Never-ending megadeals embarrass gov ICT strategy

Ten days before Cabinet Office gave a recent progress report on its flagship ICT policy to end oligopolistic megadeals, it signed two such megadeals worth over £1bn combined.

At £525m a-piece, the two key contracts DWP will use to deliver Universal Credit could not have come at a more inconvenient time. DWP needed to produce a massive system in a hurry. So it signed massive contracts with Accenture and IBM, two suppliers in the “oligopoly” that government pledged in its ICT Strategy it would “put to an end“.

The central planks of its ICT policy – the means by which it would end oligopolistic megadeals: open source, open standards and software re-use – are meanwhile floundering.

Conservative condemnation of Labour’s record of big IT bodges rested before the 2010 general election on its pledge to prohibit projects costing more than £100m. It made a meal out of the matter, lambasting Labour’s big IT failures: the Child Support Agency, Identity Cards and the NHS National Programme for IT.

These failures already have a lot in common with the coalition’s Universal Credit: big transactional systems managing flagship government policies that concern the big departments of state.

Diminishing returns

A “presumption” against such deals became coalition policy. It also adopted a “presumption” against the use of the “competitive dialogue” procurement procedure, as Francis Maude said last month it had.

Both the Universal Credit contracts were let after competitive dialogues 10 days earlier. This time last year, Maude promised no more megadeals. This year, he’s saying no more gold plated contracts. Next year it will be, no ground left to give.

There is already a presumption against Competitive Dialogue, in European competition law. The procedure can only be used in exceptional circumstances: it has questionable competitive credentials. It allows government agencies to pre-qualify suppliers in complex procurements before deciding which ones are permitted to bid. In each of the Universal Credit contracts the government invited only two suppliers to bid.

So what did government mean when it said such deals would be broken up into £100m chunks “wherever possible”?

Computer Weekly put the question to HMRC and DWP heads of IT at the aforementioned suppliers’ conference: what criteria determine when “wherever possible” is not possible?

They couldn’t answer.

Because there are no such criteria.

Can we therefore assume that “wherever possible” is not possible simply when one of the big departments needs to produce a big system? I.e., that it is business as usual between government and its ICT “oligopoly”.

The coalition has kept the National Programme for IT going (simultaneously scoring political points by condemning it). The CSA system was not merely scrapped, it was replaced. Identity Cards were always to use existing government biometric and biographical databases. Those databases live-on under the Con-Dems and may yet be used for the same purposes. (Now with the Interception Modernization Programme, the coalition plans to build more such databases, breaking another pre-election promise).

Universal Credit has similarly employed contractual arrangements set up under Labour: the Application Deployment Services framework procurement launched in March 2009. (Cabinet Office has also pledged to dispense with frameworks). Two contracts worth about £600m are still to be let under the ASD competition. Capgemini has been given a £70m corner of the deal. That with the IBM and Accenture contracts will run until 2018.

Universal Credit

Computer Weekly put it to Kenny Robertson, DWP IT director, that if the government wanted to break its IT contracts up and give more business to SMEs then these DWP contracts would have been an ideal opportunity.

“You ignore the timing of this,” he said. “What do you expect people to do, tip their contracts upside down and start afresh? That competition has been running for several years. It’s been openly competed. You can’t just stop business change.”

ASD replaced an existing contract not due to expire until 2014, four years after July 2010 when the coalition imposed its moratorium on and reconsideration of major IT contracts.

DWP let ASD after a competition that lasted two-and-a-half years, incorporating the moratorium and austerity contract renegotiations under which the government claimed to have saved £1bn and would reap a further £2bn savings.

Accenture (and others)

This all seemed to have no effect on Universal Credit. DWP awarded Accenture, Capgemini and IBM the topmost of the range of possible contract values it budgeted in 2009 before the coalition government changed the rules on ICT and started renegotiating contracts.

Robertson had told an earlier meeting of suppliers DWP had already made progress by splitting what used to be a single £multi-billion contract with EDS. (Though its parts are worth half-a-billion a-piece and this was done under Labour, remember).

DWP could now actually see what prices it was paying for its constituent parts, said Robertson. It had no idea, by implication, what the constituent parts of its last arrangement were costing. The Universal Credit contracts had, he said, incorporated policy measures including employing more SMEs on the job. But if the HMRC’s £8.5bn deal with Capgemini is anything to go by, the ambitions of such requirements may fall well short of the ideal the coalition presented to voters.

So what happens if, as it looks, the government has let the glue of its strategy go soft – the open source, open standards and software re-use by which it intended to cut its £16bn of ICT expenditure and deliver it in ways other than through its clutch of large integrators?

Robertson claimed shifting the infrastructure of government was not an easy thing to do. Other senior civil servants have made the same defence. “The particular hole we are in took us an enourmously long time to dig – bear with us, we are working hard to get out of it,” Liam Maxwell, Cabinet Office ICT futures director, told suppliers recently.

The big departments of state have their major business tied up for years to come. The big suppliers will not freely give up market share. The big ideas in the coalition ICT strategy will need the government to give them some welly if they have any hope of being anything more.

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