The government has claimed that it has drawn the line on "bloated and wasteful" IT contracts, to ensure that taxpayers are getting value for money.
Cabinet Office minister Francis Maude announced the plans which are aimed at encouraging competition in the sector, and enabling the government to escape from longstanding inflexible contracts with IT suppliers.
The ‘red lines' that the government said it will be adhering to state that:
- No IT contract will be allowed over £100m in value - unless there is an exceptional reason to do so.
- Companies with a contract for service provision will not be allowed to provide system integration in the same part of government
- There will be no automatic contract extensions; the government won't extend existing contracts unless there is a compelling case
- New hosting contracts will not last for more than two years.
The government has been accused of favouring some of the biggest technology vendors, and agreeing long-term inflexible deals with the companies which leave the public sector chasing behind the private sector, as the fast-changing IT industry continues to develop.
The most high-profile IT project in the last year has been the Department of Work & Pensions Universal Credit programme. The DWP is said to have written off £40m for the IT work delivered on Universal Credit, with at least £90m more to be written off before the project goes live in three years.
In November, a former DWP employee told Computing that the government does not fire enough of the big name suppliers who have wasted "billions of pounds" on failed IT projects.
But Maude told the media in December that the government had made progress in the way it deals with suppliers.
"We don't expect the partnership to contain very opaque contracts; we don't expect to see automatic extensions to contracts. We expect to see smaller contractions and more capacity in-house for us to do the integration ourselves," he said.
On the ‘red lines' announcement , Maude said: "Big IT and big failure have stalked government for too long; that is why this government is radically rethinking the way it does business. We are creating a more competitive and open market for technology that opens up opportunity for big and small firms. These red lines will ensure the government gets the best technology at the best price and we will be unashamedly militant about enforcing them to provide value for hard-working taxpayers."
Liam Maxwell, the government's CTO, added that the government needs access to the most innovative, cost-effective digital solutions to create the required services that the public demands.
"That means going to the widest range of suppliers, and giving ourselves every opportunity to renegotiate and reassess contacts. It rarely makes sense to simply extend a contract based on yesterday's technology and prices and these red lines make clear that we are doing business in a different way," he said.
The government claimed that smarter purchasing allowed it to save £3.8bn in 2012-13, while a better grasp of IT spending, and digitising services, saved a further £500m.