IT giants 'ripping off Whitehall', say MPs

Woman typing on laptop computer Civil servants need to improve their knowledge of IT before negotiating contracts, MPs say

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Government departments have been ripped off by a "cartel" of big IT firms, a damning report by a committee of MPs has found.

Some were paying as much as 10 times the commercial rate for equipment and up to £3,500 for a single desktop PC.

The public administration committee said an "obscene amount of public money" was being wasted on IT.

The government said it was already making "significant improvements" to the way it bought computer equipment.

Prime Minister David Cameron vowed to end the era of vast government IT projects that he said had dominated Labour's time in power.

The coalition has called a halt to schemes costing more than £100m as it looks to reduce the UK's budget deficit.

In its report, the public administration committee recommends that departments across Whitehall use more small and medium-sized IT suppliers to increase competition and bring down prices.


Committee chairman, Conservative MP Bernard Jenkin, said that according to some sources, the government had paid contractors between seven and 10 times more than the standard rate.

But ministers themselves did not collect the information required to verify these claims, he added.


The government has talked a good game on ending mega IT schemes - but we'll probably still be reading headlines about catastrophic computer projects for years to come.

True, the coalition has scrapped the huge ID card project, but this had more to do with politics than cost-saving.

The real problem facing ministers is that IT is central to delivering better public services and cutting costs.

Hence, the Department for Work and Pensions is rolling out a huge computer project to place all claimants' income and benefits on one database that they will be able to access in real time, online.

Placing the proposed Universal Credit online is not just a hugely complicated IT project involving millions of different benefit claims, but is also politically crucial and key to to Ian Duncan Smith's welfare reforms.

The department insists the Universal Credit roll-out is on time and on budget, but somehow I suspect we may not have heard the last of great government IT rip-offs.

The committee said Whitehall's overall record in developing and implementing new IT systems was "appalling".

It warned: "The lack of IT skills in government and over-reliance on contracting out is a fundamental problem which has been described as a 'recipe for rip-offs'.

"IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose.

"Given the cuts that they are having to make in response to the fiscal deficit it is ridiculous that some departments spend an average of £3,500 on a desktop PC."

The £3,500 figure is taken from the Cabinet Office's business plan for 2011-2015, but officials have stressed that it covers more than just hardware and also includes infrastructure and applications.

The MPs' report concludes that "the current government seems determined to succeed where others have failed and we are greatly encouraged by its progress to date".

But it warns that the government will be "doomed to repeat the mistakes of the past" if it does not learn to be more "intelligent" in its dealings with IT suppliers and improve the way it compares costs across different departments, known as "benchmarking".

The last Labour government spent £16bn in IT projects in 2009.

It came under particular criticism for the spiralling cost of its delayed NHS scheme, which eventually reached more than £12bn.

Last autumn, the coalition government announced it would allow hospitals to source more of their own equipment, as part of a plan to cut costs by £700m. This came on top of £600m of savings already announced by Labour.


In March, Tony Blair's former IT chief Ian Watmore - who has returned to the Cabinet Office under the coalition - told the committee that some Labour ministers had ordered expensive computer projects because they wanted their policies to "sound sexy".

Mr Jenkin called for an overhaul of the entire system of procurement, saying: "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."

A Cabinet Office spokesman said: "We have already made significant improvements to the management of IT projects including introducing new ICT [information and communications technology] controls, increasing transparency, and creating robust governance arrangements.

"We hope these will go some way to address the problems of the past the committee have rightly highlighted."


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  • rate this

    Comment number 403.

    Costs are normally for the lifetime of a project, £3000 for 5-10 years is not too bad, especially if it includes Tech Refresh every 3-4 years.

    Having worked in various areas of UK Government, I know from experience that today you reach an agreement of what to provide your customer but tomorrow they have changed their minds and the negotiations start all over again.

  • rate this

    Comment number 375.

    I work in the public sector and IT is a constant source of frustration, delays and stress. It is a national contract awarded for a lengthy period with no apparent sanctions for the atrocious service and outdated equipment and applications we're expected to use. The IT companies see the public sector as a cash cow and need to be brought to task.

  • rate this

    Comment number 346.

    Major IT corporations noticed that procurement legislation and the trend for centralised purchasing both present major barriers in entry for new companies wishing to supply public sector organisations. Therefore they decided to buy out all of the smaller companies leaving effectively no competition in the market.

  • rate this

    Comment number 281.

    As long as civil service managers regard Testing and Quality Assurance of IT systems as a means of diverting blame so that they continue in their comfy jobs we will continue to pay the price of failed government IT systems.
    In 6 years as a freelance system tester on the NHS national program I never a saw civil servant brave enough to make a stand on the quality of the solutions being delivered.

  • rate this

    Comment number 140.

    I'm a civil servant and have to use these IT systems. For all the money that is spent on them I'm using a machine that's 7 years old, has minimal memory and hard-drive capacity, is running Internet Explorer 6, has snail's pace connectivity speed and find it really difficult to do my job. And as you all may know, everything is done on computers these days.


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