Government Recipe For IT Rip Offs Laid Bare

A swingeing report from the Public Administration Select Committee (PASC) looking into government IT procurement describes successive administrations as wasting “an obscene amount of public money” on a small number of large companies.

Bernard Jenkin, chair of the PASC, said of the many witness interviews undertaken by the committee, “We heard truly worrying accounts about the amount of money successive governments have wasted on failed IT projects. According to some sources the government pays between seven and ten times more than the standard commercial rate for its work: however the government does not collect the information needed to verify these claims.”

Failed Projects Wasted Billions

Towards the end of the last Labour government’s tenure, The Independent newspaper reported that IT projects had wasted over £25 billion. The money was squandered on schemes that either ran over budget, suffered delays, or had been scrapped. The paper added that the cost of Labour’s 10 worst IT failures more than equalled half of Britain’s schools budget for 2009.

Comments from the National Audit Office, the parliamentary spending watchdog, stated that the projects were “fundamentally flawed” and that the ministers in charge were guilty of “stupendous incompetence”.

The new government and IT – “A Recipe for Rip-offs”: Time for a New Approach report is equally critical. Jenkin said, “The government has said that it is overly reliant on an ‘oligopoly’ of suppliers; some witnesses went further and described the situation as a ‘cartel’. Whatever we call the situation it has led to an inexcusable situation that sees governments waste an obscene amount of public money.”

PASC witness Martin Rice, CEO of Erudine, told the committee: “I think the IT industry should publicly apologise to the citizen for the rip-offs of the last 10 or 20 years.”

Topping the list of recent costly failures is the overambitious NHS National Programme for IT (NPfIT) which wrote off £12.7 billion, and next was the £7.1 billion Defence Information Infrastructure (DII) project. Soon after the current coalition government’s election, the ailing £5 billion National Identity Scheme was scrapped.

The £5 billion price tag was the current running cost up to the closure of the ID card scheme, but the government pointed out that it would have cost an extra £86 million pounds to continue with the implementation. Very little money could be recouped because even the machines purchased to produce the cards had to be destroyed because they were custom-built and could not be used for other purposes.

Ambitious Schemes Require Bold Changes

Jenkin’s committee observes that the coalition has already outlined several ambitious schemes and puts forward several suggestions on how to avoid the disastrous results.

“This government, like many before it, has set out an ambitious programme aimed at reforming how it uses IT,” he said. “We are greatly encouraged by the government’s plans, and we promote a number of solutions which can transform how we deliver public services online.

“We will need to wait and see whether it can make progress in an area that has resisted so many previous attempts at reform,” Jenkin (pictured) warned.

The report argues that the government needs to do four things to break out of this relationship:

• Improve the information it holds on IT expenditure, without which the government is unable to secure the best possible price for goods and services.
• Publish more information about IT projects. The committee argues that the government should make public information about how much its IT costs, and how its systems run. This would allow external experts to challenge current practices and identify ways services could be delivered differently as well as more economically.
• Widen the supplier base by reducing the size of its contracts and greatly simplifying the procurement process to engage with innovative SMEs. Most importantly, departments need the capacity to deal directly with a wider range of suppliers, especially SMEs.
• Work in a more “agile” manner. The government needs to move towards the use of more iterative development methods which enable IT programmes to adapt to ever changing challenges.

The report argues that changes need to be made to regain a healthy level of insight within Whitehall’s IT departments. Recent moves to outsourcing have been made without regard to the de-skilling effect it has on government departments. It also has had the potential to place the government at the mercy of services companies that may push certain suppliers products in favour of others for no real technical reason but for mutual financial gain.

“To address these challenges successfully the government needs to possess the necessary skills and knowledge in-house, to manage suppliers and understand the potential IT has to transform the services it delivers,” Jenkin advises. “Currently the outsourcing of the government’s whole IT service means that many civil service staff, along with their knowledge, skills, networks and infrastructure have been transferred to suppliers. The government needs to rebuild this capacity urgently.”