"Cartel" still blocking SMEs from ICT £billions

Dominant ICT suppliers are still blocking government attempts to share its £16bn public ICT spend with small companies, according to a Cabinet Office SME advisor.

Industry’s own initiative to bring SMEs in on big government contracts has meanwhile got stuck in the mud, Computer Weekly can reveal.

Daniel Ruiz, Cabinet Office SME advisor, told Computer Weekly large ICT suppliers were still holding up government attempts to reduce their hold over the public purse.

“Large companies still hold sway and have a lot of influence and it’s not in all large companies’ interests for agile models to be implemented.”

“It’s a difficult area to be working in,” he said.

The Cabinet Office had been trying to disaggregate government’s conventional, large ICT contracts, he said. It fancied networks of small companies instead. It imagined them as fast-adapting insect swarms, forming briefly around parts of projects, and using a business model that put collaboration before competition.

But it was having trouble getting the new model to fit with European procurement rules as well, said Ruiz.

EU law, apparently intended to stop corruption and stagnation among large firms and public procurement officials, was blocking reform.

EU rules may be suspicious of collaboration: when does collaboration become collusion and an informal network an anti-competitive cartel?


When does an agile network of enlightened tech collaborators become an elitist club for the socially well-adjusted and advantageously connected – an old boys network for the network age: privilege more palatable because it is not concentrated in quite so few hands as it used to be. (The enemy, it has been said, is middle-class).

Ruiz’ answer seemed to be ideological. He paraphrased John Ruskin, the late 19th Century art critic, social reformer and anti-capitalist: “If you want incremental change, then do it through competition. If you want exponential change, then do it through collaboration.”

“I would argue that collaboration – if implemented correctly – is less prone to corruption,” said Ruiz.

Collaboration was based on trust – and that, he said, sprung from openness and transparency.

As though to illustrate the point, ICT trade body Intellect said this week it might not be able to disclose whether its own initiative to help SMEs work with government was getting anywhere because it was commercially sensitive.

Gordon Morrison, director of Intellect’s government business, admitted its scheme to help SMEs had stalled. But the trade body was planning on restarting it.
“The pause is really down to us… not finding the resource and allocating the priority to it,” said Morrison.

The scheme comprised events called “Innovation Dens” modelled on Dragons Den, the purse-lipped TV programme, and designed with competition in mind.

Intellect held 10 events between February 2010 and December 2012, where it invited ICT SMEs to pitch a panel of executives from government and the large ICT suppliers that have most of the government’s £16bn IT spend tied up in large contracts.

“[It was] very resource intensive and very popular. I’ll be stretching my team to get another one done by close of business this year. It’s quite a challenge. Given the other work we do, we have to resource that. We will deliver another two by the end of the year.

Morrison said Intellect subsequently passed 250 requests for contact between the executives and SME hopefuls. But that is all he could say about it.


He didn’t know whether any of those SMEs had actually got any business out of it. And even if he could find out, the probably couldn’t say – he might not even be able to say which SMEs had attended the programme.

“What happens after that is not Intellect’s business,” he said. “That’s commercial. We don’t follow the commercial side. As trade body we can’t get involved with the commercial side.”

But neither did Morrison know how much business SMEs were getting from government more generally, though it was Intellect’s declared aim to increase it. He couldn’t say whether it was actually improving.

The programme had at least proven popular while it was running. It had been over-subscribed. That was the basis of Intellect’s claim that it was a success, said Morrison.

But surely, with £16bn of public money up for grabs and most of it snaffled by the 10 largest IT suppliers, it would be no great achievement to assemble a roomful of SMEs prepared to suffer any indignity to get five minutes before those civil servants and supplier executives who control the money – even to endure a role-play of Dragon’s Den.

Morrison agreed, in not so many words, that this might suggest the only real measure of this scheme’s success would be business subsequently ‘won’ by those SMEs it patronized.

If it made the government’s whole SME initiative look like a joke it may have been because of the sardonic lens through which the whole thing is seen on this pages.


Or it might be because Intellect’s last SME Den coincided in December with the passing of the deadline the Cabinet Office office had set itself, to double the amount of business it did with SMEs. It failed.

The Cabinet Office had promised to “smash the ICT oligopoly”. Yet it emerged in Computer Weekly last week that it failed even to get SMEs in on the coalition government’s own Universal Credit programme.

Amidst the brave talk of reform in and around the Cabinet Office and Universal Credit in 2011, Parliament’s Public Administration Select Committee came up with the outlandish suggestion that the large IT suppliers weren’t just an oligopoly, they were operating a cartel.

Intellect – closely linked to the large suppliers and the £billion contracts with which they have government IT sown up – said at the time the suggestion was “outrageous”.

“Cartels do not exist in our industry,” it said – almost two years ago to the day. “On the contrary, this is a highly competitive market.

“Intellect would cooperate with any investigation into such allegations, but we believe it would be a waste of public money.”

Universal Credit

Things then went quiet, and pretty much back to normal – with the Department of Work and Pensions giving £2bn of Universal Credit contracts to BT, Capgemini, HP and IBM – contracts that were already well in train before the programme was conceived; and with SMEs not getting much more of a look in than they used to, no matter how enthusiastically they don their clown costumes and perform for the panel.

DWP IT director Kenny Robertston was unapologetic about this in 2011: the world doesn’t stop overnight just because the government had a new IT strategy, he said. Change was nevertheless afoot.

“So why are we doing Agile? Because we have to. We in government and the supply community have been locked in mutual convenience for a long time. Its been easy to continue traditional practices designed – so the story goes – to reduce risk in IT delivery. Well I’ve been around long enough to know that isn’t true.”

Still, nobody would really investigate the cartel allegation the PASC had made in such cavalier fashion in 2011, would they? So it seemed until 3 July this year, when the Office of Fair Trading issued an official call for information on government ICT – referring back to that very same cartel claim.

The call may lead, most amusingly, to a competition investigation. The OFT said it might not be in a position to say anything about it. Cabinet Office SME officials were meanwhile declining to accept calls.