The labelling of two IT suppliers as high-risk by government is part of a tightening-up of outsourcing, but how far can the government practically address the problem of failing outsourcing contracts?
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Fujitsu is among the companies labelled as high-risk by government to alert all departments if a supplier has poorly performed.
Fujitsu has a number of contracts with government and a public sector IT services operation that accounts for over half of its UK business.
A Cabinet Office spokesman said the department cannot comment on the status of individual suppliers, but stressed that the government will not tolerate poor supplier performance.
He added that the government is improving its post-contract management capabilities and sharing information on supplier performance across government departments.
“We want to strengthen our contract management by reporting on suppliers’ performance against criteria and sharing the information across government. This means information on a supplier’s performance will be available and taken into consideration at the start of and during the procurement process (pre-contract),” he said.
“Suppliers with poor performance may therefore find it more difficult to secure new work with HMG.”
He said the announcement that Fujitsu is now classified as high-risk is part of this strategy.
“This policy will include the identification of any high-risk suppliers so that performance issues are properly taken into account before any new contracts are given.
“High-risk classification is based on material performance concerns. Suppliers deemed high-risk will be subject to particularly close scrutiny when awarding new work.”
The government said this is simple good business practice with the government emulating the private sector. But it remains to be seen how much difference will it make in a sector where so many IT services contracts are dominated by so few suppliers.
If contracts are already in place, the blacklisting will have little effect on extensions or changes in scope, said one source.
He told Computer Weekly that the blacklisting of Fujitsu has not stopped it from winning bids.
“Fujitsu are not as down as a result of this as you would expect. Fujitsu is winning government contracts through extensions and relationships they have with other suppliers.”
The Cabinet Office spokesman said he believed the government is getting tougher through the Cabinet Office. “The Cabinet Office is being much more the deciding factor than ever before and this is the most centralised control of suppliers and contracts I have seen in my time.”