TopShop owner Sir Philip Green has a reputation as no-nonsense guy, the type of businessman who calls a spade a spade. But why did it take a billionaire fashion retailer to state the obvious facts about government IT contracts that most of the IT community have known for years?
Green’s review of Whitehall procurement highlighted the absurdity and inefficiency of “expensive IT services contracted for too long with no flexibility”. He cited examples such as a £100m per year deal with six years left to run delivering services that are no longer needed, but without the flexibility to change the agreement. What’s more, that same deal sees the prime contractor supplier passing most of the work to a subcontractor, incurring two layers of profit margin yet still charging Whitehall £1000 a day.
Government IT has been a gravy train for too many IT suppliers for too long. Despite more National Audit Office and Public Accounts Committee reports than you could read, even at £1000 a day to do so, IT suppliers turn up after every over-budget and delayed project and pick up yet another megadeal all the same.
Of course, government CIOs have to take their share of the blame for poor purchasing decisions, but their hands are tied by the historically siloed nature of Whitehall and by the painful restrictions of EU procurement rules. Government CIO John Suffolk had never been given the authority to veto contracts or impose central purchasing rules – he can recommend, but each department has been able to do its own thing regardless.
Next week sees the long-awaited results of the Comprehensive Spending Review, and many IT suppliers will see their sales to government reduced. The biggest IT providers are already being forced to renegotiate with the Cabinet Office and sign new agreements that will provide better value for taxpayers’ money.
It is human nature to quietly take the cash as long as you have a willing customer to give it to you. It is hardly a supplier’s fault if its government client is happy to tie itself into inflexible, over-priced, long-term contracts. But it is time for the practice to stop.