Software engineer turned lawyer describes immediate future for Scottish public sector outsourcing

I am constantly writing articles about how the cost cutting will hit IT in central government. But I have not really looked at the Scottish government.

Luckily an expert on the issue has painted a picture for us.

Douglas Mathie is a lawyer at Brodies in the Technology, Information and Outsourcing Group . Before becoming a lawyer he trained as a software engineer.

He has given Inside Outsourcing his views. He expects fewer large contracts and a period of quite.

Here is his post:

“With its own central government, 32 local authorities, large education sector and multiple quangos Scotland has many potential public sector buyers of ICT. However, as with the rest of the UK, budget pressures are forcing the Scottish public sector to re-think about how it should buy ICT in the future.

Before looking at what the future might hold there’s one important legal point to note. Scottish public sector bodies will typically only contract under Scots law. While Scots law is very similar to English law, there are important differences, essential to know in detail if selling complex, or high value, ICT to the Scottish Public sector.

The current trend in Scotland is for centrally procured framework agreements for ICT (similar to the old Catalist Agreements in England). These are typically procured by Procurement Scotland (and there are a couple of ICT framework procurements in the pipeline). Once you are “on the framework” the Scottish public sector can buy from you directly.

In theory these frameworks deliver savings to the public sector. Whether that is true in practice (especially for non-commodity items) is a different matter. Also, from a supplier’s perspective getting on the framework can be quite a lot of work, but with no guarantee of revenue.

A recent survey commissioned by Brodies indicated that many Scottish local authorities are looking to shared services and, to a lesser degree, outsourcing as a way of reducing costs, and improving delivery. Our survey suggested that the preferred model (85% of respondents) was a fairly conservative one where local authorities “club” together to purchase and provide services. Whether this will deliver the required level of savings is questionable. There was much less appetite in the sector for joint ventures with private entities, and even less for off-shoring.

The survey also revealed that the biggest perceived barrier to outsourcing was not resistance from unions, but rather worries about governance and accountability.

So what does this mean for suppliers?

Well due to budget, and to a degree central government pressure, I think there will be fewer Scottish Public Sector buyers doing stand-alone procurements. Rather they will either buy under a framework, or they will team up with another body. However, in my experience the teaming up process is rarely quick (largely because of arguments over who gets what) – and this may delay any resulting procurement exercise.

So all in all the future looks like fewer procurements (though each will be higher value due to shared services aggregation), a potential slow period of a year or so when the bodies team up, and more purchases under framework agreements.”

Brodies survey report can be downloaded here