Government IT workers and suppliers will be starting to feel the full brunt of the government’s Comprehensive Spending Review, if the latest National Audit Office (NAO) report is anything to go by.

This week’s NAO report, entitled ‘Information and Communications Technology in government – Landscape Review’ identified a significant number of IT projects that will be cancelled, re-scoped or reviewed in a bid to achieve the government’s planned budget cuts.

“Many of the projects that were cancelled had limited business value or were found to be likely to fail,” the NAO said.

So far, government departments have decided that 229 ICT projects under £50 million should not continue, with a further 193 up for review. The cancelled projects are expected to save the government up to £1 billion over the next five years.

In addition, more than 80 IT projects over £50 million, budgeted to cost more than £28 billion overall, are being reviewed, with only a minority coming out unscathed.

Just 26 projects, costing more than £4 billion, are being allowed to continue unchanged. Two IT projects, totalling nearly £2 billion, have been cancelled, while the remainder, more than 52 projects worth £22 billion, have been rescoped or are subject to ongoing reviews.

For example, the Department for Communities and Local Government recently cancelled a £160 million ERP and IT support contract.

“This rescoping exercise has so far identified potential spend reduction of at least £1.7 billion, the majority of which has been used to inform the Spending Review in autumn 2010,” the report stated.

Meanwhile, the report said that only six new IT projects costing £36 million, out of 76 projects, have been rejected under moratorium. The Cabinet Office also expects to make £200 million in savings by rescoping the approved projects.

The NAO believes that potential savings of up to £800 million could be achieved if government departments and suppliers fully implement the Memoranda of Understanding that were initiated by Frances Maude, minister for the Cabinet Office with 19, primarily IT, suppliers last July. Also underway are negotiations with 34 more suppliers.

“The new initiatives mean that spending on ICT will almost certainly be lower in 2010-11 than earlier years.

“However, it is difficult to evaluate the long-term and wider impact on government operations of the cost reductions made by restricting spending on ICT in 2010-11, for example, where projects delivering business transformation have been delayed or cancelled,” the report said.

Read more on the NAO report in the Tony Collins Blog.

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