Government reworks IT contracts to handle suppliers' cash flow problems

The government is easing the guidance on oublic sector contracts with IT suppliers in light of the recession.

The Office of Government Commerce today launched a new contract model to provide better ground for resolving problems if suppliers have cashflow trouble.

The revised version of the ICT Model Services Agreement and Guidance, addresses potential “financial distress” of suppliers, the OGC said, though details its exact provisions are not yet clear.

The new procurement model can be used by all government departments, and was developed with the advice of IT industry body Intellect. It is geared towards providing a standard model that government departments and suppliers may come to expect.

In previous versions of the standard contract the government could to take steps from freezing funds, to cancelling the contract in the worst circumstances, when suppliers experienced financial difficulties

These provisions remain, but with the new version, the government should receive more timely information from suppliers about potential financial difficulties, allowing earlier resolution and avoiding the need to abandon contracts and retender for new suppliers.

The new version also provides for quicker changes to contracts so that the services being delivered are not adversely affected.

David Shields, programme director at OGC, said the success of IT programmes depended on services “being contracted in the most appropriate and efficient way”. The new model reflects “feedback, lessons learned and the changing operating environments”, he said.

The new version of the model also includes developments in security management, and information on carbon reduction and the use of open source software.

Copyright © 2009 IDG Communications, Inc.

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