Party Conference Procurement Edition – part 1: Welfare

I explained yesterday that we would feature the procurement issues in the major areas of UK Government and public policy this week.  Let's start with Welfare.

It's hard to argue that, outside perhaps the deficit and 'defence of the realm', this is not THE most important issue facing the UK and the Government.  The spiralling costs; welfare dependency; 5.5 million adults not working while we suck in eastern Europeans to do the work UK citizens won't touch with a bargepole; something needs to be done.  So while we don't make political comment here, I must say that Iain Duncan Smith's ideas, the concept of the Universal Benefit, and making it worthwhile for people to take up work, seem to me absolutely right.

But what does this mean for procurement?

Without wanting to scare my friends in DWP... it means perhaps the biggest procurement challenge ever faced by the public sector.

Firstly, in the IT space, a challenge to provide the right procurement and commercial input to what is going to be an enormous IT programme. A gradual exit from most of the current benefit systems; building a new system for the Universal Credit;  transitioning records and data.... perhaps even a merging of DWP and HMRC (tax) systems to form the 'dynamic' tax and benefits system that is being suggested.
There's been a lot of talk in Government IT about avoiding large contracts, using open-source software and other innovative ideas.  This programme would test those principles to destruction I suspect were they to be followed here.

Breaking up this programme into smaller 'chunks' might be possible  - I  wouldn't rule it out - but would bring huge issues of technology and commercial alignment and integration.  On the other hand, running this through a single 'prime contractor' arrangement will carry its own obvious risks.

And it is impossible to underestimate the importance of this working.  In my opinion, this is the most important IT / procurement programme - politically, socially and financially - that the UK has ever seen.  If this becomes another NHS IT- type failure, then the ramifications will be very serious.  This just has to work. Yet the budget for the work will be constrained - there will be no open cheque book for consulting support and significant cost overruns will also be politically disastrous.

What of the major IT suppliers?  On the one hand, they will be rubbing their hands together about the opportunity for an enormous 5 year programme.  HP, Cap Gemini, Accenture....all must be very excited.  On the other hand, once this is in place, one would expect that the ongoing amount of business will be much less than through the current multiple systems and platforms.  So DWP may find themselves with a 'bi-polar' supplier relationship situation.  Those who win significant work in the new programme will be positive and enthusiastic; those who don't, will look to maximise short term income (and they may even try and make life difficult for the successful firms).

And the outlook for consultants?  I don't know.  Despite DWP's position as probably the most capable Department in terms of procurement (and perhaps IT), this will be a huge undertaking.  But consultancy is so out of favour in central Government at the moment....

The second major supply area of challenge is in the Welfare to Work space.  For this whole programme to work, there must be a real drive to get the most disadvantaged - and difficult - people into jobs.  Which is not easy.  And running a US style 'workfare' programme has real challenges.  So the welfare to work providers, third sector and private firms alike, will play a vital role in this programme.  The challenge for DWP procurement then is how to commercially incentivise such organisations, and manage them to achieve these goals.  Too generous a commercial model or weak management will lead to claims of "fat cat firms ripping off the taxpayer / vulnerable clients".  But equally there must be incentives and a positive style of supplier management to get the market working properly.

This is a relatively immature and developing market, and here I suspect there are real opportunities for solution providers (for example, around the performance management of the whole supply chain) who can tailor products for this sector.  I'm less sure about 'pure' consultancy; but it feels like both DWP and the prime 'welfare to work' contractors might need some good technology to help manage this critical spend area.

So all in all... good luck, ladies and gentlemen of DWP!!

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