Bill Crothers (UK Government CPO) on BBC Radio 4, suppliers get another good kicking

Bill Crothers, Governments Chief Procurement Officer,  was on BBC Radio 4 World at One last Friday. (You can listen here –until Jan 30th - it starts around 7 minutes 30 seconds into the programme). He was laying into the big IT suppliers in the way he has done for some time now – telling stories such as Government being ripped off when buying power cables via large IT integrator type contracts. The whole piece was linked to the Cabinet Office (CO) rules that say no government IT contract can now be signed worth over £100 million except in  ‘exceptional circumstances’.

Crothers talked about the oligopoly of large IT suppliers. He is quite right of course, but the oligopoly has been created by government’s own policies in the main. So I have a lot of sympathy for his views, but whether conducting the argument in public is another matter. Government does still need these suppliers...

Francis Maude, Cabinet Office (CO) Minister,  was then quoted saying the first couple of years of the Universal Credit (UC) project was an example  of the ‘old, bad’ practice.  He now ‘hopes’ the new solution will work, which wasn’t very convincing. Indeed, his comments on UC sounded very much like positioning for the future, because if UC technology problems don’t get resolved, then there is going to be an almighty battle to allocate blame, with Ian Duncan Smith and Maude going head to head, we suspect. Even if neither of them are Ministers by that time. Or both might just blame the suppliers, I suppose.

We then heard all too briefly from the excellent writer and analyst Tony Collins, who has a history of identifying government IT disasters long before most – like the NHS IT programme. He sees the CO restrictions as a good thing. But does it have the power to make it happen?

Margaret Hodge, chair of the powerful parliament Public Accounts Committee, then pointed out that the £100 million limit was a re-announcement – yes, I spotted this. (We’re going to get a lot of this in the next 18 months up to the election, a continuous stream of good news, repeated over and over again)!

She also talked about the need for renewing some major government legacy systems over the next couple of years – intrinsically huge projects that small suppliers are unlikely to run. She also pointed out the lack of skills in departments, and welcomed the end of automatic contract renewals (wasn’t that always illegal)?

So I don’t think this moves us on very much really. There is a big issue – large suppliers have not covered themselves in glory, but small suppliers just can’t develop huge systems for DWP or MOD. The large suppliers must have a role, but we have to manage these contracts better. And the answer can’t just be a small hit squad in Cabinet Office. This needs real capability development across government, which we haven’t really seen as yet in a coordinated fashion.

Voices (5)

  1. Bill Atthetill:

    I don’t buy any of this “small suppliers can’t deliver big projects” bollocks.

    Here is a true story. Many years ago, I purchased a global intranet for a global company (in the role of ‘global head of procurement’).. The intranet had 30+ databases, simultaneously supporting across 34 countries via 3 regional hubs (US, Europe and Far East). It was delivered by a small firm (at that time) at a total cost of circa £8m. Not long after this (a matter of months), one of our top team left to join a large central government department and he was asked to deliver a ‘national’ intranet (that’s right “just in England”) with just one database. we met up, and he asked me to guess the budget for the project. I estimated a generous figure of £5m (one country, one database, but this was HMG…). He told me that it was £150m and that at least £40m had been set aside for the ‘consultants’. He’d been told to spend every penny of the budget. No matter how hard I tried (ie: I made up very silly things), I simply couldn’t figure out how to spend anywhere near £150m on a project like that..Perhaps Cabinet Office need to figure out to set-up UK ICT incubators (‘start-ups’) with some of its large projects – who knows – but I do know that we don’t need large suppliers to deliver large ICT projects. Some of the largest tech companies in the world employed little more than a man and a PC.

    1. dan2:

      What he is talking about is the role of the system integrators. Government load all liabilities onto the SI, ask them to manage the 2nd tier supply chain, deliver the entire IT stack, place a huge negative cash flow on them in early years through ‘service based pricing’ (usually through financial engineering rather than mirroring the costs of the technology). A small company won’t be able to do that as for example (I) cash flow is too important for them; (ii) the level of liability will be untenable and (iii) for certain services e,g, desktop hardware support – I doubt they would have the GB wide presence to meet the hard SLAs that government tends to demand and they certainly won’t have the clout to go toe to toe with other ‘big beasts’ of the IT world.

      Case in point, I’ve dealt with a smaller IT company recently – and to be honest, they have been fantastic. Totally refreshing to deal with, very responsive, no commercial issues (so far), good quality people. Far superior to the Tier 1’s of this world. As they are based in Sheffield though and we are in London, if I do need someone on site, it is always next day response. If I had say, 100 buildings across the UK, would they really have the capacity to help? Not sure. Would they even want to take on a government department’s service with the skills needed to bid it, manage the TUPE etc

      Having said all that, I am still have to reluctantly agree with Bill C, if only because Government must do something different. The old quote comes to mind ‘trying the same thing again and again expecting different results is the definition of insanity’.

      Personally I would state that anything that disrupts the IT market into government is going to be a good thing as the Tier 1’s can be very competitive when they need to be. So while certain parts of the IT stack probably are safest with a Tier 1, there will be plenty of other parts to chunk up in a controlled manner and put out to market.

      My real concern is that Cabinet Office just don’t have the skills needed to make this work. While it’s all well and good to set a strategy – it needs to be deliverable. I can only think of one government department that has had a decent stab at tackling how to integrate an IT service of multiple providers. Most of the others lost those skills during their original outsources. Right now Government reminds me of the original round of ‘knee jerk’ outsourcing where no real consideration was given to ‘does this give us the best leverage’. It was more driven by ‘well everyone else is doing it’. If the move to multi vendor isn’t done strategically, fast forward a few years and I suspect most departments will be:
      – spending a bit less on 3rd party suppliers
      – spending a shed load more on internal staff to manage the service

      Anyway, have rambled on far too long.

      1. life:

        Agreed Dan.

        Different types / sizes / cultures are good for different things, and the danger with over consolidation across markets / requirements (esp. without competition) is that it leads to consolidation of procurement approach, decline of specialist skills and understanding etc etc. It is just not possible for CO to have, and then retain, the sorts of skills required without spending a politically unacceptably large amount of money on an ongoing basis. And the more generic the approach, the less benefit anyone gets from using a procurement function anyway.

        The idea is barmy but one can guess on the gestation – “these guys are not doing as they’re told, EU laws are changing, I know what’ll fix ’em…..” etc. but it’s hard to believe much deep thought or planning has gone on. Who knows where it’ll lead – loads of Local Authority arm’s length bodies, buying all our stationery off the Consip Spa….

  2. David Orr:

    Tony Collins article here:

    http://ukcampaign4change.com/2014/01/28/bbc-world-at-ones-focus-on-government-it/

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