious problems with CARD, in particular the Auckland CARD site. The answering performance at all other emergency service provider 111 acceptance points was excellent in comparison. Telecom advised that the problems appear to stem from human resource management and are likely to worsen. It strongly advised the Police to initiate remedial action.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/1).
    Eight months later Telecom concluded that answering performance by the Police had not improved significantly.
    Submission from Telecom New Zealand Limited, received 9 November 1998 (INQ/CARD/T/2).
    On 11 November 1998 the Police and Telecom gave an undertaking that communication between the two organisations would improve. It was evident that there was a lack of communication between the Police and Telecom, especially in relation to reports Telecom provided on problems at CARD centres. However, the Police told us in March 1999 that it was not aware of any specific communication problems with Telecom, as telephony and associated technology protocols were in place. We understand that Telecom has had in place for a number of years an account manager for the New Zealand Police.
    Response to question 11 contained in submission from the New Zealand Police, dated 18 March 1998 (INQ/CARD/POL/11).
    We note that the Police only receive call delivery problem reports from Telecom on request. No such reports have been specifically requested recently. The Police told us that it and Telecom consider there are currently minimal call delivery problems. The CARD centres are now rostered to forecast workload demands and when a problem is identified a solution is initiated and ongoing performance is monitored.
    We recommend to the Government that the Police should request call delivery reports more regularly to assess its performance and to enable it to update and reassure Parliament and the public about the effectiveness of the CARD system.
    Inadequate resources
    Telecom said that the "abysmal" state of affairs at the Auckland CARD centre was due to resource management problems. The Business Case for CARD anticipated a requirement for 275.5 personnel at the three CARD centres. In May 1997, the Police estimated 295 staff would be employed within the communications centres. This figure included 175 sworn staff and 120 non-sworn staff. We note that in May 1997 there were 136 sworn and non-sworn staff employed at the Auckland CARD centre.
    The Audit Office believes there could have been better consultation with district commanders over the level of resources needed in control rooms under the new CARD system. The Police has realised the extent of the performance problems and are addressing them by changing staff rosters to ensure peak times are covered, providing additional training, and deploying part-time personnel. On 11 November 1998, the Police assured us that operator numbers will not be reduced. The table below shows the latest information (as at 1 March 1999) we have concerning staffing levels at the CARD centres.
    Table 4—Police personnel levels at CARD centres
    Sworn Non-sworn Totals
    Auckland 59 95 154
    Wellington 34 58 92
    Christchurch 34 50 84
    Totals 127 203 330
    We note that prior to CARD 192.5 Police personnel were deployed in the control rooms at Auckland, Wellington, and Christchurch. In addition, 118.4 staff were deployed at the 17 provincial control rooms, making a total of 310.9. In hindsight it is apparent that the original Business Case allowed for too few staff to be deployed at the CARD centres. The issue of staffing levels at the CARD centres has subsequently been addressed.
    Lack of local knowledge
    CARD has been criticised for the lack of local knowledge on the part of operators and dispatchers. The Police agreed that before CARD was implemented local control room staff had local knowledge. When the three CARD centres were commissioned in late 1996 it was recognised that, along with new technology, local policing requirements and customer quality service ethics would need to be quickly developed. To facilitate this the position of training capability and customer quality service manager was established at each centre.
    Training focusses on a number of key areas; for example, localised standard operating procedures, mapping systems, and quality improvement teams. We note that the communicator and dispatch modules offered to staff have recently been accredited by the New Zealand Qualifications Authority. In addition, CARD staff visit Police districts to familiarise themselves with local requirements.
    Response to question 2 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/11).
    Allegations made by Mr Tony Crewdson regarding tendering process
    The CARD system was developed to interface with INCIS. As mentioned above the CARD contract was subject to a tendering process with the successful tenderer being Intergraph. During our questioning of the former INCIS Project Director, former Superintendent Tony Crewdson, allegations were made by Mr Crewdson about the tendering process to supply the CARD system. Mr Crewdson said that "independent inquiries were carried out later on into some of the things that went on, because there were certainly a lot of concerns with soft corruption and inferred helicopter rides and that sort of thing." Mr Crewdson also alleged that inappropriate procedures were employed when tendering for aspects of the CARD project and unsound commercial and technical decisions were made in relation to the project.
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    At the time the contract was out for tender Mr Greg Batchelor was Director of Information and Technology at the Police. Under the natural justice provisions contained in the Standing Orders of the House of Representatives we gave Mr Batchelor the opportunity to respond to the allegations.
    Mr Batchelor refuted the allegations. He told us that Mr Crewdson was referring to the allegations made by Tandem/SCC in February 1996 that there had been irregularities in tendering the CARD contract. Mr Batchelor said that Tandem/SCC were obviously disappointed that the CARD contract went to Intergraph. The response from Tandem/SCC was to allege "that the tender process was procedurally or criminally violated" to the disadvantage of Tandem/SCC.
    The allegations by Tandem/SCC were taken very seriously by the Police. Mr Batchelor told us that the complaints were referred to Sir John Jeffries, the then Police Complaints Authority (the Authority). The Authority spent five months investigating every aspect of the allegations. It found no basis for any of the four complaints made by Tandem/SCC and consequently none of the complaints were upheld.
    Letter from the Police Complaints Authority to the Chief Executive Officer of SCC Communications Corporation, United States of America, dated 8 August 1996.
    Mr Batchelor also commented on Mr Crewdson's reference to a "helicopter ride" as somehow supporting a suggestion of "soft corruption". According to Mr Batchelor the only helicopter ride he could think of to which Mr Crewdson may have been referring concerned a visit he made to EDS headquarters in Plano, Texas. Mr Batchelor said he and others in an evaluation team flew by commercial flights to Dallas, Texas. EDS then met the group and flew them in a helicopter to Plano. The visit to EDS was at its invitation to meet key corporation executives. It was entirely EDS's choice to fly the team by helicopter from Dallas to Plano. Mr Batchelor said the flight could never be classified as some form of "soft corruption".
    Submission from Mr Greg Batchelor, dated 18 May 1999 (INQ/CARD/BAT/2).
    Need for an independent inquiry
    Some commentators have called for an independent inquiry into the Police CARD system. The New Zealand Fire Service established an inquiry into the Fire Service CARD system following a series of system failures.
    "Dial 111 and cross your fingers", Sunday Star-Times , 8 November 1998.
    To date the Minister of Police, Hon Clem Simich, has consistently ruled out the prospect of an independent inquiry into CARD.
    "Simich refuses inquiry into troubled 111 call system", The Dominion , 12 November 1998.
    Conclusion
    We consider that there were some real problems with the CARD system, particularly during 1998. Initially resourcing of the CARD centres was clearly inadequate. Many of these problems have been addressed overtime and the level of complaints and dissatisfaction with the CARD service is diminishing. However, complaints about the CARD system persist. Between 1 January 1999 and 30 September 1999 eight complaints were received concerning Police delays in answering calls to CARD centres. Two complaints were sustained. During the same period the Police received 140 complaints concerning inadequate Police responses to calls to CARD centres. Of this number, 74 complaints were sustained and 57 were not sustained. Nine complaints are still under investigation.
    While we acknowledge that the CARD centres received 1,038,034 calls during this period, we believe that the level of complaints is still too high and every effort must be taken by the Police to improve the service it provides to the public of New Zealand. Behind each complaint is an individual story of frustration, for example the recent case where the Police failed to respond to three 111 calls from a woman who was under threat of attack at a boarding house in Auckland.
    We have recommended a variety of possible solutions to improve Police performance and overcome lingering problems with the CARD system. The Government must consider what action it can take to significantly reduce the amount of hoax and false calls received by Telecom, the Police and other emergency service providers. Hoax and false calls are impeding the efficient operation of the system. We believe that the Government should consider undertaking a nationwide educative programme about the 111 system and investigate tougher legislation to deal with abuse of the system.
    The Police should give serious thought to setting up an 0800 number for calls that do not have the same urgency associated with 111 calls. In addition, we consider that the Police is responsible for ensuring that staff working at the CARD centres receive adequate training and that this training should be ongoing. Overall the Police must continue to improve the CARD system and work to reduce the number of complaints. While we recognise that errors can not be eliminated entirely, this should not deter the Police from striving for 100 percent performance.
    PART TWO—THE INCIS PROJECT
    Introduction to INCIS
    Background
    The Integrated National Crime Information System (INCIS) was conceived to replace several existing Police computer systems and provide additional capability. It was also developed as a time saving measure to free up more Police hours for frontline policing and allow reductions in the number of sworn personnel to achieve cost savings. To accommodate INCIS the Police required a nationwide computer infrastructure.
    During 1990 the Police identified 18 databases that were nearing the end of their useful life. The Police realised that it could combine all these together to provide an operational intelligence tool. In January 1991, the Gulf War precipitated the Police into further action and a decision was taken to build a computerised intelligence capability, the National Intelligence System (NIS). The system was developed to track an anticipated influx of refugees and others from the Middle East. The initial development cost was $50,000.
    NIS was developed during 1991, as a temporary measure, and grew in an ad hoc manner eventually becoming a national intelligence system on which records of notings
    Observations and criminal information including incident and offence information, and subject of interest details.
    , diversions, youth aid and many other operational records were stored. However, the system was unstable and in need of expensive upgrades. Moreover, it did not have access to the Wanganui computer system (the Law Enforcement System) and was not able to be used as the database for major enquiries. INCIS was designed to transfer all the data from NIS and all the names and other data from the Law Enforcement System (LES).
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    The alternative to INCIS was to continue with the Police's existing systems and replace them as they gradually wore out. The Wanganui computer system would have needed to be replaced during the expected lifetime of INCIS, which was estimated at eight years (including two and a half years for development). According to the Police, the cost of this approach was estimated at $105.1 million and it would receive no additional benefits for this spending.
    INCIS Business Case, Executive Summary, dated 12 May 1993, page 2 (contained in submission from the New Zealand Police on the 1996/97 Financial Review of the New Zealand Police (FR/P/7)).
    The Business Case for INCIS was prepared by the Police in May 1993 and a proposal requesting funding for the INCIS project was approved by the Cabinet in April 1994. The Business Case noted that the rates of assault, sexual violation, family violence, house burglary and motor vehicle crime in New Zealand were "extremely high by world standards".
    INCIS Business Case, Executive Summary, dated 12 May 1993, page 4 (contained in submission from the New Zealand Police on the 1996/97 Financial Review of the New Zealand Police (FR/P/7)).
    It stated that since 1980 crime in New Zealand had increased at a rate six times that of population growth. Projections contained in the document showed steadily increasing rates of crime. Underpinning these figures were the wider economic costs to the community. Figures available for the financial year ending 30 June 1991 indicated that the annual cost of crime to the community was as high as $4.2 billion.
    INCIS Business Case, Executive Summary, dated 12 May 1993, pages 4 and 5 (contained in submission from the New Zealand Police on the 1996/97 Financial Review (FR/P/7)).
    The Business Case noted that the Police had responded to the increasing rate of crime. It said that in the early 1980s the philosophies and practices of policing were reactive. They did not encourage community involvement nor involve visionary strategic thinking. The Business Case noted that the reality of policing in the 1990s was that the demands on policing and society in general were greater than the resources available to meet those demands. It said that the Police had adapted to meet the changing circumstances. The Police had undergone organisational change and incorporated the use of IT in its work. In addition, the Police had reformed its philosophies and adapted its work practices.
    Despite these advances the challenge to policing and to society in general remained. The challenge was to stem the flow of crime, reverse the trends and thereby contribute to improved quality of life. In response to this challenge, the Police developed a five year Strategic Plan , which was to implement longer term strategies designed to combat crime and reduce the incidence and effects of crime on the community. This commitment was encapsulated in the Police Mission Statement:
    "To serve the community by reducing the incidence and effects of crime detecting and apprehending offenders, maintaining law and order and enhancing public safety".
    As part of the five year plan, 22 strategies were developed. The strategies supported four major new programmes, which were:
  • environmental change
  • improving Police operations
  • organisational development
  • effective resource management.
    • Strategy 21, "Improve use of technology", specifically required the identification and use of appropriate technologies to improve Police efficiency and effectiveness. This was the umbrella strategy under which INCIS was developed. However, INCIS was more than just "appropriate technology". It was to support all elements of the Strategic Plan through the provision of quality information.
    INCIS Business Case, Executive Summary, dated 12 May 1993, pages 4 to 13 (contained in submission from the New Zealand Police on the 1996/97 Financial Review (FR/P/7)).
    The development and implementation of INCIS occurred at a time when the Police was undergoing major restructuring and organisational change. The Policing 2000 group was established to assist the Police's transition into the next millennium through the utilisation of Business Process Re-engineering (BPR). INCIS also occurred at a time when a number of other critical Police IT systems were either being implemented or updated.
    Purpose
    The purpose of INCIS was to assist frontline policing through the use of technology and achieve cost savings. INCIS would support operational policing by providing crime related information investigation and analysis capabilities to help detect and apprehend offenders and reduce crime. The key functions of INCIS were:
  • criminal information
  • case and investigation management
  • crime trend analysis
  • intelligence analysis
  • performance measurement
  • special operations.
    • While the project made use of technology, it should be noted that INCIS was first and foremost a business project rather than simply a technology project. It was a business solution to meet the Police's business requirements. The INCIS project was viewed by the Police as an opportunity to refocus and refine its business directions and practices with leading edge technology. All operational practices were to be "re-engineered" using BPR to facilitate a significant reduction in paperwork and related administration in order to allow the Police to spend more time providing frontline policing, to rationalise middle management and enhance customer service.
    Implementation in stages
    IBM told us that the INCIS project consisted of four major stages. The first stage was the development and implementation of a new computer network. In terms of hardware the network provided the Police with a nationwide infrastructure which consisted of a mainframe computer connected to approximately 3125 personal computers
    2000 desktop computers and 1125 laptop computers.
    and 800 printers. This network has been deployed and is operational and was a major component in terms of the cost of the whole INCIS project (see section headed Cost of the project ). The other level of the INCIS project was the self-development of specialised crime-fighting software to be delivered in three increments.
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Three increments
    INCIS was originally intended to be delivered and implemented in one stage or "Big Bang". In accordance with this plan the INCIS project was scheduled to have been completed by December 1997. However, this approach was refined following the renegotiation and agreement during 1997 of the INCIS contract (see section headed Deed of Variation and approval for increased cost ). Subsequent to the variation of the contract, INCIS was to have been delivered and implemented in three separate increments. Increments 2 and 3 have not been implemented.
    Increment 1
    Increment 1 was implemented in May 1999 and replaced NIS. In terms of applications it provides online legislative libraries and digital maps, intelligence and crime trend analysis, office automation and electronic forms, and electronic mail and personal organisers. The Treasury told us it will enable frontline police to enter notings directly onto personal computers linked to the national server. IBM told us that a key benefit of Increment 1 is its focus on quality of information. Data collected in Increment 1 allows the Police to pinpoint crime by geographical areas and also identify repeat offenders.
    Submission from IBM, dated 21 April 1999 (INQ/CARD/IBM/1).
    The cost of Increment 1 was $10.976 million. The functionality contained in the increment provides:
  • the conversion of all NIS data to INCIS and conversion of some key data from LES
  • the implementation of the core functionality of INCIS
  • the ability to create associations between core objects; persons, organisations, vehicles, locations, items, telephone numbers, and accounts
  • the ability to create information, notification and safety alerts on core objects
  • the query and search functions against all data
  • the Geographic Information System and related package to enable analysis of data using the system
  • modules to manage information about court diversions, modus operandi and youth aid, financial transaction reporting, and secure information
  • a user management system
  • an interface with the Land Transport Safety Authority
  • an interface with the Police's human resources data.
    • We note that under the original project plan for INCIS the Police would have exited LES completely in one stage rather than incrementally. The Police told us in October 1997 that a staggered approach would reduce risks associated with a "single cutover" from LES.
    Submission from the New Zealand Police, dated 24 October 1997 (INQ/CARD/POL/3).
    Increment 2
    Increment 2 would have been the core INCIS application and the most expensive. It would enable the Police to exit from LES completely and interface with the rest of the justice sector. All aspects of investigations into incidents and offences would be recorded on INCIS via Increment 2. It would also interface with the CARD system so that when an event has been entered on CARD and action taken, a file is automatically created on INCIS. The process for charging offenders would also be automated, with information passing electronically to the Department for Courts. The estimated cost of Increment 2 was $12.113 million.
    Increment 3
    Increment 3 was intended to provide additional features over Increment 2. The main feature of Increment 3 was "Speedbooks". This is a specialised data entry system which would enable high volume and low complexity transactions to be entered once on a single screen with all relevant files updated automatically and various documents produced. Other features include the provision of court appearance record and prosecution record information, the ability to create crime or search scene maps, and to operate INCIS by remote. The estimated cost of Increment 3 was $6.945 million.
    Cost of the project
    In March 1999 the Police informed us that the capital cost of INCIS would be $127.67 million. Subsequent to the provision of this figure to us the estimated cost of INCIS has increased to $132.47 million. The table below provides a breakdown of the capital cost of the project given to us in March of this year and is based on information supplied by the Police.
    Table 5—Detailed breakdown of the capital cost of the INCIS project
    Hardware $ millions $ millions
    Network hardware 12.085
    National server 1 7.454
    National server 2 3.005
    Work stations, printers and servers 24.725
    System Management Centre and test equipment 2.379
    Sub-total (Hardware) 49.648
    Software
    Standard "Off the shelf" purchases 11.754
    Specially developed work station software 17.026
    System Management Centre and test equipment software 2.194
    Sub-total (Software) 30.974
    Services, etc
    Scoping and evaluation 5.724
    Data mapping 2.203
    Data conversion 6.875
    INCIS Increment 1 10.976
    INCIS Increment 2 12.113
    INCIS Increment 3 6.945
    INCIS Release 2 2.212
    Sub-total (Services, etc) 47.048
    Total 127.670
    Chronological history
    Below is a summary of key events in relation to INCIS and our inquiry into the difficulties experienced with the INCIS project.
    Table 6—Key events of the INCIS project
    Date Event
    May 1993 Business Case prepared
    November 1993 Hon John Banks ceases as Minister of Police and Hon John Luxton appointed Minister of Police
    December 1993 request for proposal prepared
    April 1994 Cabinet approval for the project
    September 1994 Contract between the Police and IBM signed
    October 1994 Tony Crewdson appointed Police INCIS Project Director
    November 1994 Greg Batchelor appointed Police Director of Information Technology
    March 1995 Data conversion problems identified and user requirements not sufficiently complete to enable detailed design of the system
    September 1995 Issue of changes to the architectural cornerstones of the project raised, including changes from Token Ring to Ethernet, Systems Network Architecture to Transmission Control Protocol/Internet Protocol and OS/2 to Windows NT
    October 1995 Definition of detailed specifications completed. Identification of additional user requirements, due to new legislation and Wanganui computer conversion issues
    October 1995 INCIS Project Director reports project "on time and within budget", but problems with IBM organisation and personnel involved in the project identified within quarterly status report
    March 1996 Detailed systems analysis commences as a result of the identification of various changes to progress the project
    May 1996 Strategic decision taken by the Police to change from OS/2 to Windows NT. Some technological changes to INCIS requested by the Police
    May 1996 Independent consultants, Logica, called in by the Police and IBM and reports 30 percent of current project requirements are outside the scope of original specifications
    July 1996 Peter Doone appointed Commissioner of Police
    August 1996 Deputy Commissioner Barry Matthews becomes Project Sponsor
    August 1996 The Police do not meet six monthly reporting requirements to the Cabinet State Sector Committee
    September 1996 The Police do not prepare September quarterly status report
    October 1996 Hon John Luxton ceases as Minister of Police
    December 1996 Hon Jack Elder appointed Minister of Police
    March 1997 December 1996 quarterly status report to the Cabinet confirms project is nine to 12 months behind schedule
    March 1997 Greg Batchelor, Police Director of Information Technology resigns and returns to Australia to work for Intergraph
    March 1997 The Treasury and the Police contract Andersen Consulting to review the project
    April 1997 Justice and Law Reform Committee initiates its inquiry into CARD and INCIS
    May 1997 Andersen Consulting review concludes that the project is "high risk"
    June 1997 The Police and IBM meet to discuss critical decisions over changes to the scope of INCIS
    December 1997 Negotiations for variations concluded and Deed of Variation between the Police and IBM signed
    December 1997 Under the original timeframe INCIS was scheduled to be implemented by this date
    December 1997 The Treasury and the Police commission Andersen Consulting to update its previous review (review delayed due to personnel resource issues)
    March 1998 Quarterly status report revises estimate to complete project to $118 million of which $14 million is due to new business
    May 1998 The Cabinet increases project approval by $20.17 million (six months after variation signed) and requests review of the contract from a legal perspective
    May 1998 The Cabinet increases project approval by a further $1 million to strengthen project management
    June 1998 Treasurer, Rt Hon Winston Peters, and Secretary to the Treasury, Dr Alan Bollard, visit IBM headquarters in New York and receive assurances regarding the organisation's commitment to the project
    June 1998 Andersen Consulting update review completed
    June 1998 The Cabinet requests the formation of an Ad Hoc Officials Committee on Information Technology to monitor the project and evaluate future options
    June 1998 The Treasury and the Police contract Phillips Fox to undertake the legal review of the contract, requested by the Cabinet. The Police also request an opinion from Chapman Tripp Sheffield Young
    June 1998 Tony Crewdson ceases as INCIS Project Director and then leaves the Police in October 1998
    July 1998 IBM complains some requested work is outside the scope of the 1997 contract variation
    July 1998 New INCIS project plan approved by the Police. Increment 1 is scheduled to be delivered by 30 November 1998
    July 1998 Phillips Fox and Chapman Tripp Sheffield Young report separately on legal review of contract.
    August 1998 Hon Jack Elder ceases as Minister of Police and Hon Clem Simich is appointed new Minister of Police
    August 1998 Deployment of computer hardware and personal computer infrastructure
    September 1998 State Services Commissioner finds that the breach of delegated authority by the Commissioner of Police, in relation to the varied contract, was a serious matter
    October 1998 Police appoint new INCIS Project Director
    January 1999 IBM complain requested project work is now outside the scope of the 1997 variation
    February 1999 IBM advise the Police that Increment 2 will not now be delivered until May 2000 and Increment 3 until November 2000
    February 1999 Justice and Law Reform Committee receive a briefing from committee staff on the INCIS project
    March 1999 Justice and Law Reform Committee receives a briefing from committee staff and the Controller and Auditor-General and hears evidence in private from Tony Crewdson, former INCIS Project Director, and hears evidence in public from the Minister of Police and the New Zealand Police
    April 1999 IBM advise that Increment 2 will not be ready until at least September 2000. The Police hear informally that IBM want to quit the project citing massive losses in excess of $90 million
    April 1999 The Police and IBM agree to defer Increment 1 until 19 May 1999
    April 1999 Justice and Law Reform Committee hears evidence in private from IBM New Zealand and Dr Leo Mercer, Mercer and Associates, and hears evidence in public from the Treasury
    May 1999 Increment 1 finally implemented
    June 1999 Ministerial Group of Ministers and senior officials established to control the project. Group is led by the Minister of Finance, Rt Hon Sir William Birch
    August 1999 IBM announces it is pulling out of the project
    August 1999 Justice and Law Reform Committee receives a briefing from the Controller and Auditor- General
    August 1999 Crown commences legal proceedings against IBM by filing a statement of claim in the High Court at Wellington
    September 1999 Justice and Law Reform Committee hears evidence in private from Greg Batchelor, former Police Director of Information Technology
    September 1999 Justice and Law Reform Committee hears evidence in private from Tony Crewdson
    September 1999 IBM files a statement of defence and counterclaim against the Police
    September 1999 Justice and Law Reform Committee considers its report on the inquiry
    October 1999 Justice and Law Reform Committee reports on its inquiry to the House
    Project initiation and approval
    Business Case
    The Business Case for INCIS noted that the project was a major financial investment. In addition, it stated that there were insufficient funds to implement all worthwhile programmes and hard decisions had to be taken as to which programmes and projects were shelved. In the original Business Case the capital cost of the project was $88 million and its lifetime cost was estimated at $188.5 million.
    The Business Case argued that INCIS provided the necessary criminal information infrastructure to enable the Police to implement its corporate strategy. The key benefits of INCIS were that it would:
  • free up 1.9 million hours of Police time annually for redeployment worth $74.1 million through reduced paperwork, a flatter hierarchy and improved work-flows
  • save approximately $14.2 million per year on current systems (LES and NIS)
  • reduce prosecution costs for the justice sector
  • save other government departments from developing, implementing and operating INCIS-like systems by using INCIS on a "user pays" basis
  • generate overseas sales revenue worth $45 million over the life of the project
  • increase officer safety and empower individuals by providing timely and relevant criminal information and make them more accountable through performance measurement
  • improve crime prevention capabilities and speed up the detection and apprehension of offenders
  • provide key operational information to support both strategies and operational planning through crime trends analysis and performance measurement
  • above all, improve relationships with the community through the above changes.
    • A further key benefit of INCIS was that it would enhance the existing Police time management system to provide better information to measure Police service delivery and to facilitate the move to present the Police as an hours-based rather than persons-based organisation, or in other words "service and hours delivered" rather than "Police per head of population".
    The Business Case identified two key risks that needed to be managed. First, the ability to absorb change. The Police culture and work processes had to continue to evolve for a project of the scope and vision of INCIS to be successful. The Police had to predict and prepare for the changes to the organisation; to be pro-active, not reactive.
    Secondly, the need for cost containment. The Business Case noted that large projects generally do not fail because of cost overruns. However, a significant proportion do fail and the key way of ensuring that projects remain on budget is through project management. The chief mechanisms to ensure successful effective project management are scope and change control, planning and monitoring and issue resolution, quality assurance, and quality people.
    INCIS Business Case, Executive Summary, dated 12 May 1993, pages 34 to 35 (contained in submission from the New Zealand Police on the 1996/97 Financial Review of the New Zealand Police (FR/P/7)).
    Consultation
    Various government departments and agencies were consulted on INCIS. The New Zealand Customs Service, the Ministry of Justice, the Land Transport Safety Authority, the Ministry of Agriculture and Forestry, the Serious Fraud Office, the Department of Social Welfare, the State Services Commission, the Treasury and the Privacy Commissioner supported INCIS and requested ongoing project involvement. The Ministry of Justice believed that an integrated approach to the development of IT systems in the area of criminal justice was essential if maximum efficiency benefits were to be obtained.
    Independent review by Ernst and Young
    In 1993, an independent review commissioned by the Police and the Treasury was conducted by Ernst and Young. It concluded that INCIS was based on a sound technical solution; was consistent with the corporate strategy of the Police; had a well argued Business Case for an affirmative investment decision; and that the benefits should be both achievable and realisable.
    We heard evidence about the adequacy of the initial independent review of the INCIS project by Ernst and Young. The Treasury, in April 1999, told us that some of the advice provided by Ernst and Young was "wrong". The advice did not emphasise the likelihood of some of the risks and difficulties that subsequently occurred during the INCIS project.
    Ernst and Young disputed the Treasury's opinion about its advice and suggested that the Treasury had no grounds for stating the advice was wrong. It said that its 1993 report identified many risks and recommended approaches to both monitor and manage them. Ernst and Young drew our attention to the following report extracts:
    "In our view IBM does not have the same level of capability to as effectively (compared with the role of prime systems integrator) design and implement application systems . . . the application area requires extensive review of project plans and absolute proof of technical viability and deliverability of this project.
    "The object orientated technique that is proposed to deliver the applications is still considered an emerging technology and must be managed accordingly.
    "IBM have proposed on the basis of Police's capacity requirements projections and Police need to carefully benchmark and test these claims.
    ". . . the completion and sign-off of the detailed technical design is an area where Police will need to carefully manage IBM and to cap any potential project cost increase or area of dispute. This is an area where contract negotiation must be conclusive."
    Ernst and Young told us that a copy of its report provided to it by the Treasury had some of these comments underlined by hand which indicated that the Treasury had recognised the significance of the advice provided.
    Second independent review
    A second independent review was carried out by KPMG Peat Marwick, which concluded that INCIS was a complex change project. It said that the requirement to select proven technologies was both commercially prudent and appropriate and the solution offered by IBM "will more than fulfil the specified requirements".
    Tender evaluation process
    The Police undertook a detailed and lengthy tender evaluation process in compliance with Ministry of Commerce tender guidelines. The process focussed on services, hardware, software, communications, ability to forge an effective business partnership and the identification of all project costs. Two major consortiums were short listed for consideration. They were IBM and Andersen Consulting. IBM demonstrated a superior solution to that of Andersen Consulting, according to the Police. Preliminary contract negotiations were conducted but no contractual obligations were entered into until the project was considered by the Cabinet.
    Cabinet consideration and approval
    The Cabinet approved the INCIS project in April 1994. The proposal put to the Cabinet was for the implementation of a computerised system to provide improved crime investigation information and analysis capabilities, and enhance the operational and administrative functions of policing, largely within baseline and without any increase in the overall net fiscal cost of policing over the project's lifetime. INCIS was to be an operational, computer-based information system based on a network of 3125 personal computers linking all police stations and supported by a national crime database.
    The cost of INCIS considered by the Cabinet was slightly higher than the cost outlined in the Business Case. INCIS was now estimated to cost $203.64 million, comprised of $97.83 million in capital expenditure and $105.81 million in operating expenditure, over the lifetime of INCIS (eight years less two and a half years development). The Treasury told us that the Government agreed to contribute $62 million to the cost of the project by way of capital contributions to the Police. The Police agreed to fund the remainder from within its baseline. The capital contributions were to be paid to the Police over four financial years from 1994/95 to 1997/98.
    INCIS represented a number of benefits. The efficiency gains were estimated to be $380 million. It was meant to achieve efficiency gains for the Police substantially from the elimination of correspondence and improved access to a wide range of operational and administrative information. The summary of benefits presented to the Cabinet were similar to those contained in the Business Case and stated that INCIS would:
  • increase the quantity and quality of delivered policing hours
  • improve communication and reduce paperwork and administration
  • enhance the detection and apprehension of offenders
  • improve staff safety by providing officers with a real picture of "dangers and difficulties" which they might encounter in dealing with people or places
  • increase the quality and flow of information between the Police and its key stakeholders, including the public and other law enforcement agencies
  • contribute to the policies of improved prosecution and sentencing and reduced fiscal risk within the criminal justice system
  • satisfy the requirements of the Privacy Act 1993.
    • Most of the benefits were to result from efficiency gains of 1.9 million hours or approximately 11 percent of the 17 million hours worked by Police personnel.
    Responses to supplementary questions for the 1996/97 Financial Review of the New Zealand Police (FR/P/7). Contained in Cabinet papers released in response to a committee request.
    The Police agreed that 30 percent of the benefits from the project would be returned to the Crown through savings on the baseline. This share of benefits was quantified as $114 million over the eight-year period to 30 June 2002 and was to be achieved through reducing sworn personnel by 540 by 30 June 2000 as a consequence of reduced administrative tasks.
    The return of 30 percent of the benefits from INCIS to the Crown was seen as a minimum. A further split of the benefits between the Police and the Crown was to be considered. The net effect after the split was to leave the Police with increased capability as a consequence of the introduction of INCIS.
    The Treasury told us that the intention to reduce staff and the associated funding implications has been superseded by the Review of Police Administration and Management Levels and Structures (the Police review) and by funding decisions in the current (1999/2000) and preceding budgets.
    The Minister of Police, in an answer to a written question, said that the focus of the Police review is on the more efficient delivery of policing services by streamlining administrative functions and reinvesting the efficiencies back into frontline policing. As part of the restructuring the Police plan to reduce the number of non-sworn positions by 330 by the end of March 2000. Conversely the Police plan to increase the number of sworn positions by 301 by the end of June 2000.
    Response of the Minister of Police to written question 6385, Replies Supplement , 17 August 1999.
    IBM and the Police sign contract
    Following the Cabinet's approval of the INCIS project, the Police completed detailed contract negotiations with IBM. The contract was signed in September 1994. The first three months of the INCIS project were spent establishing the project and bedding it in. The Police established an INCIS project team and appointed Superintendent Tony Crewdson as the INCIS Project Director. In addition, project management structures, policies and procedures were finalised.
    The Police also established a high level Change Management Team (CMT) to co-ordinate and action the broader organisational aspects of restructuring within the Police. The Police anticipated that INCIS would result in widespread organisational change. The Minister of Police was to be regularly briefed on all significant matters relating to the INCIS project and the change management projects. CMT reported directly to the Deputy Commissioner of Resource Management, Mr Peter Doone. He was also, initially, the INCIS Project Sponsor.
    The majority of us consider that the Business Case was grossly optimistic and the benefits to be derived from the INCIS project were overstated. We question why the Business Case was so divorced from reality and question the basis for the claims made in it, particularly in relation to the level of crime in New Zealand and the anticipated benefits of INCIS. We want to know on what basis did the Cabinet reach its conclusion to support and approve the project given these concerns. We consider that answers are needed about the competence of the Treasury in advising the Cabinet on the Business Case and question why there was not greater scrutiny and analysis of this document by the Treasury. The response of the Police to this and other findings about its performance is attached as Appendix I.
    Project development
    First year of the project
    Difficulties with the INCIS project began to emerge during the first year of the project, according to the Audit Office. In March 1995, data conversion problems were identified and there were indications that the system user requirements were not sufficiently complete to enable detailed design of the system to occur. The detailed specifications of INCIS were completed in October.
    In addition, during the first year of the project the Police began to consider making technological changes to the cornerstone technology of the project. For example, the Police were beginning to consider making technology changes to the Wide Area Network, the Local Area Network and the desktop operating system.
    In October additional system user requirements and Wanganui computer conversion issues were identified.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    The additional system user requirements stemmed from the passage of new legislation regarding traffic offences, firearms and domestic violence.
    Domestic Violence Act 1995.
    In addition, the request for proposal that went to the Cabinet did not contain all the functionality required to achieve the Business Case and to exit LES.
    Andersen Consulting Review of Project Status and Plans, commissioned jointly by Treasury and Police, May 1997, forwarded to committee by the Police, page 8 (INQ/CARD/POL/12A).
    Also, the Audit Office informed us that there were problems with IBM organisation and personnel involved in the project.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    View of Mr Tony Crewdson
    We questioned Mr Crewdson about the early stages of the INCIS project. He told us that the INCIS project was "clearly set up as Police's flagship change project". He believed that the INCIS contract was "very well balanced", however, it was "very large and quite cumbersome" and "difficult to manage". He noted that "it had an awful lot of protections" for the Police.
    The INCIS project was like most public sector projects, according to Mr Crewdson. It had no contingency, or very little contingency in terms of budget or time. The project "could not afford to go off track". He considered that the project appeared to have strong support from the Police Executive.
    We questioned Mr Crewdson about the proposed technology changes. He told us that it was in the latter part of 1995 that "the dynamics of the situation were starting to get pretty uncomfortable . . . and Mr Batchelor (Police Director of Information Technology) was now expressing real concerns about the INCIS technology and about the contract". Mr Crewdson told us that these issues led to "a review of all the major components of the INCIS solution".
    Mr Crewdson said the situation between him and Mr Batchelor became so bad during 1995 that he offered his resignation to Deputy Commissioner Peter Doone. His resignation was not accepted. However, by December 1995 the situation had become unworkable and he again approached Mr Doone. He told Mr Doone that he was concerned about the risks to the project from the technology substitutions. Mr Crewdson repeated his concerns to Mr Doone again in March 1996.
    Mr Crewdson also spoke about the relationship between the Police and IBM. He said that after the first year of the project the working relationship between the Police and IBM was extremely strong. He said that "we had spent most of that year building a relationship with IBM" and that the IBM auditors had commented that "the relationship" was as strong as any client/vendor relationship they had ever seen.
    In summary, at the end of 1995 according to Mr Crewdson "the project was still on track, on budget, however, the cracks are starting to appear". He considered that there was "active opposition" to the project from Mr Batchelor and there was an "inadequate level of support and understanding" from other key Police managers. He said they did not understand the complexity of a commercial project in a public sector environment.
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    View of Mr Greg Batchelor
    Under the natural justice provisions of the Standing Orders of the House of Representatives we gave Mr Batchelor an opportunity to respond to issues raised by Mr Crewdson. Mr Batchelor told us that IBM were very committed to delivering an IBM technology solution, a "true blue solution". He considered that it was doing this for sound commercial reasons. However, in his view there were serious disadvantages for the Police.
    Oral evidence in private, Mr Greg Batchelor, 1 September 1999.
    Mr Batchelor informed us that IBM's commercial strategy towards the Police impacted on the INCIS project. He considered that IBM looked upon the INCIS project as a vehicle for determining and in effect controlling the future technology requirements of the Police. The INCIS project risked locking the Police into a relationship with IBM which was not in the long term interests of the Police. He said that the project created what came to be known as an "INCIS-centric" view of all future technology and information requirements for the Police.
    Whilst the INCIS-centric model would have been very attractive from IBM's perspective it was very apparent to Mr Batchelor at the time of his appointment that IBM's dominant position would create an intolerable environment for the Police. He was concerned about the Police being overly dependent on one major supplier. In particular, he was concerned about the commercial and technology implications of a supplier gaining a dominant position over a purchaser.
    Submission from Mr Greg Batchelor, dated 18 May 1999 (INQ/CARD/BAT/2).
    Second year of the project
    Due to various changes identified to progress the project a detailed systems analysis of INCIS commenced in March 1996. In May of that year, the Police requested that IBM make significant technological changes to INCIS. For example, the Police requested that the client operating system be changed from IBM's OS/2 system to Microsoft Windows NT, that the local area network be changed from Token Ring to Ethernet, and that the technology for the wide area network be substituted. Also, in May, the independent consultancy firm Logica was called in by the Police and IBM to assess the changes to the scope of the project. It reported that 30 percent of current project requirements were outside the scope of the original specifications.
    Changeover from IBM's OS/2 to Microsoft Windows NT
    The decision to use Microsoft Windows NT as the desktop operating system for INCIS was a significant reason which contributed to delays in the implementation of the system. INCIS was built around IBM OS/2 server technology and was originally intended to be run on an OS/2 desktop operating system.
    The original tender process took place in 1993 and no tenders included Windows NT as an operating system. The choice at the time according to the Commissioner of Police was essentially between UNIX and OS/2. The Commissioner told us that between 1994 and 1996 there was a major technology shift in the market with Windows NT becoming a potential contender for large organisation desktop and server environments and market support for OS/2 was declining significantly, to the extent that there was serious doubt as to IBM's willingness to support OS/2 into the medium-term.
    Decision to change to Windows NT
    The Police formed a Strategy Review Committee to make the technology substitution decision. On 30 May 1996 IBM received formal advice from the Police requesting a technical substitution under the INCIS contract. In July 1996, a decision was taken by the Police, and supported by IBM, to change INCIS's desktop operating system from OS/2 to Windows NT. This decision meant that INCIS would have an OS/2 server and a Windows NT desktop operating system. In making its decision about which operating system to pursue, the Police were assisted by Price Waterhouse, who established a framework to facilitate the decision-making process. Mr Crewdson did not support the decision to change operating system.
    Price Waterhouse advice
    Price Waterhouse advised the Police that Windows operating systems had a large market share and were approaching near domination of the desktop market. In contrast, OS/2 had a small market share and would continue to struggle for market acceptance. However, both systems had proven capability in organisations similar to the Police. Windows NT users included NatWest Bank and Barclays Bank with 50,000 desktops each. OS/2 users included the United States Navy with 800,000 desktops and Banca Commerciale Italiana with 10,000 desktops.
    In 1996, two percent of Police workstations were running OS/2 and 97 percent were running Windows applications. Most Police had experience of Windows applications but few had knowledge of OS/2. Price Waterhouse said that if the Police stayed with OS/2 the great majority of desktop applications would need to be replaced or migrated to OS/2. This would have been costly and time consuming. The opportunity created by changing to Windows NT was that a large majority of current Police applications would continue to run without alteration.
    Price Waterhouse Decision Framework for Desktop Operating System Selection, dated 16 July 1996 (INQ/CARD/POL/16E).
    Risks
    We note that the risks in changing operating system were identified. In July, the Commissioner of Police noted that the Windows NT desktops to OS/2 server login process was a "world's first" development and the robustness of such a link in that context was a significant risk issue.
    NT v OS/2 Decision, Commissioner of Police, dated July 1996 (INQ/CARD/POL/16F).
    In August, Police management were advised by Mr Batchelor that reference checking had been difficult "due to the fact that there is no site currently deploying Windows NT desktops and an OS/2 server". However, the Police were told that the significance of the change in terms of complexity, risk and effort required was relatively low.
    Report to Strategy Review Committee Policing 2000 from Mr Greg Batchelor, dated 20 August 1996 (INQ/CARD/POL/16G).
    Options for the changeover
    After deciding to change to Windows NT the Police considered three options for moving to the new operating system. The Strategy Review Committee examined these options. Option 1 was to change immediately. The Police considered this option would delay the project by 12 weeks and cost $11.8 million, including lost productivity gains. Option 2 was to change after completion of Release 1. The Police estimated that the resultant delay would be 27 weeks and the option would cost $22.8 million. Option 3 was to change after completion of Release 2. The Police estimated the delay at nil to eight weeks and estimated the cost of the option at $15.7 million.
    Report to Strategy Review Committee Policing 2000 from Mr Greg Batchelor, dated 20 August 1996 (INQ/CARD/POL/16G).
    Option 1 was refined further into two sub-options. Option 1(a) would have seen continued development of OS/2 to just before the completion of Release 1. Option 1(b) was to change to Windows NT immediately.
    The INCIS Project Director, Mr Crewdson, voted for option 2. One other member of the Strategy Review Committee voted for option 1(a). The Commissioner and the rest of the decision-making team voted for option 1(b) or immediate change over. On 19 December 1997, the Police and IBM reached agreement that the Windows NT desktop operating system would be excluded from contractual warranties relating to performance.
    IBM told us that it advised the Police that an immediate move to Windows NT would cost $10.7 million and delay the project by 24 weeks. In addition it advised that an immediate move was not viable with the technology available at the time. IBM noted that the project was already above average risk because of the use of new technologies and the sophisticated processing required by the application software. IBM considered the change would represent a significantly increased risk to the Police in the delivery of the INCIS project. However, IBM suggested that a phased approach could provide a workable solution. It said that migration to Windows NT at a later date would cost $4.7 million and delay the project by about 12 weeks. IBM believed the risk with this option was "sustainable".
    Submission from IBM New Zealand Limited, dated 7 May 1999 (INQ/CARD/IBM/3).
    Selection process
    The selection process and analysis of the Windows NT operating system was not part of a separate tender process but was conducted under the technology substitution and change request provisions of the INCIS contract. The process required thorough investigation of alternatives and rigorous examination of the merits of competing technologies. It should be noted that IBM were carrying the risk of delivering an OS/2 solution. Police in changing operating systems would now carry a greater risk.
    Mr Crewdson said the decision and the process to change the desktop operating system from OS/2 technology to Windows NT was wrong. He said that the decision to change operating systems was based on narrow technical advice from Mr Batchelor and the Strategy Review Committee was not technically equipped to challenge those views. He maintained that the decision was not based on broader business considerations and was excessively driven by technology considerations, not the business needs of the Police. He also maintained that the decision exposed the Police to unacceptable risks of delay to the project and loss of performance guarantees.
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    View of the Commissioner of Police
    The Commissioner of Police, Mr Peter Doone, informed us in May 1999 that a key issue for the Police to consider was the need to keep its information technology infrastructure up to date with new software applications. He said that it was timely and appropriate that the Police considered the enterprise technology components for both current and future needs, and that there was a clear strategic need to do so. INCIS was one component, but there were many other business applications either planned or in operation. A significant issue in this respect was whether or not IBM would commit to supporting future applications, especially in the Windows environment. The INCIS contract had anticipated such events and had within it a technology substitution framework. This framework was designed to ensure that the Police did not get locked into outdated or proprietary product set, which would reduce flexibility in future technology decisions and/or be more expensive to support and maintain into the future.
    The Commissioner of Police informed us that the Police sought wide technology advice from the market, from IBM, from independent specialist advisers and from experts within the Police, including Mr Crewdson. Opposing views were tested, considered, further advice sought where appropriate and refined. The composition of the Strategy Review Committee was Police focussed because the decision was not simply a technology decision. It was a strategic business decision for the Police. He informed us that because of the complexities and risks surrounding the decision it was appropriate that it be chaired by the Commissioner and that senior executives played a key role.
    In conclusion, the Commissioner of Police claimed that reading through all of the documentation and analysing the different perspectives through the decision framework clearly supported the decision to change. All of the relevant issues were examined, and examined at length, by people with the requisite expertise. When looked at from an organisational- wide perspective it was cheaper, and there were fewer risks and more benefits to go with Windows NT. He believed that the decision was a sound decision then and remains a sound decision today.
    Submission from the Commissioner of Police, dated 8 May 1999 (INQ/CARD/POL/16).
    IBM's advice to the Police
    On 7 May 1999 we wrote to IBM and asked about its exact advice to the Police about the ramifications of the change from OS/2 to Windows NT. In summary, IBM advised that an immediate move to Windows NT desktops and an OS/2 server was not viable with the technology available at the time. IBM noted that the project was already above average risk because of the use of new technologies and the sophisticated processing required by the application software.
    In IBM's view an immediate move to Windows NT represented a significantly increased risk to the Police in the delivery of the INCIS project. IBM told us that Windows NT desktops and server would involve the same costs and risks as for Windows NT desktops and an OS/2 server. IBM noted that the future migration to Windows NT desktops with an OS/2 server provided the Police with "the best of both worlds" and confirmed that, provided the move coincided with software with appropriate functionality being available on the Windows NT platform, IBM believed the risk was "sustainable". IBM said it would be unable to warrant that the deliverables associated with the change to Windows NT would continue to meet the Police's requirements after acceptance.
    IBM said the changeover had "a significant impact in terms of planning of the project and decisions that were made". There were certain features Windows NT had and certain features that it did not. Other products needed to be put in place that were in OS/2 but were not in Windows NT. IBM said the changeover was particularly significant in terms of cost.
    Oral evidence in private, Mr Bill Doak, IBM, 21 August 1999.
    IBM advised the Police that the OS/2 desktops and server were the least risk approach. Under this option contractual commitments made by IBM would be fulfilled. IBM also advised the Police that it was committed to the longevity of OS/2 by its investment in product development of $US2 billion. IBM was committed to meet the Police's requirements for seven years following acceptance under the INCIS contract. The contractual terms provided a strong safeguard against future risk related to the longevity of OS/2. There would be no impact on costs or the implementation of Increment 1.
    Developments after the decision to change to Windows NT
    We asked IBM about the Police's response to its advice. On 4 September 1996, the Police confirmed its intention to go ahead with the change but indicated it wished to negotiate with IBM regarding its assessment of the financial and implementation impacts of the change. According to IBM, the negotiations and discussions on the changeover took a total of 28 months. IBM and the Police reached agreement regarding the charges for the change on 14 October 1997.
    IBM decided to absorb the additional $10 million cost of the changeover while the Police contributed only $1.5 million. IBM informed us that in order to meet timeframes and avoid delays on the project, it carried out the tasks necessary to change from OS/2 to Windows NT before agreement on costs was reached. A substantial portion of the cost was either absorbed by IBM or mitigated by the implementation of increased efficiencies in delivery to reduce the cost impact to the project. This accommodation was reached in October 1997 in order to avoid further delays and to enable the Police and IBM to continue with work on the INCIS project.
    Submission from IBM New Zealand Limited, dated 1 March 1999 (INQ/CARD/IBM/3).
    Evidence from Mr Crewdson
    Mr Crewdson told us that, by the start of 1996, Mr Batchelor started to question his management decisions and, in many cases, to countermand them. He explained that this was not beneficial for the project. It was important for there to be a clear line of communication between the Police and IBM otherwise confusion develops, decisions slow down and a vendor may start to play one client manager off against another.
    Mr Crewdson stated his concerns in the project status reports that he sent to Mr Batchelor and Mr Doone. He alleged to us that he was being deliberately isolated by Mr Batchelor. Mr Crewdson felt that Mr Batchelor did not believe that he had the technical expertise to run the INCIS project and did not understand the strategic nature of the issues. He told us that he confronted Mr Batchelor about his wishes to make technology substitutions, in particular the change from OS/2 to Windows NT, but explained to us that Mr Batchelor "was not prepared to discuss the issue with the INCIS project team full stop".
    In summary, Mr Crewdson said that the degree of change in the project imposed during the second year of the project put it into the extreme high risk category. The degree of change made it impossible for the INCIS project team to meet the original time-lines or deliver within the authorised budget. Mr Crewdson said, moreover, "credibility in the project had plummeted within Police and . . . morale was very low."
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    Changeover from Token Ring to Ethernet
    INCIS was originally designed around Token Ring local area network architecture. We received evidence from the Police about the change to the use of Ethernet architecture. It stated that two separate evaluations were made of the options, and both supported the Token Ring approach. The Police acknowledged that Token Ring was superior but stated that business issues required the use of Ethernet architecture. The evidence claimed that this did not appear to be substantiated by supportive documentation. After a substantial period of negotiation "customer preference" was imposed by the Police as the decision criterion.
    NZ Police OS/2 v NT Analysis Report, received from the New Zealand Police (undated).
    WAN change
    Mr Crewdson alleged to us that the Police changed key technology components outside of the INCIS contractual framework and without a competitive tender process; for example, the Wide Area Network (WAN) technology. WAN is basically the cabling that links Police stations together. Mr Crewdson alleged that discussions were conducted behind closed doors and the change control process was avoided. Furthermore, he alleged that there was no competitive tender process of any sort and there was no consultation with the INCIS project team about its project requirements or the impact on implementation.
    Mr Doone informed us that, early in 1996, Mr Crewdson told him of his concerns surrounding the process being undertaken to change the WAN technology. Mr Doone raised these concerns with Mr Batchelor who advised him as follows:
    Submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12)
    ". . . it was IBM's responsibility under the INCIS contract to deliver both the local area and wide area networks so any tender responsibility for selecting a supplier of these needs rested with IBM. . . . While at some point Police intended to deliver this solution outside the provisions of the INCIS contract it was eventually included in the contract with IBM. Thus, both the selection of technology and the tender process for implementation remained an IBM responsibility.
    "Under the technology substitution clause of the INCIS contract, Police could request a change in technology and this was done in respect of network technology.
    "Over time the new network technology would be more future proofed and potentially cheaper to support because of the competitive support market which was not available with the IBM network technology."
    In his view, Mr Doone told us there was a sufficient level of analysis and inquiry to make the business decision to change the network technology components to protect the interests of the Police.
    Submission from the Commissioner of Police, dated 8 May 1999 (INQ/CARD/POL/16)
    IBM performance guarantees
    Mr Tony Crewdson alleged to us that as a consequence of the technology substitutions the Police lost IBM's "end to end" performance guarantee for INCIS. He said this issue was given inadequate consideration when decisions to change technology were taken. The Commissioner informed us that the issue was considered as part of the Windows NT decision and the same conclusion was reached as for the other changes.
    We understand that in July 1996 IBM formally notified the Police that the guarantees in relation to performance and availability and particularly response times would be waived. We questioned IBM about the withdrawal of the guarantees. IBM said there were two substantial issues in terms of performance and guarantees. The changeover from OS/2 to Windows NT was one of them. IBM informed us that "the other was in terms of the network which was originally being supplied by IBM as part of the original contract but then at a later stage withdrawn by the Police and tendered and provided by a third party". IBM felt that "it could no longer provide an end-to-end guarantee in terms of performance and availability given that it was not responsible for the piece in-between".
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Mr Batchelor disputed Mr Crewdson's claims that the Police compromised performance standards by making changes to the project. He said "the original contract only specified basic performance requirements in relation to systems availability and time to process simple transactions. Performance standards for the more complex aspects of the system were left open, to be determined once the system was developed." Mr Batchelor considered that "none of the technology substitutions made under the contract would have impacted the basic performance standards contained therein. In addition, IBM acknowledged that the more important standards related to systems throughput of the more complex transactions would be negotiated, as envisaged under the contract, when the system had been developed."
    Submission from Mr Greg Batchelor, dated 18 May 1999 (INQ/CARD/BAT/2).
    We questioned the Commissioner of Police on the issue of performance guarantees.
    Submission from the Commissioner of Police, dated 8 May 1999 (INQ/CARD/POL/16).
    He informed us that in early 1996 Mr Crewdson told him of his concerns that the Police would lose "end to end" guarantees. Mr Doone raised the issue with Mr Batchelor who at the time was reporting to him. Mr Batchelor advised as follows:
    "In respect of performance guarantees, the advice was that only limited guarantees existed at the time and that IBM were already raising doubts as to the extent that they were prepared to be held to them. . . . In addition, agreement had yet to be reached on the specific tests upon which performance was to be assessed. IBM had already reserved their rights on performance guarantees in these respects. The position was that even without technology substitutions, further work and agreement was required to finalise these with IBM.
    "Risk to performance guarantees did not automatically arise from technology substitution. Providing IBM agreed to the change and the correct process was followed IBM should be still liable for guaranteeing performance. Even if IBM "de- committed" from guaranteeing performance of a particular piece of technology within the INCIS framework, they could not escape their obligations in respect of products not subject to change".
    In addition, Mr Doone said that because of the significance of the issue he raised it directly with the then Managing Director of IBM New Zealand, Mr Gowan Pickering. He advised Mr Doone as follows:
    "That IBM agreed that any resiling from performance guarantees as a result of a change in technology to a non IBM product could only be in respect of the performance of that product and not of the remaining IBM components.
    "That this approach would be taken when finalising the issue of performance testing and guarantees between Police and IBM."
    Submission from the Commissioner of Police, dated 8 May 1999 (INQ/CARD/POL/16).
    Project had run into significant difficulties
    By early 1997, the INCIS project had run into significant difficulties.
    Audit Office advice, dated 29 September 1999, to the committee regarding the delayed December 1996 quarterly status report received in March 1997 (INQ/CARD/AO/3).
    Approximately $55 million had been spent on the project and a cost overrun of $8 million was predicted. In addition, on existing plans, the project was nine to 12 months behind schedule. Decisions to change the client operating system from IBM's OS/2 to Microsoft Windows NT had added cost and risk. The need to extend the scope of the project to include all functionality on LES had also added cost and delays.
    Andersen Consulting Review of Project Status and Plans, commissioned jointly by Treasury and Police, May 1997, forwarded to the Committee by the Police (INQ/CARD/POL/12A).
    Mr Crewdson told us that he twice contacted Deputy Commissioner Barry Matthews seeking an independent review of the project late in 1996 because of problems associated with INCIS. Mr Matthews had taken over as INCIS Project Sponsor in August 1996, following the promotion of Mr Peter Doone in July 1996 to the position of Commissioner of Police. According to Mr Crewdson, Mr Matthews declined to review the project on both occasions.
    Mr Batchelor wrote to the Deputy Commissioner on 6 March 1997 to advise him of his concerns. Below is an extract from that letter:
    "The INCIS project team has not established a track record for delivery. Perhaps the most obvious example of this is in relation to the Systems Management Centre where no key deliverables have been produced since project inception. In addition, roll out schedules for the installation of Police's new corporate desktop environment have continually slipped and Police are facing an extended delay to the delivery of the INCIS application.
    ". . . The current project management methodology is cumbersome, overly bureaucratic and has obviously been hampering progress to date in many aspects of the project. The methodology does not appear to be based on the production of deliverables against established key milestones and interdependencies with other I & T and Policing 2000 initiatives. The number of times the project has been re-baselined since its inception is excessive, making the tracking of progress against deliverables over time since contract signing almost impossible.
    "A further problem relates to the significant changes occurring in the technology industry to the manner in which software development projects are undertaken. The classic software life-cycle development methodology, employed by IBM for the INCIS project, is not conducive to rapid software delivery. Rapid delivery is critical for an organisation, such as Police, going to BPR initiatives.
    "Other problems relate to the apparent poor communications within the project hierarchy and between the project and the wider I & T Group. In addition, the project suffers from ineffective Quality Assurance, evidenced by the development blow- outs that should have been picked up earlier than the points in time when IBM officially notified Police of their inability to deliver."
    Mr Batchelor also raised concerns in the letter about the skills and aptitude of the INCIS Project Director, Mr Crewdson (see section headed Personality issues ).
    Andersen Consulting review
    We note that concerns had been raised about whether the project would be able to meet its first critical milestone (getting off LES) by the revised scheduled date of December 1997. Concerns had also been raised about whether further cost increases would be incurred in completing the project. As a result of these concerns a review of the project was commissioned jointly by the Treasury and the Police in March 1997 to provide an independent assessment of the project and to determine how to proceed.
    Findings
    The Treasury told us that the broad thrust of the advice was that the Police should, in the first instance, attempt to negotiate a fixed price contract. The review found that a number of issues were driving up costs and delaying the project. They were:
  • high risk strategy and complex project
  • no high level definition of business architecture
  • changing technology direction
  • split development team
  • insufficiently developed requirements
  • incomplete requirements
  • application development significantly underestimated
  • management attention diverted
  • incomplete project management methodology
  • IBM management issues
  • Police management issues.
    • Andersen Consulting also identified additional risks that had not presented major problems to date. They were:
  • testing
  • organisational change management/training/deployment
  • system performance.
    • The report suggested that there was still "considerable risk associated with the completion of the project" and discussed three broad options available to the Police. They were:
  • continue project under current contract with IBM
  • terminate IBM contract and stop project
  • terminate IBM contract and continue project with alternative integrator.
    • The report suggested that "on current analysis, option 1 is attractive in comparison with options 2 and 3". The report suggested that any termination of the contract by the Police would probably be contested by IBM because:
  • IBM may assert that requests initiated by the Police for changes to the original contract and specification in the form of technology substitution and increases in system functionality have been responsible for delays
  • there have been disagreements over the financial and timetable impacts of technology substitution and scope variations
  • IBM may assert that the Police have not fulfilled their obligations under the contract
  • IBM may assert that whilst it conceded to agree with the findings of the Logica report with respect to scope, it did not bind itself to deliver the larger and more complex application within the original timeframe.
    • Recommendations
    The report recommended nine action points to progress the project. They were:
  • establish funding and schedule contingency
  • validate legal position
  • prepare to negotiate
  • closely manage contract and project
  • undertake high level integrated design for Release 1 and Release 2
  • review change management requirements and strategy
  • conduct review of application technical architecture
  • manage IT organisation structure
  • ensure sustained focus from Police.
    • Executive Control Group
    To address the project risks identified in the review by Andersen Consulting the Police and IBM adopted a joint problem solving and risk management strategy aimed at resolving all major risk management issues by the end of September 1997. Part of this strategy was to establish an Executive Control Group (the Group). The Group consisted of:
  • Deputy Commissioner of Police
  • Director of Information and Technology, the Police
  • INCIS Project Director, the Police
  • Managing Director, IBM New Zealand
  • Solutions Integration Manager, IBM Asia Pacific
  • Project Manager, IBM New Zealand.
    • The Group met on a fortnightly basis to review the project and monitor risks.
    Submission from the New Zealand Police, dated 24 October 1997 (INQ/CARD/POL/3).
    Deed of Variation and approval for increased cost
    During the lifetime of the INCIS project, the Police sought a number of changes to the scope of the project. Some of these changes were outside the scope of the original INCIS contract and meant that the contract had to be varied. At first IBM disputed the revised scope of the project in relation to its original contractual commitments. However, an independent report by Logica resulted in both IBM and the Police reaching agreement about what matters fell within the scope of the original contract and what fell outside.
    The Treasury told us that the Logica report found that 30 percent of the new requirements were outside the scope of the project.
    Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    The Audit Office told us that the Police required these changes for the following reasons:
  • need to overcome insufficient user and data conversion requirements
  • new software requirements to allow links to CARD and Human Resources systems
  • technology substitution requirements
  • additional business requirements to deal with new traffic offences, firearms and domestic violence legislation.
    • Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    Deed of Variation signed in December 1997
    A Deed of Variation was signed by IBM and the Police on 5 December 1997. The changes increased the estimated completion cost of the project substantially. The Treasury told us that the Deed of Variation fixed the price of the contract for the changed functions. In addition, the Audit Office told us that IBM were required to build the applications included in the original contract under the fixed price conditions in the contract. The Deed of Variation did, however, mean that the Police had to commit to additional capital funding for the project. By signing the varied contract the Police committed the Government to spending an additional $20 million on the INCIS project. A new project plan stemming from the varied contract was approved by the Police in July 1998.
    The Audit Office told us that the extent of the contract adjustment, with respect to cost implications, plainly exceeded the Commissioner of Police's level of delegated authority and that further Cabinet approval should have been sought prior to agreement of the varied contract. On 18 December 1997, after the varied contract had been signed, the Treasury wrote to the Police indicating that it believed the variation "may have contravened the financial delegation requirements" and recommended that the Police seek the advice of its auditor.
    Audit Office briefing supplementary report on the 1999/2000 Estimates examination of Vote Police, dated 14 July 1999 (EST/AO/P/2).
    Cabinet approves funding in May 1998
    Before seeking Cabinet approval, the Treasury told us that it and the Police sought an update review from Andersen Consulting. We heard there were delays in completing this review which caused delays in obtaining the necessary financial authority from the Cabinet. That authority was eventually obtained on 18 May 1998. We note that the update review by Andersen Consulting had not yet been completed by this stage.
    When the approval for the varied contract price was given on 18 May, the Cabinet also "directed the State Services Commissioner to undertake a review of the exercise of delegations by the Commissioner of Police in respect of the November 1997 variation in the INCIS contract with IBM, and recommend appropriate action to Ministers".
    Audit Office briefing supplementary report on the 1999/2000 Estimates examination of Vote Police, dated 14 July 1999 (EST/AO/P/2), page 3.
    The State Services Commissioner's review was completed on 18 September 1998.
    Breach of delegated authority was a serious matter
    The State Services Commissioner found that the Police should have sought approval for the increase of $20.17 million as required by the relevant Cabinet Office Circular CO (96) 11. This circular provides that the chief executives of Mode B departments (which includes the Police) have the delegated authority to incur expenditure on capital purchases or projects up to a maximum of $5 million. It also found that the breach was a serious matter but did not warrant the removal of either the Commissioner of Police or the Deputy Commissioner of Police.
    Audit Office briefing supplementary report on the 1999/2000 Estimates examination of Vote Police, dated 14 July 1999 (EST/AO/P/2), page 4.
    The Cabinet agreed and took disciplinary action by sending a letter from the Minister of State Services to the Commissioner of Police advising him of Ministers' displeasure at the breach. In addition, the State Services Commissioner reviewed the Treasury's performance in the matter pursuant to his functions under section 6(b) of the State Sector Act 1988.
    We consider that the breach of delegated authority by the Commissioner of Police, in this instance, was a very serious matter. We are aware that questions were also raised in June 1997 in relation to the lack of Cabinet approval for the CARD project even though that project was well underway and almost completed. Cabinet approval for CARD was not obtained until August 1997 and the contract for CARD had been signed in August 1996. We would have expected, that with the issue of delegated authority foremost in the mind of the Commissioner, a more considered approach would have been taken to obtaining the required Cabinet approval before signing the varied INCIS contract.
    Audit Office advice to the committee
    We asked the Audit Office why we did not receive a full report on the incident when it arose, given that at the time we were conducting a parliamentary inquiry into the INCIS project. The Audit Office explained that the issue was not one that would be addressed in the context of the Estimates of Vote Police, unless it anticipated that it would affect how the 1999/2000 appropriations for Vote Police would be spent. The matter was one that would be addressed in the context of a financial review.
    The Audit Office's last report to us relating to a financial review of the Police was made in respect of the 1997/98 financial year. While the Audit Office was aware of the breach of delegation, appropriate Cabinet approvals had been obtained by the end of the financial year. The issues surrounding the breach were at the time subject to an investigation by the State Services Commissioner. The Audit Office believed, that as the State Services Commissioner's investigation had just begun at the end of the 1997/98 financial year, it would have been inappropriate to have anticipated his findings.
    Audit Office briefing supplementary report on the 1999/2000 Estimates examination of Vote Police, dated 14 July 1999 (EST/AO/P/2).
    We note that the Audit Office only raised the issue with us after a request for information from the committee.
    We would have expected to have been informed by the Audit Office about the breach of delegated authority as soon as this matter came to its attention. Given the Audit Office's role as Parliament's watchdog we are very concerned that it did not formally raise this matter with us. This is a case of the watchdog not barking at the right time. The Audit Office knew that we were conducting an ongoing parliamentary inquiry into CARD and INCIS and any briefing we would have received could have been confidential and would not, in our view, have hindered the work of the State Services Commissioner, who was conducting an inquiry into the breach. The Controller and Auditor- General's response to this and other findings about the Audit Office's performance is attached as Appendix H.
    Strengthened project management
    In May 1998, the Cabinet also approved a further increase of $1 million in the cost of the INCIS project to allow project management to be strengthened. This was to be achieved through the recruitment of an external expert as the INCIS Project Director and the appointment of both the Police internal auditor and an external expert to the INCIS Executive Control Group. The Police appointed a new INCIS Project Director in October 1998 and a KPMG Peat Marwick partner joined the INCIS Executive Control Group. Mr Crewdson left the INCIS project in May 1998 and left the Police in October 1998.
    Ad Hoc Officials Committee on Information Technology
    In May 1998, the Government established an Ad Hoc Officials Committee on Information Technology (the Ad Hoc Committee) to review and monitor performance of the INCIS project and other public sector IT projects. The Police were directed to report to the Ad Hoc Committee on a monthly basis. In addition, the Police submitted a detailed risk management plan to the Ad Hoc Committee in August 1998. The Ad Hoc Committee was chaired by Mr Ross Tanner, Deputy State Services Commissioner.
    Treasurer visits IBM headquarters in New York
    In late May 1998, the then Treasurer, Rt Hon Winston Peters, together with the Secretary to the Treasury, Dr Allan Bollard, met senior executives from IBM in New York with a view to obtaining assurances from IBM that it would provide sufficient resources to deliver INCIS by the end of 1999. The Treasurer obtained assurances from IBM to provide the resources necessary to ensure that the project was completed promptly and effectively although no specific date was given. Subsequent to that meeting the Police noted an increased commitment by IBM as evidenced by additional staff made available to work on the project, according to the Treasury.
    Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    Andersen Consulting update review
    The Treasury and the Police engaged Andersen Consulting in December 1997 to undertake an update review. The key purpose of the review, which was completed in June 1998, was to confirm the extent to which the Police had acted on the May 1997 report.
    The update review found that while the Police had negotiated a fixed price contract with IBM, this had taken substantially longer than recommended. Andersen Consulting saw no evidence to suggest that alternative options to continuing with the project had been considered before the Police signed the variation to the contract.
    The Treasury told us in April 1999 that Andersen Consulting added considerable value in terms of providing the Police with advice about how to proceed. However, the effectiveness of the update review was reduced because the Commissioner of Police had signed the varied contract with IBM before the review was completed.
    The Treasury had intended that the update review would be used to provide Ministers with advice as to whether continuing with the project was the best option. The Treasury made the judgment that the signing of the varied contract with IBM prior to the review meant that there was limited value in exploring alternatives at that stage. Andersen Consulting noted that alternatives to the project did not appear to have been considered, but did not advise that the project should not proceed under the revised contract.
    The Treasury said that it should be noted that the Police do not accept the view of Andersen Consulting that alternatives were not considered. The Police indicate that advice was sought from KPMG Peat Marwick who recommended that there were clear advantages from continuing with IBM, provided the Police could obtain a fixed price contract for the changed scope.
    Issues raised by Mr Tony Crewdson
    Mr Crewdson criticised the review and update review by Andersen Consulting. He told the consultant that he did not feel that the first review had appropriately reflected the nature and extent of project initiatives and that a number of the review's recommendations bore a resemblance to existing project initiatives. Regarding the update review report, Mr Crewdson told us that Andersen Consulting produced a very brief report (seven pages) which was "dispatched to Treasury without being provided to the Police project team for comment". He believed that this was "inappropriate" and that the "lack of true consultation and fair consideration of all the issues meant that the report was flawed".
    Submission from Mr Tony Crewdson, dated 13 September 1999 (INQ/CARD/TC/1).
    Response from Andersen Consulting
    Under the natural justice provisions of the Standing Orders of the House of Representatives we gave Andersen Consulting an opportunity to respond to Mr Crewdson's allegations. Regarding the first review, Andersen Consulting informed us that "Mr Crewdson had been fully consulted in framing these recommendations". It said that it was aware that Mr Crewdson did not feel that it had given sufficient weight in its report to the successes he perceived the project to have had. However, Andersen Consulting's terms of reference were focussed on understanding the problems that had led to it being contracted to conduct the review in the first place.
    Submission from Andersen Consulting, dated 28 September 1999 (INQ/CARD/AC/1).
    In respect of the update review, Andersen Consulting informed us that it was not at any time during the initial discussions given any indication that there was any particular deadline for completing its work. Andersen Consulting agreed that the partner who had completed the initial review was not available for some time but informed us that it offered three other partners as alternatives. The Police and the Treasury decided to wait until the original partner was available. Andersen Consulting believed that the report was "sufficient to meet the agreed terms of reference". It also believed that it undertook the necessary consultation about the report. A draft report was issued on 22 May 1998 for consultation with the Police and the Treasury. Andersen Consulting received a number of comments from the Police on the draft. To date Andersen Consulting have not been informed of any "flaws or errors of fact" in the final version of the report.
    Submission from Andersen Consulting, dated 28 September 1999 (INQ/CARD/AC/1).
    Phillips Fox review
    At the time the additional expenditure of $20.17 million was approved, Ministers requested that the varied contract between the Police and IBM be reviewed from a legal perspective. Phillips Fox were engaged jointly by the Police and the Treasury in June 1998 to undertake the review and reported in July 1998. This review focussed on:
  • the legal advice sought by the Police
  • the legal advice provided to the Police
  • the Police's actions and response in relation to the advice
  • the robustness of the revised contract
  • advising on management of remaining legal risks.
    • Review by central agencies
    The Treasury told us that government officials were notified by the Police in February 1999 that IBM expected further delays, particularly in relation to Increments 2 and 3. This resulted in the central agencies (The Treasury, the State Services Commission, and the Department of the Prime Minister and Cabinet) reviewing the progress of Increment 1 and, to the extent that information was available, the progress of Increment 2.
    The finding was that Increment 1 was being managed in accordance with best practice project management techniques. IBM agreed to defer the implementation of Increment 1 to May 1999 to allow for testing. Increment 1 was implemented on 19 May 1999. In addition, the Police received and evaluated a detailed project plan from IBM for Increment 2.
    Ministerial Group
    Midway through 1999 a Ministerial Group of senior ministers and officials was established to review and monitor the INCIS project. In June 1999, the then Treasurer, Rt Hon Bill Birch, announced that Cabinet had directed the chief executives of the Treasury, the State Services Commission and the Department of the Prime Minister and Cabinet together with the Commissioner of Police to oversee INCIS and report to the Ministerial Group. The membership of the Ministerial Group was the Treasurer, the Minister of Finance, Hon Bill English, the Minister of Justice, Hon Tony Ryall, the Minister of Commerce, Hon Max Bradford, the Associate Minister of State Services, Hon Maurice Williamson, and the Minister of Police, Hon Clem Simich. Mr Birch and Mr Ryall are reported to have said the work would be given urgent priority. They are quoted as saying that "progress on the next stages of the project has been complicated by difficulties and delays".
    "Birch joins top team to clean up INCIS mess", The Dominion , dated 2 June 1999.
    On 12 August 1999 we wrote to the by now Minister of Finance, Rt Hon Sir William Birch, the Commissioner of Police, the Secretary to the Treasury, the State Services Commissioner, and the Controller and Auditor-General with a series of questions regarding our inquiry into INCIS. We asked them the following questions:
  • What were the problems that caused the failure to deliver the full INCIS project?
  • What role did monitoring agencies—the Treasury, the State Services Commission, the Audit Office and the Cabinet—play, and were there shortcomings in performing their role?
  • What could or should have been done to prevent or resolve the problems and by whom?
  • Who is responsible for the losses incurred and what is being done to hold them accountable?
  • What are the full costs incurred by the Police in working on INCIS, and what are the full costs of the non-completion of the project to the Police? What are the ongoing costs of managing the current situation? Are there any other costs incurred to Government as a result of the non- completion of the project? If so, what are they?
  • What savings or efficiencies have been gained for the Police from the implementation of Increment 1 of INCIS? How does this relate to the savings or efficiencies that were promised at the start of the project, including lost opportunity costs?
  • What has the Government learned from the previous non-fulfilment of information technology projects and why was this not applied in planning and implementation of INCIS?
  • What should be done to prevent recurrence of further problems?
  • Where does INCIS go from here?
    • The Minister of Finance replied on behalf of all recipients except the Controller and Auditor-General and said that, on 9 August 1999 IBM had advised the Commissioner of Police that it would withdraw from all further development work on the project. In light of these events the Minister of Finance sought legal advice from the Solicitor-General on the questions contained in our letter.
    The Minister of Finance informed us that "the Solicitor-General advised that it would be contrary to the Crown's interest for the questions you have posed to be answered in public at this point because they canvas matters which may well be the subject of legal action between the Crown and IBM. All recipients of our [sic] letter acknowledge that the questions must be answered before the committee at some point because they are material to our [sic] inquiry. However, to provide answers at this juncture
    may later prejudice the Crown's ability to obtain for all New Zealanders the best possible result from the current dispute with IBM."
    Letter from Rt Hon Sir William Birch, Minister of Finance, dated 16 August 1999 (INQ/CARD/GEN).
    We received a response to the questions from the Audit Office, dated 29 September 1999. The Audit Office provided substantive replies to about one third of the questions. The remaining questions were not answered fully either because the questions were not within the mandate of the Audit Office to answer or the questions touched on issues that the Audit Office felt were sub judice .
    Audit Office report on the inquiry into INCIS and CARD, dated 29 September 1999 (INQ/CARD/AO/3).
    Proposed Audit Office review
    At our meeting on 17 March 1999 we agreed that the Audit Office should be invited to review the information and documents supplied by the Police and other parties in relation to INCIS. We wished to appoint the Audit Office as advisers to the committee in the conduct of our inquiry into INCIS. At our meeting on 24 March 1999 we considered a paper from the Audit Office setting out a number of options showing how the office could assist and discussed generally our concerns about the project. We wrote to the Audit Office on 1 April 1999 and again on 20 July 1999 regarding possible Audit Office assistance with our inquiry.
    The Audit Office considered our request but was unable to assist us in the way we desired. On 3 August 1999 the Controller and Auditor-General wrote to us and acknowledged that he had commissioned scoping work to ascertain which of our concerns could usefully be addressed through an audit. However, the Controller and Auditor-General added that his options for responding to the committee's request had been complicated by the complex and sensitive negotiations currently being held between the Crown and IBM. He decided that it would be inappropriate to prejudice these negotiations by initiating audit work on issues that could conceivably become the subject of litigation. He decided to refrain from committing to any substantive inquiry until after the negotiations concluded.
    Contract terminated
    On 9 August 1999 IBM withdrew from the INCIS project. In response to the termination of the contract, the Government commenced legal proceedings on 17 August 1999 by filing a statement of claim in the High Court at Wellington against IBM. It is seeking damages, in particular, two sums substantially in excess of $3 million (excluding GST). IBM also has a number of unresolved issues with the Police about the INCIS project and on 24 September 1999 filed a statement of defence and counter-claim against the Police. IBM is seeking $75 million and court costs in compensation for losses it says is sustained from the project.
    IBM's withdrawal from the project leaves the Police with only Increment 1 fully implemented and the fate of Increments 2 and 3 uncertain. It is probable that the Police will require outside assistance to complete the project if it decides to proceed in that direction. Whatever the case, we believe it is highly unlikely that INCIS will be fully implemented by November 2000. We note that it has been reported that the Police and IBM have recently signed a contract to complete some parts of the original project. It is reported that the Minister of Finance has confirmed that a new contract had been signed but denied the arrangement would further INCIS.
    "Troubled INCIS gets reboot", The Dominion , 6 October 1999.
    Project implementation and cost
    Implementation
    INCIS was originally scheduled to be completed and operational by December 1997. There have been significant delays in the implementation of INCIS and its constituent parts. However, we note that the hardware and personal computer infrastructure was deployed on 28 August 1998, slightly ahead of schedule. Since we began our inquiry in 1997 we have asked the Police on several occasions to provide information about when it expected the system to be implemented and operational. The table below summarises the most recent information and shows where slippage occurred.
    Table 7—Slippage in implementation of the INCIS project
    Date of Police assurances 27 August 1998  Submission from the New Zealand Police, dated 27 August1998 (INQ/CARD/POL/7). 11 November 1998  Submission from the New Zealand Police, dated 11 November 1998 (INQ/CARD/POL/8A). 17 March 1999  Submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    Increment 1-implemented December 1998 December 1998 April 1999
    Increment 2—implemented June 1999 July 1999 Date not provided
    Increment 3—implemented December 1999 December 1999 November 2000
    In both August and November 1998 the Police told us that INCIS would be implemented by December 1999. This timeframe meant that the project would end up being implemented two years behind schedule. By March 1999 the Police were telling us that INCIS would not be implemented until November 2000. This meant that implementation of INCIS was three years behind schedule. The Minister of Police, Hon Clem Simich, told us in March 1999 that he was not happy with the delays but was happy with the project.
    Oral evidence in public, Minister of Police, 24 March 1999.
    Increment 1 was implemented in May 1999. However, IBM has now withdrawn from the project and it is uncertain when Increments 2 and 3 will be implemented.
    aaa
    In April 1999, the Police advised us that the cost of INCIS would total $127.67 million. Of this total $49.65 million comprises computer hardware, $31 million is for software programmes and the balance of $46.9 million is for services of various sorts required for the development and implementation of the system.
    Also in April of this year, the Treasury explained that more cost increases were likely and the revised project cost could be $132.47 million. The additional costs over and above the $119 million were attributed to:
  • IBM non-performance $8.67 million
  • Traffic Enforcement System $4.8 million.
    • Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    Operating expenses
    At the beginning of the project the total estimated operating cost over the anticipated operational lifetime of INCIS (five and a half years) was $105 million. The annual operating cost was estimated at $19 million. We note that the current annual operating cost for INCIS and related systems is $17.6 million.
    Submission from the New Zealand Police (INQ/CARD/POL/18)
    Lost opportunity cost
    We asked the Police to calculate the lost opportunity cost consequent to the delay in implementing the project. The calculation was based on INCIS being fully implemented by November 2000. An assessment of the benefits lost as a result of the delay in the implementation of the project is set out below.
    Submission from the New Zealand Police, dated 9 April 1999 (INQ/CARD/POL/15)
    Table 8—Lost opportunity cost due to delay in implementation of INCIS
    1998/99
    $ millions    		 1999/2000
    $ millions    		 2000/01
    $ millions    		 2001/02
    $ millions
    Originally forecast total net benefits 25.3 25.3 25.3 25.3
    Current expectations of net benefits 0 0 15.0 25.3
    Total lost benefits 25.3 25.3 10.3 0
    We note that with the non-completion of the INCIS project there may be additional lost opportunity costs in the years after the 2000/01 financial year.
    Ongoing costs
    In April 1999, the Treasury told us that the cost of the Police INCIS project team is approximately $0.510 million per month. As at April 1999, project approval only made allowance for these costs to 30 June 1999. Delaying implementation of INCIS to November 2000 therefore would add an additional 17 months worth of such costs to the project, totalling $8.67 million. Delaying implementation of the project further will add extra costs to the project.
    Conformity to State Services Commission guidelines
    The Audit Office provided us with a report on the INCIS project's conformity with the State Services Commission guidelines on selecting and managing IT projects, which were developed after the INCIS project was approved.
    See Principles and Good Practices for Selecting and Managing Information Technology Projects , State Services Commission, 1998.
    The guidelines cover a range of issues. The Audit Office reported that the selection and management of the INCIS project appeared to have conformed to the guidelines. In particular:
  • a feasibility study was completed and a business case prepared
  • a project plan and budgets were prepared and revised as required
  • appropriate project management processes are in place with progress reporting made on a regular basis. The project is subject to a quarterly internal audit and a status report produced every quarter
  • initially there were unclear lines of responsibility and accountability for decisions between Police management. More involvement from the Project Sponsor resolved these issues
  • the project appointed a Steering Committee and had a Project Sponsor.
    • The Audit Office noted that initially the project team was split into two locations making co- ordination of the project difficult. However, the team was eventually sited back to New Zealand. It also noted that an INCIS training strategy was developed to assist in the implementation and deployment of the new system. An assessment of the risks and benefits of the project was determined and the project was accredited with the ISO 9000 quality standard.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    The majority of us consider that the report was far too brief and was not an accurate reflection of the reality of the INCIS project. For example, we have already commented on the inadequacies of the Business Case. Furthermore, we have received evidence which is discussed below that indicates reporting by the Police on the project was deficient and that there were serious management and accountability problems regarding the project within the Police. We consider that the Audit Office should have completed a significantly more thorough analysis of the project and reported this to the committee.
    Reasons for difficulties with the project
    >From the outset the INCIS project was a high risk and complex project in terms of breadth and depth of scope, the use of new and sometimes innovative technologies, and cost. Its non-completion poses a significant financial risk for the Government of New Zealand and serious operational risks for the Police force. We considered potential reasons for the difficulties experienced with the INCIS project that led to its eventual non- completion.
    In its submission dated 20 April 1999, the Treasury set out seven main reasons for the cost increases and delays associated with the INCIS project. They are:
  • new software was required to build the links to systems such as CARD and Human Resources systems, which were implemented after the original contract was signed
  • extra business requirements, not originally included in the scope of INCIS to deal with traffic offences, firearms and family violence were included in the project
  • case management requirements were brought forward into earlier phases of the software development
  • extra LES conversion costs were required to deal with traffic, firearms and family violence required to fully exit and decommission LES
  • non-performance by IBM
  • the number of Police stations targeted for operational installation increased by 26 percent from 299 to 378
  • the need to change the workstation operating system from OS/2 to Windows NT.
    • We also considered the reviews conducted by Andersen Consulting in 1997 and 1998 which addressed the difficulties facing the INCIS project. The reviews are discussed under the sections headed Andersen Consulting review and Andersen Consulting update review .
    Large and complex project
    The INCIS project was large and complex. IBM told us that projects of the size and nature of INCIS are extremely complex. It explained that with Police systems there is very little experience or very little general knowledge available as opposed to commercial applications which have been built many times. The INCIS project was intended to be a first of a kind, state of the art system. It has never been done anywhere else in the world. The complexity that is involved with the project was not foreseen. It was unforeseen by IBM, which is not a law enforcement expert, and was more complex than anticipated or wanted by IBM.
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    In November 1998, the Police informed us that complexity, changes to technology and additional business requirements had contributed to delays with the INCIS project. The Deputy Commissioner Barry Matthews said, in March 1999, that the project was complex and represented significant challenges to the Police and IBM.
    Oral evidence in public, Deputy Commissioner of Police, 24 March 1999.
    The majority of us consider that the extremely complex nature of the project and its considerable size should have sounded alarm bells with the Police and IBM.
    Changes to the project
    We note that the INCIS project was subject to a significant number of changes in scope and technology during its lifetime. Changes to the project were made through a project management mechanism (known as change control) which permitted both IBM and the Police either to change the way agreed functional requirements were delivered under the contract, or to respond to purely day to day administrative matters that arose on the project. The Police informed us that the change control mechanism is a traditional and conventional mechanism in contracts for the implementation of information technology.
    The total number of change requests to the INCIS project before termination of the contract was 1096, according to IBM. The number of changes up to and including the Deed of Variation was 890. Following the Deed of Variation a further 206 changes were made. IBM estimated that 171 changes were due to "technology creep". These changes involve or relate to architecture, technology substitution, and the Windows NT substitution. According to IBM, architecture and Windows NT substitution were the main areas of change in this context. IBM told us that these changes frequently involved delays while original architecture or design requirements were revised in response to changes in functional requirements.
    Letter from Russell McVeagh McKenzie Bartleet & Co acting on behalf of IBM, dated 1 September 1999 (INQ/CARD/IBM/5).
    The Police agreed that between 23 September 1994 and 5 December 1997, when the Deed of Variation was signed, a total of 890 changes were requested and agreed by the Police and IBM. Contrary to comments made in the media the Police functional requirements for INCIS have not increased since the Deed of Variation, according to the Police.
    The Police concurred that since the Deed of Variation there have been approximately 200 change requests. Not all of these have resulted in changes being made. It said that where changes have been made, the impact on the overall implementation of the contract has been negligible. Only five of the 200 changes related to application development scope changes. The remainder relate to such things as hardware purchases, upgrades, changes to the physical computer infrastructure, seeking clarification on various issues or recommending document updates. The Police said that it is important to emphasise that, irrespective of which party initiated the request, both parties (IBM and the Police) agreed to each change before the change was acted on. This explains, added the Police, why not all of the requests were implemented.
    Submission from the New Zealand Police, dated 31 August 1999 (INQ/CARD/POL/18).
    IBM told us that over time the project evolved into a much more expansive and complex endeavour than originally contemplated. The strategic objectives, functional requirements, and overall scope all broadened considerably. The resultant increase in scope and complexity exponentially increased the amount of time and cost to the Police that would be required to develop, test, deliver, and operate INCIS. This complexity also increased the cost of training, using and maintaining the system in the future.
    IBM told us that "it is very difficult for them to comment on what the Police need to do their business". From its perspective the increased complexity and changes made by the Police "certainly made the project more complex than we would have preferred". IBM told us that at every stage where changes were signalled by the Police, IBM provided best estimates as to what they would mean "in terms of time and cost". IBM made "the ramifications of those decisions clear" to the Police. IBM said any delays and cost overruns were due to "the complexity which IBM has been required to build into the system". IBM told us that essentially all the delay is due to the Police.
    We questioned IBM about the added complexity of the project. IBM gave us an example involving one area called person attributes. When a Police officer finishes a shift he or she is expected to enter information on offenders or persons into the system. Typically he or she may enter 12 to 30 attributes to describe a person. According to IBM, "Over time INCIS has built to the level where person attributes in the system numbered 233. This many attributes means one goes from one or two screens to describe a person to many, many screens." There are 173 vehicle attributes.
    We asked whether that many attributes or level of complexity would defeat the purpose of having a computerised system and IBM replied "exactly", but suggested that it was probably a question best directed to the Police as "they know their business". IBM told us that it believes that "the time taken to finish the project fundamentally [sic] because of the complexity which has arisen from the detailed requirements". An added problem with complexity identified by IBM is that it "then leads to complexity to use and complexity to maintain in the future".
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Dr Leo Mercer, appearing in his capacity as a computer expert with Mercer and Associates, told us that it appeared that the Police and IBM achieved agreement on the technology platforms reasonably early in the process. However, the technology platforms were altered as the development project continued. The re-specification of a project mid- stream entailed significant risks, according to Dr Mercer.
    Preliminary Results Review of INCIS, Dr Leo Mercer, dated 15 May 1998 (INQ/CARD/LM/1).
    Technology creep
    We heard evidence about the issue of technology creep. IBM told us that changes in the scope of the project and technology substitutions significantly affected the cost of the project and were the predominant reason for delays in implementation. In May 1998, Dr Mercer produced an eight page report on the INCIS project for Mr Jack Jenkins and Mr Doug Martin, who were both involved in a Police review of the project. He told us that a common feature of self-developed systems is a tendency to seek the latest or leading edge technology throughout the development. This is known as technology creep.
    Dr Mercer said that it is also common for there to be constant change in the specifications of self-developed systems as new technology and products become available. He stated that at some stage, in order to have a successful implementation, one needs to freeze the specification and freeze the platform and move on. He said the risks associated with self-developed systems is quite high and "there are ways of mitigating that risk, and one of those ways is to freeze the scope and freeze the specification of the project early".
    Oral evidence in private, Dr Leo Mercer, 21 April 1999.
    In his report he says the most frequent causes of failures in self-developments appear to be an inability to develop a robust but reasonable series of specifications around the processes to be automated (computerised), failure to freeze these specifications and failure to control creep in the specifications or scope of the development project.
    Preliminary Results Review of INCIS, Dr Leo Mercer, dated 15 May 1998 (INQ/CARD/LM/1).
    In his review of the INCIS project, Dr Mercer found evidence that technology had crept, the scope of the project had crept, and the functional specifications had changed from the point in time when the project was committed. In the conclusion to his review, Dr Mercer said that the Police should reconsider their Business Case, in light of the increased functionality of the system, and freeze relationship issues. He noted that a considerable amount of time had been devoted by the Police to negotiating the relationship with IBM. Continued creep in requirements, scope, and technology needed to be addressed. At this stage in the project, he considered there should have been few issues requiring protracted negotiation.
    Preliminary Results Review of INCIS, Dr Leo Mercer, dated 15 May 1998 (INQ/CARD/LM/1).
    Police management issues
    Organisational focus
    Mr Crewdson told us that it was clear to him that the Police as an organisation was not geared up to deal with the requirements of a commercial project like INCIS. He had constant problems throughout the project appointing staff because of public sector appointment processes. For example, it took nine months to appoint a training manager. In addition, Mr Crewdson alleged that the Police ignored the issues relating to the interface between the CARD system and INCIS.
    Mr Crewdson said that, by the end of the first 12 months on the project "there seemed to be diminishing support from the Police Executive" and "from Peter Doone". In addition, he told us that "there was an inadequate level of support and understanding from other key Police managers, who did not understand the complexity of a commercial project".
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    The 1997 Andersen Consulting review recommended sustained focus on the project from the Police Executive. It said the project demanded continued management attention from the Police Executive to address risks and issues and make decisions from a business perspective. It recommended that appropriate forums needed to be established, for example Steering Committee, Business Implementation Group, Focus Groups, etc. The 1998 Andersen Consulting update review said there was evidence of a "sustained focus from the Police Executive" on the project.
    Mr Doone claimed that there has been strong support of the INCIS project from successive Police Executives throughout the time Mr Crewdson was involved in the project. He believed Mr Crewdson's views stem from his side of the debate on Police technology and business needs. Mr Doone said there was another view which needed to be, and which was, considered along with Mr Crewdson's views and concerns. He does not believe that Mr Crewdson can claim lack of Police Executive support for either the project or him personally.
    Mr Doone informed us that his direct involvement with the project reduced from July 1996 on his appointment as Commissioner. He said it was inevitable that his formal contact with Mr Crewdson would reduce at this point. He agreed that they did continue to discuss issues of concern from time to time and these matters were also raised with Deputy Commissioner Barry Matthews and Mr Batchelor.
    Submission from the Commissioner of Police, dated 8 May 1999 (INQ/CARD/POL/16).
    Project management structures
    Under the original INCIS project management structures the INCIS Project Director reported to the Deputy Commissioner of Resources, who at the start of the project was Mr Peter Doone. Mr Crewdson told us that he thought that this was "the appropriate reporting line". He explained that when Mr Greg Batchelor was appointed the reporting arrangements were altered and his "reporting line was changed from Mr Doone to Mr Batchelor". From this time Mr Batchelor would report to the Police Executive on progress with the project. Mr Crewdson believed that as soon as this change occurred the "public persona" of the project altered. The INCIS project "started to move from being very clearly a business project to a technology project".
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    Mr Crewdson was dissatisfied with the reporting arrangements and proposed changing them. He told us that between July and late 1996 he asked Deputy Commissioner Barry Matthews to consider a number of proposals to senior management to change the management structure around the INCIS project. In essence the proposals would mean that Mr Batchelor would be responsible for the technical issues and he would manage the business issues. According to Mr Crewdson, Mr Batchelor "refused to visit" any of those proposals.
    In August 1996, Mr Batchelor wrote to Deputy Commissioner Matthews, who had taken over from Mr Doone as INCIS Project Sponsor, and suggested two options. The first option was a retention of the status quo providing Mr Crewdson accepted Mr Batchelor's authority as controlling officer and that a "highly skilled technical manager to take direct management responsibility for technical issues within the INCIS project" would be appointed. The second option was for Mr Crewdson to change from being INCIS Project Director to being INCIS Business Project Manager and report directly to the Policing 2000 Programme Manager. Mr Batchelor also recommended that the INCIS project responsibilities should be separated out into business components under the control of the INCIS Business Manager, technology components under the control of the Director of Information Technology, and BPR under the Manager of Business Innovations.
    Submission from Mr Greg Batchelor, dated 18 May 1999 (INQ/CARD/BAT/2).
    Mr Crewdson told us that in September 1996 Deputy Commissioner Barry Matthews had to despatch a memorandum to Mr Batchelor advising that the INCIS Project Director had full authority for INCIS only project decisions.
    Submission from Mr Tony Crewdson, dated 14 September 1999 (INQ/CARD/TC/2).
    The May 1997 Andersen Consulting review commented that conflicting objectives and unclear accountability for decisions between the INCIS Project Director and the Information Technology Director caused delays in resolving enterprise issues, but noted that this was not currently an issue as the Information Technology Director had left the Police, and the Deputy Commissioner, Mr Barry Matthews, had a personal focus on the project. The review suggested that "care should be taken when appointing a new Information Technology Director". Andersen Consulting recommended that the consequences of any decisions to "change the foundations of the project are made clear to applicants . . . to ensure their expectations are aligned with the needs of Police."
    The Andersen Consulting update review in June 1998 acknowledged that project management processes had been partially addressed. However, in addition, the report stated that it did not see evidence of any significant strengthening of Police project management capability at the senior level since its last review and this needed to be addressed. In summary, the report stated that although some progress had been made in project management and reporting, it was not sufficiently robust for a project of the nature of INCIS, and recommended that the Police's project management capability at a senior level should be strengthened.
    Andersen Consulting update review, dated June 1998 (INQ/CARD/TSY/2).
    Police restructuring and other IT projects
    We note that one reason given for the failure of some public sector IT projects in New Zealand is that Ministers or government departments attempt too much overly ambitious reform to achieve a particular political or policy outcome. This approach to reform is termed "agenda jamming".
    "Why Government Information Technology Projects Fail", John Gill, Public Sector , June 1999, Vol. 22, No. 2, pages 25-27 (INQ/CARD/CC/9).
    Throughout the lifetime of the project the Police organisation was undergoing a major restructuring and reform in relation to Policing 2000 restructuring and more recently the Police review. Mr Crewdson said the Police were trying to do too much if you look at the Policing 2000 restructuring and all the IT projects together. "If you are going to manage change within an organisation you have to manage it very carefully." In his view this did not happen.
    Oral evidence in private, Mr Tony Crewdson, 24 March 1999.
    We were advised by the Audit Office that at the same time as work was being carried out on INCIS, the Police were developing the CARD and Human Resources systems and a new Financial Management Information System, carrying out the migration of the UNIX database (legacy server) and upgrading the Automated Fingerprint Information System.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    In November 1998, the Audit Office told us that uncertainties with the Police review will impact on both sworn and non-sworn staff. Staff react differently to any proposed changes and the way in which the change and associated risks are managed will also impact significantly on the Police. As with all organisations undergoing major restructuring, there can be significant risks associated with change. These risks can be controlled through a well-managed change management programme that emphasises and demonstrates the necessity of the changes that are taking place.
    Audit Office briefing report on the 1997/98 Financial Review of the New Zealand Police, dated 25 November 1998 (FR/P/AO/1).
    On 18 December 1998 we were informed by the Audit Office that the Police's change management strategies had not been wholly effective.
    Accountability issues
    Police reporting to the Government
    We considered the performance of the Police with respect to its fulfilment of its obligations to report on the INCIS project. Pursuant to the original Cabinet approval of the project, the Police were directed to report to the Cabinet State Sector Committee on a six monthly basis. The Police also reported to the Treasury and the Ministers of Police and Finance on a quarterly basis. There were also internal reporting arrangements within the Police. For example, the INCIS Project Director was required to prepare quarterly status reports. These reports were audited by Price Waterhouse and subsequently PricewaterhouseCoopers, and reviewed by the Police audit committee.
    The Treasury told us that the initial quarterly reporting process was ineffective. Reports were not completed until around three months after the end of each quarter and, until more recently, these reports were too optimistic. For example, the December 1996 quarterly report, that advised the project was running nine months behind schedule and estimated the cost to be $104 million, was received in March 1997. Other reports subject to delay included the March 1996 and June 1996 reports.
    The Treasury also found that some reports were not even made. The Police failed to produce a report for September 1996 and failed to report to the Cabinet State Sector Committee in August 1996. Ineffective reporting by the Police signalled to the Treasury that there were issues with the project.
    Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    Pursuant to the Cabinet's approval of additional funding in May 1998, the Police were directed to report on a monthly basis to the Ad Hoc Committee and then subsequently to Ministers. In addition, the Cabinet directed the Police to report to the Cabinet Strategy Committee on a quarterly basis. Also in May 1998, the Police started reporting to the Cabinet on a monthly basis by providing information on risks associated with the project, progress with the achievement of milestones including management of risks and overall timeliness.
    Information from the New Zealand Police, dated 25 November 1998 on the 1997/98 Financial Review of the New Zealand Police (FR/P/2).
    The Treasury considered that these enhanced reporting requirements improved the flow of information to Ministers and officials. This enabled more extensive monitoring of the project and provided more timely notification of risks.
    Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    Mr Crewdson informed us that the INCIS Project Director had two principal responsibilities in respect of reporting. First, the Project Director was required to prepare reports for the information of the Police Executive. A report or sections of a report would then be provided to the Minister of Police and the Treasury at the discretion of the Commissioner of Police. Secondly, the Project Director was also responsible for preparing reports for the Cabinet. Mr Crewdson explained to us, that for reasons of excessive workload, he was "not able to comply with this requirement" and accepted responsibility "for this breakdown in communication".
    Submission from Mr Tony Crewdson, dated 14 September 1999 (INQ/CARD/TC/2).
    We examined the quality of the reports produced by the Police. The 1998 Andersen Consulting update review made these comments about the reports:
    "However, to date, status reporting to the executive level has not included appropriate statistics, and in general, we are not confident that the status reports accurately summarise the position of the project in a meaningful way. They do not contain key statistical information such as work breakdown structures, workday variance, schedule variance and appropriate output measures. They are excessively voluminous, do not accurately address key issues and tend to present too optimistic a picture. This ultimately undermines the credibility of the project and its leadership."
    Mr Batchelor told us that in his opinion it was "quite obvious that the Government was not kept well informed" about the INCIS project. For example, when he left the Police in March 1997 he made his concerns known that the December 1996 quarterly status report did not present and reflect a true and fair picture of what was going on in the project.
    Oral evidence in private, Mr Greg Batchelor, 1 September 1999.
    Under the natural justice provisions of the Standing Orders of the House of Representatives we invited the Commissioner of Police, Mr Peter Doone, to respond to this allegation. We determined that the allegation has the potential to seriously damage Mr Doone's reputation.
    Mr Doone informed us that he does "not accept as having any substance Mr Batchelor's comments that the Government was not kept well informed on the progress of the INCIS project". With respect to the particular instance cited by Mr Batchelor, namely the alleged misleading nature of the December 1996 quarterly status report, Mr Doone told us that both Mr Batchelor and Mr Crewdson had concerns about the accuracy and content of the draft report. However, these concerns were addressed by Deputy Commissioner Barry Matthews in late February 1997 and early March 1997 and resulted in "some changes to both the content and style of the report which made the report more objective in commenting on the difficulties and status of the project".
    Submission from the New Zealand Police, dated 28 September 1999 (INQ/CARD/P/19).
    Mr Doone agreed that on occasions during the project the Police did not comply with requirements to report to the Cabinet. He informed us that despite these reports not being submitted, the quarterly audit reports prepared by Price Waterhouse were submitted to the Treasurer and the Minister of Police, as well as to Treasury officials.
    Submission from the New Zealand Police, dated 28 September 1999 (INQ/CARD/P/19).
    We consider that all levels of the Police failed to report adequately on the project. There were serious reporting problems (delayed, missed or overly optimistic reports) within the Police and from the Police to the Cabinet and Ministers. Obviously the Cabinet requires appropriate information to monitor government activities effectively and make decisions.
    The Audit Office considered that the INCIS project had undergone rigorous review and reporting. In the course of its audit the Audit Office found a high level of reporting from the Police and independent reporting from the Audit Office and the Police's own internal auditors about the status and progress of the project.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    We consider that the advice given to us by the Audit Office about Police reporting on the project, in light of the evidence above, was inadequate and did not fully explain the situation. It did not inform us about reports being delayed or not being made. The advice provided by the Audit Office, that Police reporting was "rigorous", clearly conflicts with the evidence provided to us by the Treasury, which showed that the Police had failed to make some reports on time or at all.
    Police reporting to the committee
    We also considered the performance of the Police in reporting to the committee. Initially the Police did not provide us with much detailed information about the INCIS project. In its response to the 1997/98 Standard Estimates Questionnaire, dated 21 July 1997, the Police informed us that "it is planned this year to roll out personal computers to all stations and provide basic office automation functions in preparation for the INCIS applications to be released next year". In its response to the 1996/97 Financial review questionnaire, tabled on 19 November 1997, the Police informed us that "rollout of personal computers should be completed by mid 1998: application functionality will be available from this point onwards".
    On 13 August 1998, we wrote to the Commissioner of Police requesting a "detailed submission" on INCIS and the timetable for its implementation. This information was received in August 1998. In addition, we received an update on implementation, dated 25 November 1998.
    During the course of our inquiry we verbally requested that the Police keep us regularly updated on progress with respect to the implementation of INCIS. In addition, we followed up this verbal request with written confirmation of our expectations. On 13 August 1998 we wrote to the Commissioner of Police, Mr Peter Doone, requesting an update on the INCIS project and stated that "during the 1996/97 financial review we made it clear that `we expect regular reports from the Police on its progress, measured against the key milestones it had identified to us for the INCIS project"'.
    Letter to the Commissioner of Police from the Chairperson of the Justice and Law Reform Committee, dated 13 August 1998 (INQ/CARD/GEN).
    On 3 March 1999, we wrote to the Police and asked why we had not been kept informed about further delays. The Police responded that "the select committee had not yet been informed due to the fact this information has only recently come to light. It would have been reported in the end of February Ad Hoc Ministers meeting. Instead a joint Treasury, SSC and Police report on INCIS is being produced for the Cabinet Strategy Committee in March."
    Response to question 11 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    In late 1997, we requested a copy of the Business Case. In its response to the committee, tabled on 19 November 1997, the Police informed us that the Business Case was "commercial in confidence and Cabinet confidential". We wrote to the Police on 3 March 1999, again requesting a copy of the Business Case. The Police provided a copy of the Business Case on 17 March 1999.
    As part of the 1997/98 Financial review of the Police we requested a full and unedited version of the Andersen Consulting report. On 25 November 1998 the Police informed us that "the unedited Andersen's report is not available for reasons of commercial sensitivity". Neither an unedited or edited copy of the report was made available to the committee.
    An edited version of the report was tabled by a member of the committee on 3 March 1999, one having been obtained under the Official Information Act 1982, following an investigation into the release of the document by the Ombudsman. The committee again requested a copy of the unedited report and this was provided by the Police on 17 March 1999.
    Looking at the evidence we have received from the Police, particularly in the early stages of our inquiry, it is apparent that the Police were reluctant to supply all the information the committee requested. In November 1997, the Audit Office explained that the Police did not present the information it expected in relation to the Police's IT projects.
    The Audit Office made three observations about the Police's compliance with committee requests.
    Audit Office briefing report on the 1996/97 Financial Review of the New Zealand Police, tabled 19 November 1997 (FR/P/2A).
    First, the fact that any document is commercially sensitive is not sufficient grounds to refuse a request from a select committee of Parliament. Standing Orders empower a select committee to seek the production of any persons, papers or records. It is also open to a select committee to continue any measure of confidentiality in relation to any information provided, at its discretion.
    Secondly, Cabinet Office classifications, especially those given some years ago, do not exempt documents so classified from the provisions either of the Standing Orders or the Official Information Act 1982. In relation to the Act, each application for a document's release must be treated on its merits. In accordance with the general principles of the Act, documents should be released unless there is sufficient reason (as specified in the Act) for withholding them.
    The Audit Office informed us that there is a convention that select committees do not ask for copies of Cabinet papers, but it did not believe that the convention extends to the factual information contained in such papers. If it did, it would be possible for departments to protect any information indefinitely by simply reporting it to the Cabinet in a Cabinet paper. It is difficult to imagine that the convention would operate in such a way that a member of the public could obtain a copy of a Cabinet paper itself but a select committee of Parliament formally charged with scrutiny of departmental performance could not even obtain the information contained in it.
    Thirdly, issues of commercial sensitivity continued through the lifetime of the INCIS project. If we had accepted the Police's position, we would effectively have been accepting that no IT project in any department within our terms of reference could be subject to in-depth scrutiny by the committee. In the end we used the Standing Orders, in particular Standing Orders 203 and 204 (3)
    Standing Order 203 provides select committees with the power to send for persons, papers and records. Under Standing Order 204 (3) a chairperson may, on behalf of a committee, request that papers and records that are relevant to its proceedings be produced.
    , to obtain the information we required to complete our inquiry.
    Personality issues
    We considered evidence on the relationships between key Police staff during the first two years of the project. Dr Leo Mercer told us that personality issues are common in large self-development projects. We note that there was obviously a degree of conflict between the Police INCIS Project Director, Mr Crewdson and the Police Director of Information Technology, Mr Batchelor. Mr Crewdson told us that "when Mr Batchelor was appointed to the position he was uncomfortable with the INCIS project and informed Police . . . he (Mr Batchelor) wanted total control, he wanted to make changes. So changes started to be made." Mr Crewdson resisted Mr Batchelor's alleged interference in the project. As a result the relationship between the two men deteriorated significantly. Mr Crewdson told us that "the management situation between myself and Mr Batchelor became very toxic, and communications broke down completely".
    Oral evidence in private, Mr Tony Crewdson, dated 24 March 1999.
    In evidence to us Mr Batchelor alleged that the skills and aptitude of the Project Manager, Mr Crewdson, in part contributed to "the INCIS debacle". Mr Batchelor said that he and Mr Crewdson had different views about the management of the INCIS project. Mr Batchelor said the fundamental difference related to the management of IBM. He said that it was of paramount importance that IBM be managed and driven to delivering the technology required by the Police. He considered that Mr Crewdson's approach was far more laissez-faire in that he was comfortable in allowing IBM to manage the project and in particular all technology related aspects of it.
    Mr Batchelor became so concerned about Mr Crewdson's performance that he wrote to the Deputy Commissioner on 6 March 1996 and advised that:
    "There appear to be numerous examples across the entire project, (IBM and Police), where the relationship between project roles and the skills of the person fulfilling those roles is questionable. For many personnel on the project it is apparent that INCIS represents their first experience with a project of this magnitude and level of complexity. There is certainly a lack of sufficient expertise in a number of key areas of the project. This represents a major risk exposure to Police."
    Mr Batchelor considered Mr Crewdson lacked the technical knowledge to properly ensure that the Police received a system that was totally compatible with its desired goals and within budget.
    Submission from Mr Greg Batchelor, dated 18 May 1999 (INQ/CARD/BAT/2).
    We asked IBM about the alleged difficulties in the relationships between Mr Crewdson and Mr Batchelor. IBM told us that "there were some personal difficulties between those two gentlemen" but it was not aware of "any effect that may have had on the project".
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Mr Batchelor left the Police in March 1997 to take up a position in Australia. He is now chief executive of Intergraph Public Safety Pty Ltd in Melbourne, Victoria. Mr Crewdson left the project in June 1998 and left the Police in October 1998. He now works as a part-time consultant for the State Services Commission. We questioned Mr Crewdson about why he left the Police. He told us he was constrained from speaking about the circumstances that led to his leaving. He suggested that media reports at the time which said "Stressed out cop perfs from project" were not true.
    Under the natural justice provisions of the Standing Orders of the House of Representatives we gave Mr Crewdson an opportunity to respond to the statements made by Mr Batchelor. Regarding the comments about his approach to IBM, Mr Crewdson informed us that he adopted the following approach. First, IBM signed a contract and had to deliver. Secondly, the Police had a responsibility to provide a supportive environment for IBM. Thirdly, IBM had the right to a fair profit, assuming it delivered. Finally, if IBM did not deliver it would not get paid and would incur penalties. Mr Crewdson said that to suggest that he, in any way, abdicated his management responsibilities to IBM was "inaccurate".
    Submission from Mr Tony Crewdson, dated 14 September 1999 (INQ/CARD/TC/2).
    Regarding his skills and abilities, Mr Crewdson informed us that he received a performance appraisal from Mr Batchelor via the Deputy Commissioner of Police, Mr Barry Matthews, just after Mr Batchelor's departure from the Police. The appraisal was very critical of Mr Crewdson's performance, who explained that the appraisal had been completed without any consultation between the two men. Mr Crewdson considered that Mr Batchelor's views were inconsistent with the views of other referees who had had a much better opportunity to assess and comment on his abilities. Mr Crewdson said that Mr Batchelor's performance appraisal was never ratified by the Police Executive. He provided us with some examples of comments he had received in other appraisals, from Mr Matthews. For instance:
    "Tony's performance was outstanding during this period. . . . Tony shows considerable potential and talent and I would expect he would achieve an executive position within Police in the near future . . . Tony's rare combination of business and technical expertise".
    Submission from Mr Tony Crewdson, dated 14 September 1999 (INQ/CARD/TC/2).
    We consider that the relationship between the former Director of Information Technology and the former INCIS Project Director was poorly managed by the Police Executive. We consider that a dysfunctional relationship between key individuals in a project of this magnitude created considerable risk.
    Role of IBM
    We considered the role of IBM in the non-completion of INCIS. IBM told us that it was arguably the most qualified company in the world to undertake a project of the size of INCIS. During the lifetime of the project IBM had a considerable number of projects exceeding US$100 million under contract, with about 38 in the Asia Pacific region. IBM had 130 people working on the INCIS project. Of this number 100 were based in Wellington and 30 were based in Sydney.
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Performance issues
    The Police blamed certain delays in implementation on "performance problems" with IBM. For example, the Police said that "the further delays result from additional time spent by IBM building and testing Increment 1 which has led to a reassessment of the robustness of the project planned for the building and testing of Increments 2 and 3."
    Response to question 11 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    The Treasury told us that non-performance by IBM contributed to delays in the project and increases in cost. It said that non-performance by IBM was a consequence of the disestablishment of the IBM United States division underwriting the INCIS software development, and the later failure by two IBM divisions to progress the software development. This resulted in an 18 month project delay. In February 1999, the Police received notice from IBM that Increments 2 and 3 would be delayed.
    Submission from the Treasury, dated 20 April 1999 (INQ/CARD/TSY/1).
    IBM told us that it did not accept the Treasury's assertion that it had not performed under the contract. IBM's view was that the majority of the delays to the project, the increase in cost and the re-allocation of IBM's resources were caused by other factors, including:
  • a lack of detailed definition of Police requirements
  • significant ongoing alterations and additions to the requirements
  • the complexity and scale of the project proving to be well beyond that envisaged by the parties.
    • IBM told us that INCIS had been a difficult environment due to the complexity of the project but it was confident that the project had "been managed well given that context".
    Submission from IBM, dated 7 May 1999 (INQ/CARD/IBM/4).
    After examining the evidence before us, we are unclear at what stage and to what extent IBM advised the Police about the growing complexity of the INCIS project and warned the Police that further changes to the scope and complexity of the project would undermine its viability.
    Impact of the project on Police
    The INCIS project has impacted on the Police in a variety of ways. The increasing cost of the project has affected the ability of the Police to finance its operations and deliver services. Delays in the project may affect the Police's ability to fund a replacement system for INCIS when it reaches the end of its working life. The project has had an impact on the morale of Police personnel. The implementation of Increment 1 has affected Police management systems and delays in the implementation of INCIS have affected the Police's plan to deal with the Year 2000 (Y2K) computer problem.
    Diversion of financial resources
    The increasing cost of the INCIS project has caused the diversion of financial resources from other areas of Police expenditure. The Audit Office discussed with the Police the consequences of increases in the cost of INCIS for the Police's capital expenditure programme. The Police had to find additional capital sums from within its baseline. The Commissioner of Police set out his expectations in writing:
    "The recent $20 million increase in cost, to be met from existing Police capital sources will require the diversion of resources to INCIS for a longer period."
    Audit Office briefing on Police computer systems CARD and INCIS, dated 25 February 1998 (INQ/CARD/AO/1).
    We note that increases in the cost of INCIS may impact on three areas of expenditure. The three areas are:
  • ensuring the security of the Police radio network with an estimated cost of between $10 million and $40 million
  • increased electronic and physical surveillance to combat organised crime with an estimated cost of $10 million
  • capital equipment to police the APEC conference with an estimated cost of $10 million.
    • Audit Office briefing report on INCIS and CARD, dated 24 March 1999 (INQ/CARD/AO/2).
    In March 1998, the then Minister of Police, Hon Jack Elder, confirmed "that the overall costs of INCIS has affected the Police capital expenditure programme" in the areas noted above and "it has absorbed funds which would have been used for other projects". The Minister noted that "the capital equipment for APEC is currently the subject of a capital bid within the 1998 budget round. A capital bid for the technology support for increased electronic and physical surveillance is currently being developed and it is expected that a strategic business plan surrounding such a bid will be completed during this calender year. The radio network is not currently the subject of an additional capital bid from Government."
    Letter from the Minister of Police to the Chairperson of the Justice and Law Reform Committee, dated 13 March 1998 (INQ/CARD/POL/4).
    In November 1998, the Police told us that the capital budget for vehicles was reduced to $7 million from $14 million due to a restructuring of the capital budget arising from the requirement to fund the development of INCIS.
    In March 1999, a further increase in the cost of INCIS was anticipated. The Police told us that if extra funding of $8.67 million was approved it would be funded out of its capital funds for the 1999/2000 year. Extra money incurred in completing the project will mean less funds available for other capital projects but the ones that could be affected have not been considered by the Police.
    Response to question 11 contained in submission from the New Zealand Police (INQ/CARD/POL/12)
    Long-term financial impact
    Depreciation
    The Audit Office identified a difficulty with depreciation as a consequence of rescheduling capital expenditure to fund INCIS cost overruns. The project was being funded in part from the accumulated depreciation of other capital resources and the replacement of these items was to be deferred. Rescheduling expenditure meant there was unlikely to be sufficient accumulated depreciation to fund a replacement for INCIS when the system reached the end of its economic life. This would leave the Police without a replacement integrated national crime information system unless additional funding was obtained.
    The then Minister of Police, Hon Jack Elder, informed us in March 1998 that, "there is certainly an issue to be resolved in the intermediate term of the adequacy of capital resourcing available to Police, given known demands for accommodation, vehicles and technological infrastructure. This matter will be addressed and scoped with Treasury officials."
    Letter from the Minister of Police to the Chairperson of the Justice and Law Reform Committee, dated 13 March 1998 (INQ/CARD/POL/4).
    The Police told us in March 1999, that in conjunction with the Treasury it was working to ascertain whether additional funding was sufficient to cover additional costs. The Police was unable to comment about at what stage the Treasury was at in its consideration.
    Response to question 12 contained in submission from the New Zealand Police (INQ/CARD/POL/12).
    Future INCIS investment
    The cost of future INCIS investment by the Police to achieve the same level of functionality promised by the INCIS project is unknown. It is considered by some that IBM is unlikely to assist the Police with completion of Increments 2 and 3 unless ordered to do so by the courts. The cost of retaining a new systems integrator and applications developer could prove to be substantial, particularly if work has to start from scratch. The estimated cost of Increment 2 is $12.113 million and the estimated cost of Increment 3 is $6.945 million.
    Impact on morale
    Difficulties surrounding the INCIS project had an ongoing negative impact on Police morale. In the Police's annual report for the year ending 30 June 1998 the Commissioner of Police said that the project was a source of frustration for both the staff working on the project and Police staff in general.
    The New Zealand Police Association (the Association) informed us that INCIS was developed at a time when policing was redefining itself after "the dramatic cultural changes introduced by the move to community policing (with its increased staffing needs) and the traffic merger". It considered that the effects of diverting resources from an already struggling frontline to a series of projects such as Policing 2000, INCIS and CARD, which had little buy in from those directly involved, had "an extremely negative impact on morale".
    Submission from the New Zealand Police Association, tabled 17 September 1999 (INQ/CARD/NZPA/1).
    The Association believed that the Police felt these "big ticket" projects took precedence over its core business of "attacking criminal offending" and this too affected morale. In addition, frontline officers saw staff being promoted quickly, through being involved in these projects and felt this undervalued day to day policing.
    Submission from the New Zealand Police Association, tabled 17 September 1999 (INQ/CARD/NZPA/1).
    Organisational change management
    In its 1997 review Andersen Consulting warned that the impact of the implementation of INCIS on the Police would be enormous. It would require changes to core processes undertaken by thousands of Police personnel around the country. Change will immediately come into effect nationwide and back-out would be difficult if not impossible. After delivery of the system, change management is the next highest risk area for Police. Andersen Consulting recommended that a thorough review of the change management requirements be conducted and strategies put in place.
    Andersen Consulting report, May 1997, page 11 (INQ/CARD/POL/12A).
    In its 1998 update Andersen Consulting noted that the investigation and advice on any change management issues were specifically excluded from the scope of its review.
    In December 1998, the Audit Office told us that it was concerned about how expectations of external stakeholders, business users and the public have been managed and reported at a senior level. It said the Police change management and communication strategies have not been wholly effective in minimising the risk that avoidable speculation affects the credibility and outcome of the project.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    The Police told us that the delivery of INCIS in increments allows the Police to make a gradual transition to a significant change. In March 1998, the Police told us that since 1995 it has had in place in every district an INCIS liaison officer responsible to district management for co-ordinating the district change management effort with support from the INCIS CMT. A change manager was employed in 1998 and left prior to a replacement being appointed in January 1999. The current change manager's primary focus is Increment 1. The Police have put in place communication, training, process impacts and district implementation plans for Increment 1.
    Responses to questions contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    We believe that a downside of the incremental approach to the implementation of INCIS was that resistance to the project was given time to develop.
    Y2K compliance work
    Delays in the implementation of the project had a significant impact on the Police's plan to deal with the Y2K computer problem. LES is not Y2K compliant and was scheduled to be phased out with most of its functions transferred to INCIS before the turn of the century. However, that transfer can only occur when INCIS is fully operational. It became apparent that INCIS would not be operational by the year 2000, forcing the Police to ensure LES was Y2K compliant. The Ministry of Justice and EDS commenced a "last minute" project to achieve compliance at a cost of approximately $2 million. The Police's share of the cost is nearly $0.85 million.
    Response to question 11 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    Effects of non-completion
    We considered the effects of the non-completion of the INCIS project on the crime information requirements of the Police and the justice sector information strategy. The non-completion of the project will affect the operational capabilities of the Police. Litigation about the project may also divert senior management's attention from operational matters.
    Integrated national crime information system
    The non-completion of INCIS means that the Police do not have the computerised, linked and networked integrated national crime information system it planned to acquire. The Police told us that it had not considered abandoning the INCIS project because that would have committed the Police to remaining on LES, which meets less than 50 percent of the Police's information requirements.
    Responses to questions contained in submission from the New Zealand Police, dated 18 March 1998 (INQ/CARD/POL/12).
    Non-completion of Increments 2 and 3 means a raft of applications giving the Police the functionality it requires to meet the needs outlined in the Business Case have not been delivered. Increment 2 would have provided the ability for Police to record information about investigations and, if necessary, charge offenders and prosecute them through the courts. Increment 2 replaces and upgrades LES which provides basic support for Police records management and the charge process. Increment 2 would have built on the functionality of Increment 1 which has already been delivered. Increment 2 was to provide:
  • ability to record incidents and offences in cases, along with key relevant information such as people, vehicles, locations and relationships, where appropriate
  • a case management capability. This would have allowed authority and responsibility for cases to be assigned to designated individuals, work groups and their supervisors
  • security. This would have provided the ability for a level of security to be placed on individual cases, based on considerations of sensitivity, privacy and secrecy
  • the ability to record text documents within the context of a case investigation. These would have been linked to the case so that they could be searched, retrieved and reused (eg. searching for an investigation document that was then made into a deposition)
  • LEDA (Law Enforcement Data Access). Would have provided a mechanism by which INCIS interfaced to LES. It is how the Police and the Department for Courts would have interchanged identity and charge information, both criminal and traffic
  • replacement for LES for the Police. The Police would no longer have relied on LES for their data. The conversion of relevant information on LES would have been converted to the INCIS database
  • CARD interface. CARD is utilised by the Police communications centres. This interface would have provided the ability to pass information about completed events through to the INCIS database. This would have provided the initial information for an investigation. It would also have provided the ability for communications centre operators to directly query and update the INCIS database
  • firearms licensing—the ability to record firearms licence, endorsement, and permit information for licensed persons. It would also have provided the ability to record specific firearms against persons, endorsements or permits.
    • Audit Office report about the inquiry into CARD and INCIS, dated 29 September 1999 (INQ/CARD/AO)/3).
    Increment 3 would have provided greater efficiencies for the capture and management of recorded information. These would have been additional functions that are not currently provided electronically to the Police organisation. Increment 3 would have built on the enhancements of Increments 1 and 2. It would have provided:
  • a rapid data entry mechanism for the high volume, low variability incidents and offences that police attend, known as Speedbooks. For example missing persons, lost and found property and stolen motor vehicles
  • the ability for Police to record case investigation information while disconnected from the main database, known as disconnected functionality. The Police could take laptops away from the station and record information for later transfer to the main database
  • the ability for Police to track and record the movement and disposal of all physical items that come into their possession, known as movement records. A strong audit trail would have been established including, for example, blood samples, drugs, and money
  • the ability to record the geographic co-ordinates of a physical location that constitutes a crime scene—used for later display and analysis, known as Scene
  • the ability to record distinctive and significant indicators of individual crimes that later could be used to support the investigation of similar crimes, known as Modus Operandi
  • the ability to track and record actions and results of Police Diversions
    • The Police operate a practice whereby offenders who match certain criteria are provided the opportunity to perform tasks which redeem them to the degree that a resolution through the courts is not required.

  • a demonstration of the efficiencies of workflow within the INCIS application—as an enhancement of case management, known as Process Manager.
    • Audit Office report about the inquiry into CARD and INCIS, dated 29 September 1999 (INQ/CARD/AO/3).
    The non-completion of INCIS has meant that the full extent of the benefits set out in the Business Case have not been realised and the objectives of the project have not been achieved. INCIS was meant to have saved the Police time and energy in completing administrative tasks to allow them more time on the frontline dealing with crime in the community. Given the difficulties with the project the attention of the Police has been focussed on INCIS at a time when it could have been concentrating on finding alternative and more effective ways to tackle crime in New Zealand.
    Impact on justice sector information strategy
    The non-completion of INCIS will significantly impact on the justice sector information strategy (the strategy). Since 1995 government departments involved in the delivery of criminal justice services have been employing the strategy to co-ordinate their information needs. The strategy is detailed in the Ministry of Justice publication Justice Sector Information Strategy. This document was first published in August 1996.
    The strategy represented a significant effort by departments to manage their own information needs and information systems in such a way as to avoid duplication and achieve maximum consistency and systems utility. The key elements of the strategy are:
  • using agreed principles and protocols for the creation, collection and handling of common information
  • defining, maintaining and developing the core common data-sets
  • providing the means to access and share core information safely and securely
  • consistently using standards for data, terms, technologies and systems
  • using network and communication technology to facilitate the exchange of information
  • respecting the privacy of individuals
  • complying with legislative requirements
  • introducing regular reporting and updates of information on justice matters, including comparative data
  • ongoing reviews of information collection and management priorities and practices in light of changing policy objectives
  • ensuring cost effectiveness.
    • The Police informed us that the INCIS project involved the development of interdependencies between it and the wider justice sector in relation to projects initiated by the Ministry of Justice, the Department for Courts, the Department of Corrections and the Land Transport Safety Authority. Departments were expecting to take the opportunity to realise benefits on the back of INCIS. An integrated approach across the sector would contribute to a reduction in costs, enhanced synergy of technical platforms, rationalisation of inefficient business processes, less duplication, greater information sharing, migration from LES and minimisation of Y2K risks.
    Submission from the New Zealand Police (INQ/CARD/POL/3).
    The Ministry of Justice informed us that the main effect of non-completion of the INCIS project relates to the need for the Police to remain on LES for longer than originally anticipated, and for other agencies to continue to share information with the Police via this platform. The Ministry noted that work has started on reviewing the Police's IT requirements in the light of the non-completion of INCIS. At the same time, the overall approach to information sharing in the justice sector will be re-considered, recognising, however, that significant agreement and investment resulting from the current justice sector information strategy already exist. It is not possible at this stage to anticipate the results of this more detailed analysis, according to the Ministry.
    Submission from the Ministry of Justice, dated 26 August 1999 (INQ/CARD/J/1).
    We understand that the non-completion of the INCIS project has adversely affected numerous other IT projects in the justice sector. For example, the Department for Courts INSLAW project collapsed at the same time as IBM withdrew from INCIS. In July 1999 the Minister for Courts told us that interfacing with Increment 1 of INCIS is not sufficient for the needs of her department.
    Report of the Justice and Law Reform Committee on its 1999/2000 Estimates examination of Vote Courts , July 1999, page 7.
    We are concerned that departments in the justice sector will be adversely affected by the non-completion of INCIS. Many have been waiting up to six years for the INCIS project to be completed and have planned their own IT requirements and projects around the anticipated delivery of INCIS. They have been left high and dry by its non-completion. We are very concerned about the future of the justice sector information strategy and the impact of the non- completion of INCIS on other government departments.
    Implications for future public sector IT projects
    The non-completion of the INCIS project has implications for future public sector IT projects. We note that a trend has developed recently for large and complex public sector IT projects to run into significant difficulties. For example, IT projects at the Accident Compensation Corporation, Land Information New Zealand, the National Library and Work and Income New Zealand have been affected by budget and performance problems.
    In response, the Government has developed a number of measures to reduce this trend, especially with respect to large and complex IT projects. It began with the State Services Commission undertaking a stock-take of public sector IT projects. This led to the development and dissemination by the State Services Commission of its Guidelines for Selecting and Managing Information Technology Projects . In addition, the State Services Commission was directed to monitor large scale public sector IT projects from 1 July 1997.
    IT projects valued at more than $5 million or defined as high risk if they were to fail.
    We consider that the trend for large public sector IT projects to be disrupted by delays and cost overruns needs to be addressed urgently. There is a need to revisit and recast the State Services Commission guidelines. In addition, there is a need to reconsider the way large scale public sector IT projects are designed, planned, implemented and monitored. Finally, there is a need to introduce additional mechanisms to provide more oversight by central government agencies throughout the design and implementation of IT projects.
    There are a number of lessons that can be learnt from the INCIS project. These lessons may be beneficial to government departments planning IT projects.
    Smaller and less complex projects
    INCIS was an extremely large and complex project. We concur with the Treasury submission to the committee and consider that it is unlikely in the future that a project as complex and large as INCIS would be approved as a single development.
    We recommend to the Government that government departments should make every possible effort to undertake smaller and less complex information technology projects.
    Favour "off-the-shelf" software
    The INCIS project, in part, required the development of complex custom built software. The Police informed us that enquiries were made around the world to see whether there were "off-the-shelf" applications that could deliver the functionality promised by the INCIS project before commencement of work on the project. No such applications were found. Dr Leo Mercer told us that he had undertaken an exhaustive literature search of systems around the United States similar to what was envisaged by INCIS and required by the Police business plan in 1993 and could not find one. Dr Mercer agreed it is probable that no United States Police force has a system of the proposed sophistication of INCIS.
    Oral evidence in private, Dr Leo Mercer, 21 April 1999.
    We note that these days there is an industry trend to opt for customised package software rather than custom built software.
    We recommend to the Government that government departments should always attempt to favour "off-the-shelf" software applications where possible.
    Project approved part-by-part
    The INCIS project was approved as a single project by the Cabinet. We consider that, in hindsight, it would have been better for the INCIS project to have been separated into component parts at a far earlier stage and that the Cabinet could then have approved each part of the project individually. Mr Crewdson agreed that the INCIS project was, in fact, a series of clearly defined sub- projects.
    Submission from Mr Tony Crewdson, dated 13 September 1999 (INQ/CARD/TC/1).
    We recommend to the Government that in future large scale public sector information technology projects should be broken down into more discrete parts which should then be approved individually by the Cabinet on a part-by-part basis.
    Tighter specification of deliverables
    There has been a great deal of criticism that the deliverables were not specified enough at the start of the INCIS project. The Audit Office reported to us that there was inadequate system user specifications at the start of the project.
    Audit Office briefing supplementary report on the 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN).
    A greater effort should be made to ensure that all project deliverables are detailed and agreed by the parties before a project proceeds.
    We recommend to the Government that tighter specification of deliverables should be required for public sector information technology projects.
    Improved monitoring
    Mr Crewdson told us that the way the monitoring regime currently operates and high level Ministerial hit teams are not the answer and merely reinforce the whole spectre of failure.
    Submission from Mr Tony Crewdson, dated 13 September 1999 (INQ/CARD/TC/1).
    Mr Crewdson said that the monitoring of public sector IT projects would be greatly enhanced by absolute transparency of reporting and information. Software tools should be developed which enable a public sector organisation to automatically and electronically transmit appropriate information to all members of a project team. He told us that the concept should be "to set up a project team that will include the State Services Commission, Treasury officials, and the relevant Minister" and that "as the information builds it automatically goes to those people".
    Oral evidence in private, Tony Crewdson, 15 September 1999.
    We recommend to the Government that the monitoring of public sector information technology projects should be more transparent.
    We note that the concept of milestones was introduced into the INCIS project after it had commenced. However, we consider more energy should have been devoted to developing milestones and time-frames at an earlier stage, and more effort should have been put into ensuring reporting deadlines were adhered to.
    We recommend to the Government that the monitoring of public sector information technology projects should be strengthened and consider that monitoring of the progress of projects would be improved by the inclusion of specific milestones with time-lines in reports.
    Enhance the role of the State Services Commission
    In 1998, the State Services Commission visited the INCIS project on two occasions. Officials from the State Services Commission, including the Deputy State Services Commissioner, Mr Ross Tanner also participated in the Ad Hoc Committee, which was set up in May 1998 to monitor the progress of INCIS and other IT projects.
    Information from the New Zealand Police on the 1997/98 Financial Review of the New Zealand Police, dated 25 November 1998 (FR/P/2).
    We consider the State Services Commission should have become involved in the INCIS project in greater detail at an earlier stage.
    Large and costly IT projects represent a serious risk to the Government. The completion of projects in an efficient and effective manner and within budget would greatly benefit from the State Services Commission playing a more prominent role. However, we are mindful that the role of the State Services Commission must not detract from the responsibility of chief executives to manage their departments.
    Nevertheless, we recommend to the Government that the role of the State Services Commission should be enhanced in relation to large and complex public sector information technology projects, including the participation of officials from the central agencies in information technology project teams.
    More hands-on involvement by the Treasury
    We questioned IBM about the involvement of the central agencies, in particular the Treasury. IBM told us that the Treasury at no stage spoke to IBM and that IBM had no input into the reviews commissioned by the Police and the Treasury.
    Oral evidence in private, Mr Bill Doak, IBM, 21 April 1999.
    Mr Crewdson told us that the Treasury had an "open invitation" to participate in the INCIS project. He briefed the Treasury on a number of occasions and during the 1997/96 financial year appointed an accountant to keep the Treasury more up to date with the project. He considered that Treasury officials should participate in a project from the beginning so that "they are sitting around the table and know exactly what is happening". The mind-set which dictates that officials and Ministers only take a hands-on approach when a project runs into difficulty needs to change, according to Mr Crewdson.
    Oral evidence in private, Mr Tony Crewdson, 15 September 1999.
    We recommend to the Government that the Treasury should be more closely involved with large or high risk public sector information technology projects from an earlier stage and take a more hands-on approach.
    Questions of accountability
    We considered the issue of responsibility and accountability for the difficulties associated with INCIS and the non-completion of the INCIS project.
    Minister is accountable to Parliament
    The Minister of Police is accountable to Parliament for the New Zealand Police and is responsible for setting the Police's policy objectives. When INCIS was approved by the Cabinet, Hon John Luxton was Minister of Police. Since that time there have been two ministerial changes in the portfolio. Hon Jack Elder was appointed Minister of Police in 1996 and Hon Clem Simich was appointed Minister of Police in 1998. The Police told us that the changing of ministers did not have an adverse affect on the project.
    Response to question 10 contained in submission from the New Zealand Police, dated 18 March 1999 (INQ/CARD/POL/12).
    Commissioner of Police
    When INCIS was approved by the Cabinet, Mr Peter Doone was the Deputy Commissioner of Police for Resources. He was assigned to the INCIS project and acted as Project Sponsor for the Police until he was appointed Commissioner of Police in July 1996. Deputy Commissioner Barry Matthews took over Mr Doone's role as INCIS Project Sponsor until he resigned from the New Zealand Police in 1999 to take up a senior law enforcement position in Western Australia.
    The Commissioner of Police as chief executive is responsible for the day to day operations of the department. We asked the Minister of Police to provide us with information about the roles and responsibilities of the Commissioner of Police.
    Submission from the Minister of Police, dated 30 August 1999 (INQ/CARD/P/17).
    We were informed that there are certain principles affecting the original jurisdiction and functions of the Commissioner that impact on matters of performance and the level of scrutiny that can be applied to the actions of the Commissioner.
    There are areas where the "constabular independence" of the Commissioner must prevail, and great care needs to be taken to ensure that the fine balance between that, and those areas where the Government is entitled to have a more direct input, is not upset.
    We note that governance matters relating to the Police are currently the subject of a review by officials.
    See Final Report on the Review of Police Administration .
    The agencies taking part in that analysis are the Police, the State Services Commission, the Ministry of Justice and the Department of the Prime Minister and Cabinet. Importantly, the Solicitor-General is also being consulted to ensure that the fundamental constitutional principles relating to the roles and responsibilities of the Commissioner are not compromised.
    Areas of consideration by officials include the appointment, performance assessment and removal of the Commissioner from the position. The Minister of Police noted that considerable care needs to be taken to ensure that there are no potential adverse constitutional implications associated with refining or redefining the relationship between the Minister and the Commissioner.
    We note that the Police is not a Public Service department within the meaning of the State Sector Act 1988. The State Services Commissioner does not appoint the Commissioner of Police, has no powers to review the Commissioner's performance or the Police's performance, and cannot remove the Commissioner from office.
    The Audit Office informed us that in the case of INCIS the State Services Commission has no direct responsibility in law, since the Police is not a department named in the first schedule to the State Sector Act. However, we note that INCIS is an integral component of the Government's justice sector information strategy, and therefore its performance directly affects other departments for which the State Services Commission does have statutory obligations.
    Audit Office report on the inquiry into INCIS and CARD, dated 29 September 1999 (INQ/CARD/AO/3).
    Appointment process
    Section 3 (1) of the Police Act 1958 states that "The Governor-General may from time to time appoint a fit and proper person to be the Commissioner of Police, who shall have the general control of the Police". In practical terms, the formal process followed by officials in order for the Government to recommend, and the Governor-General to appoint, the Commissioner follows guidelines established by the Cabinet.
    In recent times there has been a move to run an appointment process for statutory officers similar to the one the State Services Commissioner runs for Public Service chief executives. This was the case for the appointment of the present Commissioner, and the State Services Commissioner was a member of the selection panel. Most recently, a similar process was proposed for appointment to the recently vacated Deputy Commissioner position.
    Performance assessment process
    We note that there are formal assessment criteria for determining the personal performance of the Commissioner as well as criteria for assessing organisational performance. The Minister of Police informed us that, given the Commissioner is chief executive of the Police, organisational performance as reported through various mechanisms can also be regarded as a "de facto" indicator of the Commissioner's performance.
    Purchase agreement and performance agreement
    There is no statutory provision covering the purchase and performance agreements made between Ministers of the Crown and their departmental chief executives, but the production of these documents operationalises the requirements of the Public Finance Act 1989 and the State Sector Act.
    The Commissioner enters into an annual memorandum of understanding with the Minister of Police, which contains key result areas for both operational performance and the performance of the Commissioner, and also a purchase agreement.
    It is for the Minister of Police to determine whether he or she is satisfied about the Commissioner's performance for the year, as laid out in the Commissioner's personal key result areas part of the memorandum of understanding.
    Financial reporting
    The Public Finance Act applies to the Police as it does to Public Service departments. The annual report prepared under section 65 of the Police Act must refer to the "operation of the Police" and includes financial performance and audit information. As well as being received by the Minister of Police, the information provided through financial reporting is subject to Audit Office scrutiny. There is also an annual assessment process between the Treasury and the Commissioner focussing on the financial performance of the Police.
    Removal process
    Section 3(2) of the Police Act states that "The Commissioner shall hold office during the pleasure of the Governor-General." In other words, only the Governor-General can dismiss the Commissioner, which can only occur on the advice of the Government. No Commissioner of the New Zealand Police has ever been dismissed.
    The Minister of Police informed us that the Government recognises the desirability of having a clearly defined understanding of the roles, responsibilities, accountabilities, and employment and performance mechanisms relating to the Commissioner of Police. Doing so will provide better alignment between the position of the Commissioner and other comparable chief executives in the public sector. There are some areas relating to the Government's relationship with the Commissioner where more precision and certainty is considered desirable.
    Submission from the Minister of Police, dated 30 August 1999 (INQ/CARD/P/17).
    We recommend to the Government that the issues concerning the definition of the roles and responsibilities of the Commissioner of Police should be resolved promptly.
    We recommend to the Government that the processes concerning the appointment, removal and performance assessment of the Commissioner of Police should be clarified urgently.
    Conclusion
    There is huge frustration in this committee and in the community as to where accountability lies for the difficulties experienced with INCIS. The cost overruns, the delays, and the eventual non-completion of the project are having a huge impact on policing in New Zealand. We want to know who is accountable. It is reported that the Commissioner of Police takes "full responsibility" for the INCIS project.
    "Doone shoulders burden of INCIS", The Dominion , 21 May 1999.
    We want to know what the consequences are in terms of accountability for a failure of a project on the scale of INCIS. It is apparent to us that the lines of accountability regarding the INCIS project are unclear and the public perception is that there is little prospect that those responsible will be held accountable for what took place.
    We recommend to the Government that, as part of its foreshadowed inquiry into the INCIS project, it investigate who is ultimately accountable for the difficulties with the project and advise Parliament accordingly.
    Minority view of National and ACT members
    National members Dr Wayne Mapp, Bob Simcock and Pansy Wong and ACT member Patricia Schnauer do not agree with the conclusions in which the majority of the select committee prematurely allocate blame. Our disagreement is sufficiently profound to require the submission of a minority view dissenting from those conclusions of the other six members of the committee on the following grounds.
    Allocation of blame is premature at this stage
    The select committee has been acutely aware since 9 August 1999 that a process of litigation is underway between the Crown and IBM, but it has failed, in our view, to appreciate fully what that might imply for the committee's own inquiry into INCIS. It is absolutely clear to us as signatories of the minority view that the committee did not have available to it more than part of the evidence which will eventually become available, in the event of any future action in court about INCIS. Despite the length and conscientiousness of the committee's inquiries, its members have been able to review only a proportion of the evidence currently being dredged by both Crown and IBM teams, which a view to establishing, in court if necessary, what has actually occurred.
    That consideration in our view places fundamentally important limits on how far the committee should, at this stage, seek to make final findings of blame. The majority of the committee is, in our view, foolhardy in thinking it can allocate blame at this stage, on the basis of an investigation which, no matter how long it has taken, is much less thorough than other investigations already underway elsewhere. We believe, therefore, that it is inappropriate for the Chairperson, Labour, Alliance and New Zealand First members to ignore factors of such importance and drive the matter forward now, into premature conclusions.
    Findings cannot fairly be made on hindsight
    The signatories of the minority view feel at least as strongly as the majority Opposition members of the committee that accountability is central to quality public administration. But accountability cannot fairly be based on knowledge which becomes available to the key players in hindsight only, months or years after the event.
    We are particularly concerned that the committee, in reaching its majority finding, has failed to ask whether the decisions taken in the course of this project were reasonable in the light of the knowledge available at the time to the principal players. A case has not been made out by the committee, in our view, that the decisions taken by public sector managers in 1994, for example, or in 1997 when the Deed of Variation was signed, were unreasonable in the light of knowledge available to them at that time.
    Reports from independent consultants of excellent reputation, for example, advised at the time that the Business Case for the project was robust. The majority has, in our view, been driven by a wish to allocate blame that is excessively and unfairly based on hindsight.
    We are equally concerned that the committee focussed almost entirely on the public sector side of financial accountability for cost over-runs, while virtually ignoring major considerations of private sector accountability for non-delivery by IBM of key software.
    Balance and fairness
    To ensure balance and fairness in any conclusions reached by the committee in reviewing a project involving contributions from both the public and private sector, then equal attention needs to be paid to the contributions of both of those sectors. In this inquiry, the select committee focussed in particular on the public sector contribution of Police management and staff. No comparable time or effort was focussed on reviewing the responsibilities of the private sector partner in the project, IBM.
    In a sense, we can understand that lack of balance in the attention paid by the committee to the roles of the two sectors. It is in the nature of Parliamentary select committees that their concern should rightly be the accountability of those engaged in public sector management. But if inadequate attention is paid to understanding the responsibility of the private sector side, then members of the committee end up without a sound basis for fair and balanced conclusions.
    Fairness and balance require much closer investigation than the select committee made of the responsibilities of IBM for contributing to any difficulties public sector managers faced in trying to bring this project to a satisfactory conclusion. It is, for example, quite feasible in principle that continuous changes on the IBM side in the staff provided by the company to manage the project played a fundamental role in its difficulties.
    IBM at the end of the day was the system manager. They had a responsibility to keep the project running straight. The Police can reasonably be expected to understand their own needs, but they looked to IBM as vendor for solutions capable of servicing those needs. IBM entered into the contract knowingly, and presumably with the expertise to do so.
    We understand, for example, that on the IBM side, there were something like a dozen managers of this project in four to five years. That alone should be sufficient to underline for the committee and the House that it is dangerous to make final judgements about responsibility without a full review covering all of the facts in a balanced way.
    Conclusion
    The committee has not, in our view, had the opportunity to undertake a sufficiently rigorous review to allocate blame. Indeed, with litigation in motion, it was probably not practicable to seek to do so at this time. Where conclusions have been drawn allocating blame, we caution the House to be aware that they are, in our view, premature and may well prove in the light of subsequent investigation to be unfair and inappropriate.
    APPENDIX A
    Conduct of the examination
    We invited a number of individuals and organisations involved with the INCIS project and the CARD project to make submissions on the inquiry. Hearing of evidence took 8 hours and four minutes and we spent a further 21 hours and 23 minutes in consideration. We received 47 submissions (excluding supplementaries) which are listed below in Appendix C. We heard oral evidence from seven submitters.
    Committee members
    Rana Waitai (Chairperson)
    Patricia Schanuer (Deputy Chairperson)
    Hon Phil Goff
    George Hawkins
    Hon Robyn McDonald
    Dr Wayne Mapp
    Matt Robson
    Bob Simcock
    Dianne Yates
    Pansy Wong
    Committee staff
    Jayne Wallis, Clerk of the Committee
    Tracey Conlon, Parliamentary Officer (Select Committees)
    Alan Witcombe, Parliamentary Officer (Select Committees)
    APPENDIX B
    List of submissions
    Submission from the New Zealand Police Association
    Submission from Andersen Consulting
    Submission from Mercer Associates
    Submission from Ernst and Young
    Submission from the Ministry of Justice
    Submission from the Police Complaints Authority
    Submissions 1 to 22 from the New Zealand Police and/or the Minister of
    Police
    Submissions 1 to 6 from Telecom New Zealand Limited
    Submissions 1 to 3 from the Treasury
    Submissions 1 to 5 from IBM New Zealand
    Submissions 1 to 2 from Mr Greg Batchelor
    Submissions 1 to 3 from Mr Tony Crewdson
    APPENDIX C
    List of Tables
    Table 1—Chronological history of CARD
    Table 2—Capital cost of the CARD project
    Table 3—Official complaints regarding CARD
    Table 4—Police personnel levels at CARD centres
    Table 5—Detailed breakdown of the capital cost of the INCIS project
    Table 6—Key events of the INCIS project
    Table 7—Slippage in implementation of the INCIS project
    Table 8—Lost opportunity cost due to delay in implementation of INCIS
    APPENDIX D
    List of abbreviations
    BPR —Business Process Re-engineering
    CAD —Computer Assisted Dispatch
    CARD —Communications and Resource Deployment System
    CMT —Change Management Team
    DDI —Direct Dial In
    IBM —International Business Machines (IBM New Zealand Limited and
    IBM Corporation)
    INCIS —Integrated National Crime Information System
    IP —Internet Protocol
    IT —Information Technology
    LAN —Local Area Network
    LEDA —Law Enforcement Data Access
    LES —Law Enforcement System
    NIS —National Intelligence System
    PC —Personal Computer
    SNA —Systems Network Architecture
    TCP —Transmission Control Protocol
    WAN —Wide Area Network
    Y2K —Year 2000 computer problem
    APPENDIX E
    Glossary
    0800 service —A billing arrangement with a telecommunications service provider whereby calls placed to a given location are not charged to the calling party but to the recipient. Alternatively, the arrangement can specify that calls placed going from a given location are billed according to a pre-specified agreement. The four-digit prefix "0800" is added to the subscriber's phone number.
    Application —The task to which a system is applied and the procedures that relate to the execution of it. For example, a computer system and a telecommunications system may be used to handle the applications of making an airline ticket reservation.
    Application program —In any computer system, a program (or set of programs) that performs a specific task for end users, but not a program concerned with controlling the computer or parts of its operating system. Similarly, in data communications it works on text transmitted by the system and has no responsibility for system functions such as error checking, dialogue management, addressing, routing and link control.
    Architecture —The architecture of a system relates to its design and the way in which the component parts interrelate. The term can be applied to the design of any machine or to an overall communications network. The architecture refers to the logical structure of a system rather than the specific details of the individual components used to construct the system.
    Bit —See Binary digit
    Binary digit —A digit in binary notation, ie. 0 or 1. A group of binary digits may represent a number, or they may be used in groups to form binary codes that represent alphabetic characters, numerals or special symbols. As an example, it is common in computers and other electronic systems to use 6-bit groups to form up to 64 unique patterns which represent 64 separate characters.
    Call —A term used to describe the process of communication between users and more particularly to refer to the process that takes place in communication over the public switched telephone network or public data networks. This process can be considered in three phases, call establishment (making the initial connection between terminals) conversion or data transfer (transferring messages between user terminals) and call clearing (the orderly disengagement of terminals at the completion of a call).
    Code —Any character or group of characters forming a specific meaning. Any system of rules to which information must conform in order to be transmitted, received and/or processed.
    Code conversion —A process whereby data in accordance with the rules of a particular code is transformed into a format and structure required in another code.
    Computer —Any machine that can accept data in a certain form and process the data to supply results or to control a process. Generally, an electronic device in which inputs and outputs may be in digital or analogue form and in which the program controlling the operations of the computer may itself be modified by logical actions taken under program control. Computers perform instructions in millionths of a second, and a complete program can be performed in a very short time. Because a computer can store very large amounts of information and because it can, under program control, modify its actions to react to changes in external events, it had become a predominant tool in the modern world and of particular influence in the increasing efficiency and functioning of modern communications systems.
    Computer networking —The use of networks to link computers together so that they can share a workload or allow users connected via terminals to a particular computer to have access to facilities and services provided by other computers in the network.
    Data —Any values, numbers, characters or symbols that have been arranged to represent information in accordance with predefined rules. The word "data" is used often as a singular noun.
    Database —In data processing, a file (or files) organised in such a way that a variety of users can update or enquire of the file for different purposes, using computer procedures, which to the user appear to be independent of the file structure. A file that is not designed to satisfy a specific limited application.
    Desktop computer —see Microcomputer
    Digital computer —A computer that operates using a stored program of instructions in which information to be processed and the instructions are represented by digital pulses. The information is usually recorded in binary notation. Such devices range in size from small microcomputers to large mainframe computers and can handle millions of operations per second.
    Electronic mail (e-mail) —A store and forward system providing person-to-person communication of messages using electronic means for entry transmission and delivery of information in a visual form. Messages can be addressed to an unlimited number of multiple recipients and predefined groups of recipients.
    Ethernet —This system was one of the first products intended as a basis for Local Area Networks. Ethernet is intended to provide for communication between up to approximately 1000 stations, at the data rate of 10 million bits per second, over distances around 2.5 kms. The transmission path is provided by a coaxial cable loop to which all user terminals are interfaced. The users all share the same transmission path, and communication is achieved by loading information with appropriate address codes for the user destination on to the cable loop, with special features designed to prevent collision of data and to ensure that over a given time all users have equal access to the network. Compare with Token Ring.
    Hardware —A term used to define the physical components of a machine, particularly computer equipment, and devices containing logic elements used in data processing or communications machines. To be contrasted with software, defines logical functions implemented as coding in a program.
    Hard copy printer —Any printing device that produces a printout of information from a computer or terminal on paper, as distinct from a device that displays information on a screen as a transient record.
    Interface —A specification of the rules by which interaction between two separate functional units can be made to operate to conform with overall system requirements. Since most systems are modular in nature, with perhaps several hundred units in any one overall system, there are many levels of interface to be considered.
    Internet Protocol (IP) —The IP refers to routing and delivery of data between different networks. This is the fundamental method by which computers connected to the Internet exchange messages.
    Keyboard —A device for entering information in a data terminal. For example, allowing for all the functions and characters of the international alphabet No. 5 to be controlled by the human operator of a terminal.
    Local Area Network (LAN) —A network designed to provide facilities for user communication within a defined building or plant. It does not necessarily use public service facilities. LANs generally have a data rate of 2 Mbps or more and are owned by the organisation that is going to use them. See also Ethernet and Token Ring.
    Log-in —The act of a user entering a communication system to conduct a particular session, usually involving procedures to enable the system to check the authority of the particular user to perform allowable functions.
    Mainframe computer —A computer forming the central part of a data processing system and usually a general-purpose computer able to run a mixed and heavy workload including on-line systems, batch systems, program development and database management. It is common to connect a mainframe computer to a network or communications processor; thus, the communications aspects are handled by a specialised processor, while the mainframe runs the applications task. A mainframe is usually much more powerful than a minicomputer, and the term is more commonly used to distinguish large general-purpose machines from minicomputers and microcomputers.
    Microcomputer —A class of small digital computers based upon the technology of micro-electronics which began to appear in the late 1970s. In the simplest form, input is via a keyboard, and output is displayed on a TV-monitor driven from a UHF TV modulator mounted on a board. First introduced as personal computers and educational tools, microcomputers are now being used as intelligent terminals in business applications, as front end processors to interface minicomputers to networks, and to augment minicomputers by providing special arithmetic or graphics processing applications. Also called Personal computer (PC).
    Network —The basic objective of any network is to provide access paths between users at different geographical locations. A great variety of terminal types may exist in the network, and a large number of nodes may be present. The network may have a number of routings for a call, depending upon the geographical distribution of the nodes (or exchanges) and the circuits linking these nodes. The network makes it possible for end users to communicate intelligibly in spite of errors, difference in speed of operation, protocol and format.
    Network architecture —A precise definition for the protocol, functions and logical components of a network and how they should perform. Such architectures embrace the interaction of different levels of control that must be implemented at transmitting and receiving stations to maintain a coherent system of communication.
    Networking —The techniques and principles concerned with maintaining a system of communication in which users in different locations are able to communicate with one another (for the duration required by a particular call) by establishing transmission paths through a series of exchanges (or nodes).
    Node —A point in a communications network at which a number of communication channels may converge and wherein some switching or control functions take place. Nodes are generally computer controlled and may have a variety of functions according to the architecture and purpose of the network in which they exist.
    Operating system —A special program permanently resident in a computer or a communications controller to control the hardware and software resources and to supervise the running of other programs, including user applications.
    Personal computer (PC) —see Microcomputer
    Program —A program for a digital computer is a set of instructions that can be interpreted by the central processing unit in the computer resulting in data being manipulated as required to produce a desired result. A typical computer will respond to a hundred or more basic types of command such as add, subtract, compare. Each of these commands may refer to items of data in specified storage locations.
    Program development —The preparation of computer programs to carry out applications entailing: specifying the procedures required, writing the program of instructions, preparing test data, compiling and generating object code and performing tests to isolate and correct errors.
    Protocol —A set of rules defining the way information can flow in a system.
    Queue —A sequence of telephone calls or data messages in which new ones are added to the tail end as they wait for service or transmission.
    Server —A computer program and/or processor that provides a service to users on a Local Area Network, for example, accessing a file or controlling a printer. Servers vary according to whether the nodes and network are of a like architecture or different architectures.
    Software —Relating to any logical rules that are built into a device by computer programs rather than the physical arrangement of hardware components. The scope and application of the software varies greatly. It can be the operating system provided by the computer manufacturer or an application written by a user for a specific purpose.
    Station —A location connected to a network and having a unique address to enable signals to be routed to it from other stations. A station may be able to both send and receive information and could be implemented as a computer or a terminal.
    Systems Network Architecture (SNA) —A protocol and implementation for a data network developed by IBM in the 1970s to provide end-to-end management of access paths. SNA represents one of the first ways to allow terminals in a tree network to share a line to separate applications in the same host processor. Later features provided computer networking, aiming to allow any terminal to gain an access path to any host processor in the network by the interlinking of tree networks.
    Telephone —1. Refers to the public switched telephone network which is a system for transmitting voice signals in the audio frequency range over a network servicing a very large user population. 2. Also refers to the telephone terminal or telephone handset used as a primary interface between human users and the system.
    Telephone system —A system for two-way communication in which a user is able to speak via a telephone terminal to another user, by dialling the routing required through an exchange. The exchange connects the caller to the required user by selecting appropriate transmission links.
    Telephony —The technology associated with the transmission of message signals in the audio frequency waveband between users at distant locations, including the techniques associated with the transmission of voice signals by digital transmission methods.
    Terminal —A device used in a telecommunications system for sending or receiving message signals. A microphone is an example of a transmitting terminal, and television is an example of a receiving terminal. Some terminals (eg. the telephone) can be used for sending or receiving message signals. There are a great many terminal types to be considered, from the simplest telephone terminal to the large general-purpose computer.
    Token Ring —The term refers to network topology and a way to access a Local Area Network. In LAN, the token (also called a supervisory frame) is a unique set of bits that travels from station to station. Its presence indicates the station can transmit data. In LANs that have the ring topology, the token ring access method specifies that a station receives all messages on the ring plus the token. The messages and token are then passed along to the next station in a logical, though not necessarily physical circle.
    Topology —The way stations are configured on a network, either logically or physically, or both.
    Traffic —This term is used to define the utilisation or capacity of a telecommunications system and is described in terms of the number of calls.
    Transmission Control Protocol/Internet Protocol (TCP/IP) —Developed by the United States Department of Defense, TCP/IP is a set of protocols that link dissimilar computers across networks. It works on the third and fourth layers of the OSI model.
    UNIX —An operating system developed by Bell Laboratories, UNIX can handle several tasks and multiple users at once. There are several implementations of UNIX and they are not necessarily compatible.
    User —A person sending or receiving message signals in a telecommunications system. A user utilises a terminal or a personal computer to provide inputs or obtain outputs.
    Wide Area Network (WAN) —A data communications network that spans long distances, typically from city to city and across countries as opposed to a Metropolitan Area Network, which covers the area of one city. Compare with Local Area Network. A common carrier usually owns the communications network on which the WAN is built, and the host processors on the WAN may be owned by multiple organisations.
    Word processor —A system for the preparation and distribution of messages and documents, based upon principles of the conventional typewriter but enhanced to provide more advanced facilities that are realised by computer techniques.
    Window —In computer graphics, a given portion of the virtual space on the display screen. The windows feature in an application program lets the user view several tasks, or parts of the same task, simultaneously.
    Source: Dictionary of Telecommunications , John Graham, Penguin Books, London, 1991.
    APPENDIX F
    Documents provided by the Audit Office

  • Audit Office briefing report to the Justice and Law Reform Committee Police computer system INCIS and CARD , dated 25 February 1998 (INQ/CARD/AO/1)
  • Audit Office briefing report to the Justice and Law Reform Committee, dated 24 March 1999 (INQ/CARD/AO/2)
  • Audit Office briefing report and chronology to the Justice and Law Reform Committee, dated 29 September 1999 (INQ/CARD/AO/3)
  • Audit Office briefing supplementary report to the Justice and Law Reform Committee on 1999/2000 Estimates examination Vote Police, dated 14 July 1999 (EST/P/AO/2)
  • Audit Office briefing supplementary report to the Justice and Law Reform Committee on 1997/98 Financial Review of the New Zealand Police, dated 18 December 1998 (FR/P/AO/GEN)
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