Main content

Just how do you say no to government IT suppliers?

Stuart Lauchlan Profile picture for user slauchlan October 10, 2013
Queensland's managed it; the US GSA has had a stab at it; so why might Europe's procurement rule change not help its national governments IT purchasing?

Bryan Glick

Yesterday we looked at rumoured changes to European Union procurement rules that would allow IT and services suppliers to be blacklisted from future work if they demonstrably had failed to deliver in the past.

Over at Computer Weekly, editor Bryan Glick isn't getting too excited about all this.

Glick argues that there is only so much EU rules can do to prevent any under-performing supplier from being considered for future projects:

"The EU proposals will not change much.

"The UK government already has a policy in place that goes as close to a blacklist as the law will currently allow. The Cabinet Office Strategic supplier risk management policy allows for major suppliers to be designated as 'high risk' over poor performance, whereby civil servants can 'reduce where possible the extent to which the Strategic Supplier is given additional work'.

"The EU rules also state that blacklisting can only last as long as a supplier is not taking steps to address its problems - and part of the Cabinet Office high-risk designation states that the supplier agrees to an improvement plan, thereby - under the EU proposals - meaning they can no longer be blacklisted."

It can happen

There are precedents out there of other governments and government agencies getting tough on a supplier's prospects for picking up new business.

In April last year the US General Services Administration cancelled Oracle's contract on its GSA IT Schedule 70 - the federal government's single largest acquisition vehicle - stating that the Oracle contract "was not in the best interest of the government."

At the time Information Week estimated that Schedule 70 related revenues for Oracle the previous fiscal year had come to $388 million.

(Interestingly Oracle's been among the most pro-active suppliers to engage with the new regime in the UK public sector, negotiating a new deal with the Cabinet Office that is said to be on track to generate savings of more than £75 million by 2015.)

Trouble down under

Queensland, Australia

More recently, IBM has found itself barred from government contracts in Queensland, Australia until it improves its governance practices.

Health Minister Lawrence Springborg had warned that he was considering blacklisting IBM from winning any future work, saying the firm's role in winning a $98 million health service payroll contract was “corrupt”.

But in August, it was Premier Campbell Newman who confirmed that his government would not enter into any contracts with IBM until it could show it had strengthened its governance and contracting practices and had dealt with staffers who were named in an inquiry report into the failed project.

The health payroll system was initially expected to cost AUS$6.19 million, but the bill is expected to come in closer to the AUS$1.2 billion mark.

IBM argues that it did not receive a proper brief from the state government, insisting:

"The successful delivery of the project was rendered near-impossible by the state failing to properly articulate its requirements or commit to a fixed scope.”

But Newman sees a wider cultural aspect to the problem:

“I don’t want people of this character working on government projects in this state, and I don’t want companies that have this sort of culture doing work for the people of this state.

“Behaviour demonstrated by IBM on the payroll project will not be tolerated by my government."

Bad memories

At this point, it's impossible as a UK taxpayer, not to conjure up memories of the terminally ill, but still on fiscal life support, NHS National Programme for IT - the enduring template for everything you ever need to know about how not to do a major public sector IT programme.

That too had senior political intervention in 2011 when Prime Minister David Cameron told the House of Commons that he was “very concerned” that the troubled £12.7 billion scheme was poor value for money and pledged that "all available options" would be considered.

He also pledged that while a series of investigations were underway:

“There are no plans to sign any new contracts with Computer Sciences Corp. until the National Audit Office report has been reviewed, and until the Public Accounts Committee meetings and major project authorisation reviews have taken place.”

But  his Prime Ministerial tough-talking stood in sharp contrast to Sir David Nicholson, the CEO of the NHS in England and the living embodiment of the very place the infamous buck supposedly stops, when he was called to face the Public Accounts Committee (PAC).

David Nicholson
Sir David Nicholson

Appearing alongside suppliers CSC and BT - who were savagely berated by angry MPs for their performance on the National Programme - Nicholson transitioned into the role of apologist for the suppliers and for lack of progress - for which of course the civil service could also expect to take their share of the blame in the form of poor project and supplier management.

And so the flagrantly out of control Programme was described as “a laudable ambition” into which a “huge amount of work was done around working out how you might put that into practice”. There were, Nicholson conceded “big risks in the middle of it”, but the NHS had been working through those and “adapting to the circumstance in which we found ourselves".

The reality

Despite all the criticism aimed at it by MPs, the PAC and the National Audit Office over many years, as of June this year, the NHS had spent £1.1 billion on the CSC part of the programme.

That figure that is set to rise to £2.2 billion over the lifetime of the contract, despite the National Programme for IT having been officially - or at least politically - closed down.

Some £600 million will be given to up to 22 NHS Trusts who choose to implement CSC’s Lorenzo system. Now, they can choose other providers, but if they do, they don't get any central funding from the NHS, so that's technically a choice for budget-strapped trusts, but...

The NHS has also paid CSC £100 million to renegotiate the original deal – despite it having not achieved many of its previous objectives and failed to implement systems across the NHS - as well as a further £10 million for changes to the software and £2.9 million to cover legal costs.

For the record, Nicholson advised Parliament that this was the best possible outcome for the NHS.

New mindset

That sort of mentality brings me full circle back to Computer Weekly's Glick who suggests that:

"The challenge for government IT buyers is not one of EU rules, it's one of culture and mindset."

He's perfectly right of course.

That's why we need to get to get more qualified and skilled and IT savvy people back into the civil service and back from the outsourcing companies that we've spent decades farming them off to.

And it's why we need the likes of the UK's Government Digital Service and initiatives like G-Cloud and Digital by Default to succeed.

We just can't afford for them not to.

A grey colored placeholder image