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Maude draws red line under IT contracts - nothing over £100m, no extensions, no discussion

27/01/14

Minister for the Cabinet Office Francis Maude has announced 'red lines' for its IT contracts to ensure maximum taxpayer value.

From now on:

  • no IT contract will be allowed over £100m in value - unless there is an exceptional reason to do so, smaller contracts mean competition from the widest possible range of suppliers
  • companies with a contract for service provision will not be allowed to provide system integration in the same part of government
  • there will be no automatic contract extensions; the government won't extend existing contracts unless there is a compelling case
  • new hosting contracts will not last for more than 2 years

"Big IT and big failure have stalked government for too long," said Maude. "That is why this government is radically rethinking the way it does business. We are creating a more competitive and open market for technology that opens up opportunity for big and small firms. These red lines will ensure the government gets the best technology at the best price and we will be unashamedly militant about enforcing them to provide value for hard-working taxpayers."

Liam Maxwell, government chief technology officer, added: "To create the efficient and responsive services that the public demands, government must have access to the most innovative, most cost-effective digital solutions. That means going to the widest range of suppliers, and giving ourselves every opportunity to renegotiate and reassess contacts. It rarely makes sense to simply extend a contract based on yesterday's technology and prices and these red lines make clear that we are doing business in a different way."

Speaking on BBC Radio 4's the World at One following the announcement, chief procurement officer Bill Crothers, accused some IT suppliers of conducting an "abusive" relationship with government. He said that their behaviour was "appalling" and accused them of "monopolistic" behaviour.

Public Accounts Committee chairman Margaret Hodge said that the announcement was "a small step in the right direction", but warned that government departments lacked the skills to commission new IT projects or manage existing suppliers.

Separately, the Office of Fair Trading (OFT) has announced it is reviewing the sector, engaging directly with relevant parties including IT suppliers, central and local government and other public sector organisations, trade bodies, academics and business organisations.

The new rules are aimed at encouraging the widest possible range of suppliers to compete for public sector technology contracts and ensure the government acts as an intelligent customer. Smarter purchasing realised savings of £3.8bn in 2012 to 2013 alone; and a tighter grip on IT spending, along with progress on the digitisation of services, saved a further £500m. Better procurement is central to the government's wider commercial reform plans to strip out wasteful spend and harness the government's buying power to get the best deal for the taxpayer.

Good progress has been made in opening up government business to smaller suppliers. More than a third of the companies on the new procurement framework for building digital public services have never done business with government before. The suppliers that have won the opportunity to secure contracts with the public sector through this framework also include a high proportion - 84% - of SMEs.

Picture: Paul Clarke http://paulclarke.com/photography/

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