Govt kills off mega IT” projects

Cabinet Office Minister Francis Maude has warned enterprise ICT and outsourcing providers to government that the glory days of the mega-contracts is at an end.

Maude took no prisoners when he told an audience of chief executives from 31 key government suppliers including BT, Hewlett Packard, IBM and CapGemini, that future ICT contracts would be cheaper, "smaller" and "off the shelf" rather than expensive, bespoke system and expected be delivered in close partnership with SMEs.

"Government will no longer offer the easy margins of the past. We will open up the market to smaller suppliers and mutuals and we will expect you to partner with them as equals, not as sub-ordinates," he told them. "The days of the mega IT contracts are over, we will need you to rethink the way you approach projects, making them smaller, off the shelf and open source where possible."

But Maude admitted that government procurement practices had not helped the situation. He noted that government purchases took 77 weeks from first publication to the award of a contract, partly because Government buyers had to cope with "some 6,000 pages of guidance on procurement".

This means that on average public buyers take "twice as long" to agree deals as their private sector counterparts. "This is just wasted time and money on both sides of the equation and it is something we urgently need to address,” he admitted.

"This is at the root of much of the bureaucracy, duplication and confusion in this area," he said. "[Suppliers] will have had to deal with contracts where the specification changed 10 times before you were through, where your employees were manmarked by civil servants and where the individuals you were working with constantly changed.

To make procurement simpler and to level the playing field for providers, a new government website has been launched for SMEs to share their public procurement stories and to seek advice on how to change for the better. The site says: “We want you to tell us, in plain and simple terms, how we need to rip up the red tape and bring more sense into the winning of government contracts."

The government says it wants to make it easier for SMEs to engage with public sector contracts. “You will all have experienced procurements which seemed to go on forever, cost millions of pounds and took countless hours of your employees' time and energy. I know how frustrating this all was and I can promise you here today that we will do things differently” said Maude.

For enterprise ICT providers used to dealing with larger contracts, there will clearly have to be a review of strategy and business practice. “This is the clearest indication yet that the era of bloated IT contracts is coming to an end, and not before time," commented Bindi Bhullar, director at outsourcing giant HCL. "These unpredictable economic times will naturally lead to a new dawn of shorter term contracts where risk is shifted from the customer to the IT supplier. For example, an IT service provider may offer to pay the customer projected savings up front in cash before starting work. There is nothing like putting your money where your mouth is."