Digital Marketplace / G-Cloud Store – How Much Spend Is Illegal or Inappropriate?

The UK Government’s Digital Marketplace (previously known as the G-Cloud Store) had what looked like a successful November, with sales of £40 million going through the framework. And looking at the file released showing total sales up until the end of November going through the framework since the initiative started in 2011, you can see how it has been great news for some small IT service firms such as Equal Experts. HMRC (Her Majesty’s Revenue and Customs) have spent some £7.6 million on “bespoke software development” with Equal Experts, bought via the G-Cloud Store / Marketplace.

But there is an important question here. Is this an appropriate use of this procurement mechanism? The Marketplace is essentially a “framework” in public sector procurement terms. It works as a simple catalogue, with suppliers qualifying to be listed on it, then listing products and pricing to enable buyers to choose their supplier. Pricing is open to everyone to see – so Equal Experts look pretty competitive actually, with day rates around £750 for software developers.

But surely “bespoke software development” should not be bought on a per person day-rate basis? Whatever development methodology one uses, (traditional, agile, waterfall, etc.) I would have thought some risk needs to be transferred to the supplier. Whether it is fixed price, or pricing for some elements of the development, target pricing, or whatever, you would not want to be running what we can assume is a major project for HMRC on a day-rate basis.

Indeed, looking through the list of spend via the Digital Marketplace has increased our fears about how it is being used. Our suspicion is that a large number of the entries on the list may well be inappropriate purchases, illegal, or both. Please note we have not carried out a full investigation here, but the “inappropriate” aspect comes from examples like (potentially) the HMRC case, where use of the Marketplace may indicate a context of poor business and commercial practice.

So that might mean using the Marketplace as a vehicle for major consulting engagements, for instance, on a day rate basis, rather than looking to agree a fixed price contract with clear deliverables and some risk transfer to the supplier. Look at how much is going through the large consulting firms such as PA and Deloittes – in the latter case, including two thirds of a million spent by Hampshire County Council on something that isn’t described in the table at all. Are these all appropriate uses of the Marketplace – or is it just a convenient and quick way to spend money without what is often perceived as the “pain” of proper procurement processes or indeed proper definition of deliverables for the consultants to work towards?

The “illegal” is hard to establish from simply the list, but our suspicion is that many organisations are either re-negotiating the terms of the contract (not allowed under EU regulations) or are failing to run “mini-competitions”, which is required under the regulations (with certain exceptions that frankly few people fully understand).

We’ve commented before on the positives of this initiative, so we are not out and out critics. But it would be good for the National Audit Office perhaps to take a close look at just how it is being used and whether it represents good value for the taxpayer, before we get over-excited about this amazing “new” way of buying!

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First Voice

  1. A Sod:

    Hi Peter

    Whilst its a shame (& a certainty) that GCloud is being misused in some respects by buyers & suppliers alike in my experience of the Public Sector as a buyer nearly every framework has this problem.

    GClouds “issue” here is that its utterly open and transparent so people like yourself and other journos can point the finger when they spot something and say “see, its being abused, CCS/GDS must do more to stop the rot” like some UKIP immigration scaremongerer.

    I know of certain commodity ICT frameworks where awarded providers earn an incredibly good living by providing access to smaller players to Government buyers for a %. The cost of this against the cost of an OJEU procurement or trying to build a relationship with one of the big players on the frameworks (who are utterly uninterested in you and provide shockingly poor service) means that this is by far the more palatable option. If all frameworks sell through data was published people would soon be questioning frameworks as a whole rather than one of the best & most innovative procurement vehicles I have ever come across in the public OR private sectors.

    I wish people would focus on the reasons why buyers have to take the routes they do to try and manage an increasingly heavy and thankless workload under regulations that don’t allow for much in the form of creativity? Or why suppliers have to be nimble and find ways to get to buyers that sometime means the regs aren’t stringently applied.

    Anyway, rant over, enjoy the weekend. 😀

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