All businesses (whether public or private sector) rely on external suppliers to deliver some or all of their services and infrastructure. The UK public sector has a highly mature model of outsourcing ICT services and taking advantage of the economies that this can deliver. Approximately 65% of central Government ICT provision is outsourced to the private sector, unlike any other part of the public sector. This ensures that Government gets the best resources and capability to support the development and delivery of Government policies. The Gershon report of 2005 highlighted that poor relationships between Government and its suppliers had negative impacts on value for money and delivery of ICT services. Additionally, suppliers were managing Government better than we were managing them. This manifested itself in suppliers not providing the best resource available, not delivering their contractual commitments and in some instances maximising their financial return and taking resources off one Government project to deliver another.
As a result, the Supply Management Initiative (SMI) was launched by the CIO Council in 2006, to support delivery of the Transformational Government strategy. The original objective of the SMI was to enable HMG to become a world class purchaser of ICT, driving up performance, value and capability. Two strands were created:
- Performance improvement via a Common Assessment Framework (CAF) and regular pan Government Supplier forums
- Value and Capability Improvement via the Strategic Supply Board (SSB) and it’s associated ‘Tiger Teams’
The Office of Government Commerce (OGC) now delivers a mature framework of performance assessment through bi-annual performance reviews via the CAF. The 6th CAF report measured performance from July 2008-December 2008. It assessed 150 contracts covering annual spend of over £5bn – approximately 40% of total public sector ICT spend. Since CAF1 in 2006, average performance has improved by 10% in all areas measured.
In January 2007, at the request of the CIO Council and Cabinet Office, OGC launched the CAF360 – a supplier assessment of departmental performance. This complements the departments’ assessment of suppliers and provides a rounded view of areas to drive increased delivery performance from key contracts. Individual supplier Performance Improvement Plans measure progress against the three key objectives and are designed to address shortfalls in delivery and measure cash savings.
A number of tools to improve programme and project delivery have been delivered by joint Industry/Government working groups (‘Tiger Teams’) that are now being implemented by public sector bodies. These include a standard Pre-procurement Qualification Questionnaire (PQQ), Procurement Qualification Toolkit (PQT), ICT services model contract and the Joint Statement of Intent (JSI). All of these tools are available to public sector bodies via the OGC website.
However, despite four years of joint work, delivery performance has improved only incrementally and the pace of improvement is beginning to plateau. ICT programmes and projects continue to run behind time, quality and cost parameters and the average procurement of an ICT services contract takes 77 weeks.
The improvement in overall performance is shown in the following chart:
OGC, Cabinet Office, CIO Council and Industry are now developing a revised programme of work to address the joint challenges of tightening economic circumstances alongside increasing requirements for better commercial outcomes and delivery. This work will report to the CIO Council in January 2010. Elements of this review will include strengthened governance and strategic alignment to the ICT Strategy for Government (and it’s associated ICT Procurement Strategy), targets for CAF delivery scores to increase to 3.5 or more by 2015 and increased access to Government contracts and procurements by Small, Medium Enterprises (SMEs) by 2015.
Firstly, I’d just like to make clear these comments are non-political and are made here as there isn’t a commentable version of the draft strategy available elsewhere.
Given that central government is ‘approximately 65%’ outsourced this is one of the most critical aspects to the strategy – ensuring government’s IT strategic suppliers actually deliver IT successfully. It’s also the one where, evidently, there’s been the most difficulty and the least room for maneouvre.
To put the above into context:
In 2004, ministers set a target for 70% of major Government IT projects to be delivered ‘on time, on budget and to specification and budget’ by the following year(see http://www.egovmonitor.com/node/1320). This represented a 2-3x increase in performance levels at the time.
In 2007, a central government CIO is said to have disclosed that only 30% of projects were compliant. (See: http://bit.ly/5bRemC). In May 2009, the Transformational Government annual report stated that only 55% of projects were on target, which was a major improvement but still leaves nearly half falling below requirements.
At the same time, according to the report, Government IT spending has increased by £1.24bn since the start of the Transformational Government strategy in 2005/6 – the biggest contributor to this rise being the Ministry of Defence (presumably owing largely to UK military operations).
This is despite the Government’s CIO Council’s target to reduce government IT costs by 20% by 2011.
This year’s figures didn’t include IT expenditure for the Scottish and Welsh public sectors, though the previous report estimated Wales’ spending last year at £225m and Scotland’s at £600m in 2005/06. If these to be actually included in the overall sum, UK government IT expenditure would be an estimated £14.5bn.
So while government IT costs rise, the performance of key IT government suppliers falls.
Research by the Government’s CIO Council on the performance of the Government’s ‘top 13 IT suppliers’ published in the last T-Gov annual report shows around 70% are rated ‘not good’.
From January to June 2008, overall only a quarter of these strategic suppliers were rated ‘good’ – compared with a third a year ago – while the very small percentage classed as ‘excellent’ showed no change from last year.
It adds that over 37% of public sector IT expenditure – equivalent to some £4.7bn per year – is shared between just 13 companies. According to the strategy above, this equates to around 150 contracts which need to be managed.
While this section briefly touches on the problems and the solutions, I’d suggest more radical steps are now required to bring about a step-change in supplier performance and to better manage the key spend.