28th July 2011

The UK Government has long stated it wants to cut spending in the IT sector. However, its latest report, ‘Government and IT – “a recipe for rip-offs”: time for a new approach’, is perhaps the most damning verdict of current practices yet. Is the Cabinet Office really planning to abolish the procurement of IT from large suppliers?

The title says it all - today’s release from the House of Commons Public Administration Select Committee (PASC) comes with a warning to the IT industry about where the Government sees the future of technology spend lying; and it’s not with the current crop of big-time suppliers or "large system integrators".

While no names are directly singled out, the inquiry, headed by Bernard Jenkins MP, provides a disapproving insight into the money currently being wasted by the public sector on IT services:

“We found that government is currently over-reliant on a small ‘oligopoly’ of large suppliers, which some witnesses referred to as a ‘cartel’,” the report exclaims.

“Whether or not this constitutes a cartel in legal terms, current arrangements have led to a perverse situation in which governments have wasted an obscene amount of public money. Benchmarking studies have demonstrated that government pays substantially more for IT when compared to commercial rates. The Government needs to break out of this relationship.”

The report also highlights a present, average spend of almost “£3,500 on desktop PCs”, and a total sum of "£16 billion for IT overall" a clearly unacceptable amount in today’s climate.

With the rise and cost-cutting potential cloud computing offers the public sector, the scrutiny of current IT spending has led to a series of Cabinet Office initiatives in the last couple of years, including G-Cloud – a universal public sector application store expected to cut huge costs across all public sector, and a consolidation of data centres which is expected to kick into life in the next 12 months.

And despite recent suggestions that G-Cloud is about to be scrapped, the Government’s Deputy CIO, Bill McCluggage, recently went on record at the Cloud Computing World Forum to declare that this was a “miscommunication” and that the Government still planned to press on with its deployment of cloud computing – and, as this report suggests, a new methodology for how it sources long-term IT contracting:

“The Government must expand its supplier base by promoting fair and open competition and engaging with innovative SMEs,” the report continues.

“To widen the supplier base the Government needs to reduce the size of its contracts and greatly simplify the procurement process. It must also adopt common standards and ensure that systems interoperate to eliminate over-reliance on a small group of suppliers, and commoditise where possible. Most importantly, departments need the capacity to deal directly with a wider range of suppliers, especially SMEs.”

To implement a new regime on IT expenditure, the PASC makes four recommendations within the report:

i. Improve the information it holds on IT expenditure, without which the Government is unable to secure the best possible price for goods and services.

ii. Publish more information about IT projects. The Committee argues that the Government should make public information about how much its IT costs, and how its systems run. This would allow external experts to challenge current practices and identify ways services could be delivered differently as well as more economically.

iii. Widen the supplier base by reducing the size of its contracts and greatly simplifying the procurement process to engage with innovative SMEs. Most importantly, departments need the capacity to deal directly with a wider range of suppliers, especially SMEs.

iv.  Work in a more “agile” manner. The Government needs to move towards the use of more iterative development methods which enable IT programmes to adapt to ever changing challenges.

Bernard Jenkin, Chair of the Committee had this to say, following the publishing of the inquiry:

“To address these challenges successfully the Government needs to possess the necessary skills and knowledge in-house, to manage suppliers and understand the potential IT has to transform the services it delivers.

“Currently the outsourcing of the government’s whole IT service means that many civil service staff, along with their knowledge, skills, networks and infrastructure have been transferred to suppliers. The Government needs to rebuild this capacity urgently.

“This Government, like many before it, has set out an ambitious programme aimed at reforming how it uses IT. We are greatly encouraged by the Government’s plans, and we promote a number of solutions which can transform how we deliver public services online.

“We will need to wait and see whether it can make progress in an area that has resisted so many previous attempts at reform.”

So, in the aftermath of such a potentially vital report, the question now needs to be asked – is this good news for the plethora of UK cloud computing providers currently trying to get a strangle-hold on a US-dominated market?

Decide for yourself by reviewing the Government paper ‘Government and IT – “a recipe for rip-offs”: time for a new approach’ via the parliamentary website ........................................................................

Related stories: Does public sector need G-Cloud?

Related videos: Government Deputy CIO Bill McCluggage on cloud in public sector

Tags: public sector cloud | infrastructure as a service