Government CTO says too much risk is placed on suppliers - “dynamic needs to shift”

Profile picture for user ddpreez By Derek du Preez September 7, 2016
Summary:
The comments made by government CTO Andy Beale conflict with efforts in recent years to shift the liability away from government buyers to suppliers.

.GOV on blue digital background © Denys Rudyi - Fotolia.com
CTO for the British government, Andy Beale, has said this week that perhaps too much risk is placed on suppliers when entering into contractual agreements with the state, saying that in his view, the “dynamic needs to shift”.

Beale’s comments come as somewhat of a surprise, given that so much of the government’s work in recent years has been skewed towards enabling it to have more power as a buyer. This has been driven by a string of high-profile, failed government IT projects, whereby taxpayers have ended up footing the very costly bill.

It’s worth noting that Beale doesn’t have direct control over how government-supplier relationships are managed, something he himself highlighted. He also said that his views are his own personal ones, rather than the views of the government.

That being said, the comments will nonetheless raise a few eyebrows. Beale also referenced the new Supplier Standard, which was released yesterday and is intended to help government foster closer relationships with industry, saying that he thought that this “rebalancing and working in partnership is really positive”.

A long history

By way of background, Beale’s predecessor - Liam Maxwell, now digital tzar for Britain - took a tough stance with what he called the ‘oligopoly’ and larger suppliers. It was his view that a level playing field needed to be created between larger and smaller suppliers, competition introduced and stricter buying rules brought into play.

One of the key announcements during Maxwell’s tenure was the introduction of the ‘red lines’, which included rules such as no contract being allowed to be valued at more than £100 million. There was also a shift towards shorter contracts being introduced, rather than lengthy outsourcing deals which allowed suppliers to get lazy with their delivery over 10 year deals.

This was driven by headline grabbing projects, which kept continuing to fail and left government (and taxpayers) with little but huge bills to pay. For example, the NHS’s National Programme for IT, which was widely regarded a failure, but left the government still having to pay the vendors involved hundreds of millions of pounds after they had failed on a number of key targets.

We have also seen hundreds of millions of pounds worth of software assets written off for the likes of Universal Credit, DWP’s flagship welfare system.

During the peak of all of the government’s stricter policies involving suppliers, I interviewed Tim Gregory, who at the time was in charge of CGI’s UK operations - a major supplier to government. His interview gave some insight into how some suppliers felt about the change in approach in Whitehall. At the time, he said:

You’ll be aware that the government is making life difficult for IT vendors. I find this adversarial approach quite unhealthy.

I’m not saying that the government shouldn’t be driving value for money, and previous suppliers have taken advantage, but I think the pendulum is in danger of swinging too far the other way.

Certain companies will stop investing. It’s as simple as that. If you are being given an opportunity in the UK government that says: you can’t make a profit, you have to give X percent of your business to an SME, you have unlimited liability, there are lots of service credit penalties, it takes you anything up to two years to bid to win the deal - companies will simply take their investment to another country.

He added that longer outsourcing deals were a necessity, if the government wanted to drive out costs.

A softer approach?

Andy Beale
Andy Beale, Government CTO

But it seems that Andy Beale believes that things may have gone too far and that if the government wants to make the changes it needs, then it will need to go back to on boarding some more of the risk.

The government CTO was speaking to an audience member at a TechUK event this week, who stated the following during a Q&A session:

In contracting with government over the last few years, we have seen quite a push back in terms of suppliers taking most of or all of the risk. And my suggestion would be that if you want to move faster and quicker, some of that risk may need to be shared back that other way.

Beale answered with the following response:

I can make an informal comment about that. I personally recognise that dynamic needs to shift. I think coming from the private sector, I think it’s not necessarily in the right place, just to get the outcomes that everybody wants.

And I think it’s about the friction in the procurement system, it’s not just process. There are some policies, but I suspect mostly it’s culture and that takes time to shift. That’s a different way of approaching the change.

Supplier Standard

This week’s TechUK event was focused on the launch of the government’s new supplier standard, a six point plan for how suppliers and government work together. Minister for the Cabinet Office, Ben Gummer, said at the event he thought GDS was important and that he actually wanted to see them doing more.

His comments come after a disruptive period, which saw the departure of the organisation’s executive director Stephen Foreshew-Cain, in favour of director general for business transformation at DWP, Kevin Cunnington. Many commented that this would lead to a change in strategy for GDS and perhaps a shift back towards the old way of doing things.

However, this was pretty much rebuffed at the event and both the Minister and Beale indicated that we could expect positive months ahead for GDS. Beale was keen to highlight the required partnership with industry to drive change. He said:

It’s pretty encouraging to hear [the Minister] so unequivocally support the work we are doing. And I agree with him. For many of us, we felt that there was an evolution that was required at GDS. And I think we have terrific support now from the Minister. I think Kevin’s arrival is also incredibly positive for the organisation. It plays into this whole thing about a collaborative approach, both with our colleagues who are at the sharp end delivering the changes in government, but also our colleagues in industry.

I think it’s really important, the inclusive supply chain, large and small, in all its guises, that’s part of that conversation. I think we have done pretty well, particularly in technology around collaboration and consulting, but we need to move to a partnership. I don’t think we are going to meet the challenges that the Minister sets out just out on our own. It’s vital that we have this partnership with industry to deliver that.

My take

It’s too soon to tell whether this is an indication of a change in direction for government policy as it relates to the way it deals with suppliers, but noteworthy nonetheless. It seems that the Cabinet Office and GDS seems to have come to the conclusion that it can’t do most of this on its own. Make of that what you will.