National Audit Office exposes limits of government IT reform

The National Audit Office’s (NAO) latest report has said that the impact of the government’s latest initiatives on the inclusion of SMEs in public sector ICT work ‘remains unknown’.


The National Audit Office’s (NAO) latest report has said that the impact of the government’s latest initiatives on the inclusion of SMEs in public sector ICT work ‘remains unknown’.

However, between 2011 and 2012 central government did spend an estimated £316 million less than it would otherwise have done. The Cabinet Office reported savings of £354 million, but only 89 percent of these achieved the NAO’s savings criteria.

The report looked at a number of government initiatives to reduce ICT spend, including controls put in place for the IT Reform Group to review all business cases that exceed £5 million, shared ICT assets and technical standards, centralised ICT procurement and managing suppliers as a single customer.

From the £316 million savings, the NAO found that 46 percent were long-term, meaning that they would occur every year for the foreseeable future; 33 percent were likely to occur for more than one year but are not open ended; and 21 percent were savings from spending that had been stopped by government in the current financial year, but may be submitted for approval in future years.

However, although the Government Procurement Service has comparable data for IT spend across 17 central government departments and 69 arm’s-length bodies, the NAO did recommend that it complete its collection of data from all of central government.

It said: “This data set has multiple applications. It will strengthen negotiations with ICT suppliers, enable the Cabinet Office both to challenge and assist departments with their proposals for ICT solutions, and help the government to demonstrate the quantitative impact of its ICT and procurement initiatives to Parliament.”

Commenting on the report, the Cabinet Office said, "We are pleased that the NAO recognises that our efforts to cut the cost of government ICT are working. As they acknowledge, our ICT reforms and spending controls saved the taxpayer £316 million last year alone. And the NAO has confirmed that we are on course to meet the tough targets which we set ourselves.
"But because ICT spending was so wasteful in the past, we also know that there is still a long way to go. We must accelerate the pace of change. That’s why we are determined to fully open up government ICT to smaller, more innovative companies, and to embrace open source technology.
"As we reform the Civil Service, the Government has committed to providing 'digital-by-default' services designed around the needs of the user, as set out in its Digital Strategy and the departmental digital strategies published at the end of last year. This April, the digitisation of the first wave of public services will begin, saving an estimated £1.2 billion by 2015."

Computerworld UK spoke to Joe Dignan, chief analyst for the public sector at Ovum, who expressed surprise at the NAO’s inability to monitor central government in its entirety, because of this incomplete data set.

“I still think it’s stunning that the National Audit Office cannot audit right across government. I think it’s reasonable for them not to be able to have information across the whole of public sector expenditure, but central government departments shouldn’t be a hard thing to do. It’s still a partial picture,” said Dignan.

Future for SMEs uncertain

A major driver behind many of the government’s ICT initiatives is to get more SMEs working in the public sector, in order to move away from the traditional procurement approach of handing cumbersome IT contracts to a select few suppliers.

However, the NAO is still unsure about the government’s success in achieving this aim.

The report reads: “The impact of initiatives to reduce the dominance of large ICT suppliers and increase the involvement of small- and medium-sized businesses remains unknown at this stage. 

“There are early positive signs. However, demonstrating quantitative impacts from these initiatives in the future will require the Cabinet Office to have a significantly better common understanding of spend and savings data with suppliers and departments.”

Ovum’s Dignan, however, suggests that some departments are not actively pursuing the government’s reform agenda because they are unsure about the stability of these ICT initiatives in the future.

“I still can’t work out the difference between delayed, cancelled and savings figures. For example, I’m aware that there are a number of large departments who are not convinced that this process is going to be ‘unstoppable and forever’, and are delaying major procurements,” said Dignan.

“I think there is going to be a lot of interest in what happens in the next election - whether or not Francis Maude is still going to be in charge of the Cabinet Office and whether or not this is still going to be the direction of travel.”

He added: “They are waiting to see if they can go back to ‘normal’.”

Is £354 million that impressive?

Dignan also questioned whether or not the £354 million savings figure is actually that impressive in the context of how much the government spends each year on ICT (he referred to an estimate of some £26 billion a year – although estimates do vary).

“Obviously the savings are travelling in the right direct, but £354 million out of £26 billion isn’t really substantial in terms of the overall spend,” he said.

The National Audit Office also highlighted that the suppliers it spoke to in 2012 were less positive about their relationship with government than those it spoke to in 2011. It claims that suppliers are becoming frustrated with the ‘slow pace of change’ and the focus on cost-cutting, rather than on exploring innovative opportunities to redesign digital public services. 

This is another challenge facing the Cabinet Office, according to the NAO. It claims that although government has made a good start on reducing ICT spend and reforming supplier relationships, it now faces the challenge of moving its initiatives from saving money in buying ICT, to ICT solutions that reform public services and the way that government works.

Also, although the Cabinet Office is increasing the number of Crown Commercial Representatives and strengthening the seniority of the team that supports them, the NAO claims that “the pace, breadth and depth of the change required by the Cabinet Office’s ICT reform initiatives is opening up capacity and capability gaps across central government.” Essentially, the Cabinet Office risks facing a skills shortage.

Going forward, the NAO recommends that the Cabinet Office should use its new digital strategy and civil service reform plan to develop how it and departments evaluate and report the impact of ICT initiatives beyond just ICT savings; it should consider how to optimise the deployment of ICT and commercial skills across central government; and should also look to show strong leadership in civil service reform beyond the ICT profession – it states that accounting officers and finance directors are also interested in overall value for money.

What about the G-Cloud?

Finally, Dignan highlights a surprising emission from the NAO’s document – the G-Cloud. Considering the G-Cloud is a key plank in the government’s agenda to diversify its suppliers and drive down the cost of IT, it is unusual that this was not referenced by the report.

“There’s actually no mention of G-Cloud. If you think that the G-Cloud is an absolutely critical part in 1) getting SMEs on board, and 2) making the provisioning so much simpler – I don’t know why they didn’t at least mention it,” said Dignan.

“It is a very interesting omission because you can’t imagine that it was done accidentally.”

"Recommended For You"

NAO: Government ICT review highlights wasted billions Cabinet Office hits the road to engage with ‘new generation’ of suppliers