Do Whitehall procurement frameworks add value?

One of the first tasks under the Cabinet Office “Structural Reform Plan”  was the creation of a new Cabinet Office “Efficiency and Reform Group” which would overhaul procurement. There is a presumption in some quarters that this will lead to a new and more centralised regim. Is that the correct approach? As you will have gathered from opening of my previous blog, I am equally unconvinced by the enthusiams of “the Network for teh post-Bureaucratic Age”. 

I fear months of intellectual masturbation involving the procurement “experts” and “consultants” who have made good livings and reputations from creating the current and previous swamps. Meanwhile irreparable damage will be done to the supply side. Would it not be better to adopt a process of natural selection: kill off those processes which do not give value for money, encourage the use of those which do and allow for the emergence of new and better processes over time?    

The Information Society Alliance (EURIM) working groups looking at practical experience with existing procurement frameworks for buying shared network services and buying security advice have both found two or three which appear to be well worth using more widely, pending any comprehensive review. While they were asked to be positive, neither group could resist the opportunity to comment on bad practice and why the current situation had arisen. Their meeting reports are in the members’ area – also available to rgistered public sector observers.

The main reason the UK public sector pays around 30% over the odds for ICT products and services is that it costs around 30% more to cover the cost of the consultants and lawyers specifying optimised solutions and negotiating risk avoidance contracts for requirements that are evolving. The “solutions” are therefore sub-optimal by the time they are implemented. This leads to rounds of equally costly change negotiations and post mortems.

80% of most application needs can be met by using commodity components, leaving only 20% that may well need the scarce skills of the experienced systems integrators. The difference in charge rates for the staff involved can be over £1,000 a day. No wonder suppliers are willing to bid for supposedly 100% customised solutons, knowing that they can use commodity components and low grade staff for most of the task. Even when the same individual is employed under the same framework agreement via the same supplier, their charge rate can vary by £1,200 per day according to the classification of the task for which they are to be billed.

The consequences are, however, equally dire for the shareholders of the suppliers. It is common for suppliers to collectively spend more bidding for a contract than the value to the winner. Meanwhile cancelled procurements cost the industry tens, perhaps hundreds or millions a year – with no-one, other than the procurement specialists getting any business. There is a similar problem with calls for competitve bids for the research funding supposedly available from the Technology Strategy Board . Once again the collective cost of bidding may well be more than the funding on offer, yet officials measure success by the number of bids rather than successful products and services brought to market by UK-based business operations. The result is that the majority of funding vanishes into administrative overheads and a trickle of me-too projects in currently fashionable areas.

The urgency of the need for action may not be fully appreciated.

IA10 this week is likely to see a number of anouncement regarding forward strategy for procuring security products and services. The UK has a growing skill crisis, both numbers and quality in this area. One of the reasons for problems with security procurement is that so few of those involved, even those with full accreditations and clearances, have the skills and experience to understand the level of security actually required, let alone how it can be delivered. Those that do, will lose their clearance if thier employers send them overseas for the next couple of months to earn much-needed revenue in the burgeoning markets of the middle-east  while government makes up its mind.

The cost and delay of re-accrediting them, time as well as money, will have to be added to the bids of the winners of the next round of business.

Meanwhile many suppliers have wet dreams of supplying high price supposeldy “secure” networks as part of the PSN that will carry G-Cloud et al.

But no network with hundreds of thousands of users can be secure. “Secure the data not the network” has been the mantra of those running global operations for decades. Janet and the NENs are already carrying securely encrypted traffic with much higher security classifications than those used by most government departments. 

The budgets for the applications traffic that the PSN is intended to carry should be a core part of the pooled funding that could deliver Next Generation Networks across the UK in time to prevent the UK from dropping out of the global information society.

The sooner it is made clear that the PSN will use shared networks where-ever practical, the sooner we can pull forward the shared, lower-risk, local authority and private sector shared infrastructure investment that will be needed to help lift the UK out of double-dip recession – even as central government is reigning in its spend to what we can afford.   

If fear that delaying this process while we try, probably in vain,  to create a new and more efficient centralised procurement regime, will do irreparable damage. A process of Darwinian natural selection, alllowing structured evolution to take its course, is once again more likely to deliver results than any attempt at “big bang” change.    

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