MPs call for Whitehall IT procurement shakeup to end 'rip-offs'

Report recommends more engagement with SMEs, and calls for a probe into alleged price fixing by big suppliers

The government's IT record has been lambasted in a new report from the Public Administration Select Committee (PASC), which also argues that there is evidence of price fixing by major suppliers - an allegation roundly rejected by industry body Intellect.

Entitled Government and IT - "A Recipe For Rip-Offs": Time For A New Approach, the report contains detailed recommendations on how the government should move forward and address the problems it has faced to date.

These recommendations might come as a welcome development given that the government's ICT strategy has been criticised for saying the right things, yet containing little detail on how its goals might be achieved.

The PASC report puts forward 40 recommendations based on the findings of an extensive enquiry into the reasons behind recent costly and high-profile government IT failures.

The report highlights a number of projects that have run late, underperformed or simply failed, including the Child Support Agency's IT system and the IT system that would have underpinned the National ID Card scheme.

The problems that plagued these projects are ongoing, according to the report, with recent incidents such as the Department for Work and Pensions (DWP) cancelling a contract with Fujitsu for desktop computers, and the decision by one of the NHS partners involved in the electronic patient record system to pull out of the programme after suppliers failed to meet a deadline, all pointing to continuing IT mismanagement in Whitehall.

Most of the reasons given for the problems will be familiar to those following government IT, with a recurring theme being that the failure of the projects was rarely due to the technology but underlying policy or its implementation.

The problems that require urgent action, according to the report, are:

1) Inadequate information and data retenton
The government should make sure it identifies the data it needs (around IT projects in particularly), what will be collected by the departments and how frequently. It should also benchmark its IT expenditure, and compare cost information from departments. The government should use independent and specialist advisers and the NAO to help with this.

2) An over-reliance on a small number of large suppliers and the exclusion of SME IT contractors
The report looks into the governrment's use of SMEs in some detail and argues that it needs to develop a strategy to either replace legacy systems (run by large systems integrators) with newer, less costly systems, or open up the intellectual property rights to competitors. Alternative means of dealing with legacy systems should be explored with the widest possible range of suppliers, including SMEs.

Many SMEs have said that by speaking openly to the government about innovative ideas they risk losing future business, particularly if they are already in a sub-contracting relationship with a systems integrator. The government needs to reiterate its willingness to speak to SMEs directly, and commit to meeting SMEs in private where this is requested. The report recommends the government establishes a permanent mechanism enabling SMEs to bring innovative ideas directly to government in confidence, thereby minimising the risk of losing business with prime contractors.

The report also recognises that the government's commitment to collaborative and aggregated procurement can lead to aggregated suppliers - and the squeezing out of SMEs. The PASC says the government needs to explain, in its response to the report, how it will reconcile this paradox.

The government should also look into its contract and procurement processes and ensure that they do not penalise SMEs. In fact, the report goes as far as to say that the procurement process and contracts should be designed with SMEs in mind, with more detailed and bespoke negotiation being required only for more complex and large-scale procurements.

There have been accusations of collusion and price fixing among the big systems integrators, so the report recommends the government urgently commission an independent, external investigation to determine whether there is substance to this. It also says the government should provide a trusted and independent escalation route to allow SMEs confidentially to raise allegations of malpractice.

3) A tendency to commission large, complex projects that are inflexible in the face of changing circumstances
To tackle large, over specific and complex projects, the report states that departments should stop specifying IT solutions and ensure they specify the outcomes they wish to achieve, within the broad technical parameters to ensure interoperability. The government should also look at barriers - specified within the report - that prevent wider use of agile development practices within government.

4) Other problems have been the over-specification of security requirements and the lack of sufficient leadership and skills to manage IT within the Civil Service, and in particular the absence of an "intelligent customer" function in departments The report argues that the government should not over-classify routine administrative and operational information as this causes unnecessary technology and operational costs. It also argues that overzealous security can act as a further barrier to more effective use of SMEs in the supply of IT goods and services.

Government must do more to demonstrate how a risk-based approach is helping achieve a better balance in information assurance.

In terms of being an intelligent customer, the report says that the government currently seems unable to strike the right balance between allowing contractors enough freedom to operate and ensuring there are appropriate controls and monitoring in-house.

To develop the skills required to fill this gap the government should recruit more IT professionals with experience of the SME sector to help deliver the objective of greater SME involvement.

The report is very support of the government's efforts to develop its own talent in-house through the Technology in Business Fast Stream and says it should use this scheme as a basis for a strengthened IT profession within government.

The government's intention to strengthen the role of Senior Responsible Owner (SRO) by ensuring that they stay in post until an appropriate break point in a project, as set out in its ICT strategy, is also welcomed.

The report argues that wherever possible SROs should stay in post to oversee the delivery of the benefits for which they are accountable and which the project was intended to deliver. And when SROs do move on they should remain accountable for those decisions taken on their watch, and that ministers should be held accountable when this does not happen.

In addition, CIOs within departments should where possible be given board-level roles.

Further recommendations and Intellect's reaction

The report also suggests five ways in which the government should transform services: via the release of public data, the creation of open standards, personal data ownership, user engagement in service design and the open delivery of online government services.

The response to the report from industry was largely positive, with John Higgins, director general of Intellect, the trade association for the UK's IT industry, stating: "The report makes what at first sight are sensible recommendations, many of which are being acted upon. Government knows it must buy off the same fixed price menu after years of departments going a la carte."

But he takes umbrage at the notion that there is price fixing within the industry:

"I have worked in and for this industry for 35 years and I know the public sector market is highly competitive and served by sophisticated supply chains of many large and small suppliers. The suggestion of a cartel is outrageous."

The government is expected to respond to the report in due course.