‘Mega IT contracts are over’ says Cabinet Office

The government has told its suppliers that the days of huge IT contracts, such as the controversial National Programme for IT (NPfIT), will cease to exist.


The government has told its suppliers that the days of huge IT contracts, such as the controversial National Programme for IT (NPfIT), will cease to exist.

Francis Maude, minister for the Cabinet Office, told a summit of CEOs and senior representatives of 31 of the government’s key suppliers, including HP, BT, Capgemini and Fujitsu, that government contracts will now be opened up to smaller suppliers.

“The days of the mega IT contracts are over. We will need you to rethink the way you approach projects, making them smaller, off-the-shelf and open source where possible,” said Maude.

“Government will no longer offer the easy margins of the past. We will open up the market to smaller suppliers and mutuals and we will expect you to partner with them as equals, not as subordinates.

“We will be very interested in bids which involve SME or voluntary sector participants as genuine consortium partners rather than subcontractors.”

Maude also expects suppliers to be transparent in their dealings with the government, and said that terms of public sector contracts should be made available online.

The summit builds on the contract renegotiations programme that the Cabinet Office embarked on in July, where it asked its 19 largest suppliers to cut the prices of their services to the public sector in a bid to cut government spend and the UK deficit.

It said that the contracts review is expected to deliver £800 million in savings in this financial year alone, which is part of the government’s commitment to make savings of £6.2 billion in this financial year.

As well as discussing how SMEs can be more involved in procurement, Maude said that the summit was designed to help the government identify which aspects of the procurement process should be targeted to make it “cheaper” and “quicker”.

At present, procurements take at least 77 weeks from tender to award, on average twice the time it takes in the private sector, with the cost of bidding ranging from £20,000 to £200,000 for every month spent doing procurement.

“A waste of time and money on both sides,” Maude said.

He also wanted to find out what the government needs to do in order to be an effective ‘single customer’ for services. A number of the memorandums of understanding it signed with suppliers, such as Atos Origin, outlined plans for the government to become more efficient by adopting the single-client approach.

To this end, the government is establishing a network of Crown Commercial Representatives (CCR), senior people from central government departments and the private sector, whose task it will be to deal and negotiate with suppliers.  

HCL was one of the suppliers at the summit. In response to Maude’s speech, Bindi Bhullar, director of the global IT services company, said: ““This is the clearest indication yet that the era of bloated IT contracts is coming to an end, and not before time.

“These unpredictable economic times will naturally lead to a new dawn of shorter term contracts where risk is shifted from the customer to the IT supplier. For example, an IT service provider may offer to pay the customer projected savings up front in cash before starting work. There is nothing like putting your money where your mouth is.”

Meanwhile, the government has launched a new online feedback website to enable SMEs and other suppliers to share their experiences of public procurement. 

Other suppliers at the summit were IBM, Atos Origin, Logica, Steria, Siemens IS, Cable & Wireless, Accenture, Vodafone, G4S, Capita, Serco, Trillium, Xerox, Vertex, TCS, Northrop Grumman, Detica, Babcock International, Wipro, Cognizant, Infosys, EADS, Mitie, Thales, Teleperformance and XChanging.

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