Government ICT procurement: simpler, smaller – smarter?

Whitehall ICT procurement must change if the ambitions set out in the government ICT strategy, published in March, are to be realised. The strategy signposts what such change might look like, with more detail to follow in a corresponding implementation plan expected this summer.

The implementation plan must dovetail with a range of government procurement policies and initiatives, including:

• The Lean Review – following publication of this review’s conclusions in February 2011, work is ongoing to achieve simplified, streamlined  and shorter procurement processes, intended to result in up to 70 per cent improved procurement efficiency;

• The SME agenda – government has indicated it aims to award 25 per cent of its contracts to SMEs, with various measures in place supporting this goal;

• The drive towards open standards – currently encouraged but to become mandatory in due course, according to the ICT strategy.

What seems clear from all this is that the direction of travel is simpler and smaller procurements.

The case for change
The ICT strategy acknowledges that government ICT procurement “has a really bad name” in part, it notes, because of the often protracted and costly processes that bidders face. It also accepts the common complaint of SMEs that supply to government is largely dominated by a small number of major ICT vendors.

Less directly acknowledged by the ICT strategy are other known vendor complaints, including wasted investment in seeking appointment to the latest framework, only to find it is rarely used.

So the fundamental case for simpler, more streamlined procurements appears an immediately compelling one. But what will such procurements look like and will they necessarily represent a major change for the better?

To begin with, there are likely to be fewer tender opportunities as a whole. The ICT strategy advocates a more pan-government approach, aiming to reap the rewards of acting as “a single and effective ICT customer”. While not expressly advocating framework contracts, the strategy’s prescription to “reuse and share ICT solutions and contracts” suggests that pan-government framework agreements are likely to represent an increasingly prevalent feature of public procurement.

Keep it simple
Consolidation within a smaller set of framework arrangements should mean they are more likely to be well-used. Certainly, vendor concerns that buyers shop around almost too much, spreading spend across an extensive range of overlapping frameworks, should be better addressed. Good news for successfully appointed framework vendors, bad news for those who don’t make the list.

Of course, such consolidation of frameworks will be most successful if government mandates their use. The ICT strategy suggests this will be the case, but history has shown that government bodies may prefer independent routes to market. There is often justification for adopting such separate procurement routes, but clearly if alternatives are sought this inevitably impacts on the efficiency and economy of establishing frameworks.

The new model, Official Journal of the European Union (OJEU), notice for pan-government office supplies, published on 2 April 2011, evidences this move to frameworks. It also demonstrates the difficulties that SMEs are likely to encounter. The intention, noted in the OJEU notice, is that the framework, comprising two lots and valued at between £240m-£400m, is due to be awarded to only two suppliers. Accordingly, the answer for all but the largest of vendors in the ICT arena is likely to lie in the formation of alliances. Interestingly, the lots provided under the published OJEU notice are for two and three years, respectively – less than the usual four-year period. Bid costs will need to be recovered more rapidly, but at least unsuccessful vendors must wait on the sideline for a shorter time.

Procurement made easy
For tender opportunities that do materialise, the procurement process is likely to be run along different lines – under the open procedure or a much leaner competitive dialogue procedure. This is likely to present a mixed bag for vendors.