Underperforming suppliers may get fewer government contracts

Francis Maude, minister for the Cabinet Office, will today address twenty of the government’s top suppliers and inform them that supplier performance will now be monitored and made available at the start of and during the procurement process, which may make it difficult for those with poor performance to secure future government work.

Companies attending the briefing include Accenture, Atos, BT, Capgemini, HP and IBM.

Absent from the meeting list, however, is CSC – the supplier that was responsible for the failed National Programme for IT (NPfIT). It was lambasted last year by MPs on the Public Accounts Committee (PAC) after it was revealed that the IT services company had delivered a full patient administration system to just three trusts in nine years. CSC may have to write off the entire £957 million investment it made in the programme.

However, this did not prevent it from securing a 10-year outsourcing deal with the Ministry of Defence (MoD) to deliver payroll and personnel services to serving veteran communities. It beat incumbent supplier HP to secure the contract, which was worth an estimated £100 million a year.

Tola Sargeant, director at analyst firm TechMarketView, highlights that CSC’s past failings may now hold repercussions for its future in public sector work.

“Obviously this does have implications for suppliers like CSC. They are not the only one, there are always examples of suppliers in areas of the public sector where things go wrong, but at the moment CSC is the first one to spring to mind because it was such a big contract and the problems have been ongoing for a long time,” said Sargeant.

She added: “It does, however, depend on the nature of the performance issues raised and how applicable they are. I can believe that when the MoD looked at CSC they were looking more at reference sites from the US, where CSC does an awful lot of work with the Department of Defense (DoD) and government in the US.”

“You could argue, and I’m sure CSC does, that the issues around the NHS contract are quite specific to healthcare. It’s true that you wouldn’t want suppliers to be unfairly penalised, but at the same time the government as an intelligent client needs to take past performance into account.”

Sargeant also expressed disbelief that this sort of practice has not been deployed by central government before now.

“It absolutely makes sense to take into account performance and to try to do more sharing of that information across the public sector. I suppose the most surprising thing is that more of this isn’t done already,” she said.

“I know that one of the most consistent themes coming from Francis Maude at the moment is that they don’t have the right information and they don’t have enough good quality data on suppliers. It will be interesting to see how they gather and share that information – I suspect there will be a bit of a learning curve.”

Maude will also tell suppliers that stringent spending controls will be a permanent way of doing business for government going forward.

The introduction of spending controls saw the government save £3.75 billion in the first 10 months of the coalition government being formed, £450 million of which was attributed to IT. It also predicted that for 2011/2012 it will save £5 billion, some £140m of which will be from IT.

“We are ensuring that government operates in a more business-like fashion than ever before. To deal with the deficit we inherited in 2010 and to protect every taxpayer’s pound we are relentlessly driving efficiency savings,” said Maude.

“Our cross-Whitehall controls on spending have made billions of cash savings for the taxpayer – something that has never been done before. That’s why I’m pleased to confirm that our controls will be a permanent feature, helping to change fundamentally the way government operates.”

“I want Whitehall procurement to become as sharp as the best businesses.”

Meanwhile,Julian David, Intellect’s director general, said: “We are pleased that government recognises it needs to change the way it specifies and procures projects in order to deliver further benefits. We welcome the progress made to date which we hope will benefit both government and industry, including SMEs.

"However, the big prize for the public sector will come from using information technology to transform its service delivery and that is the agenda we want to engage with now. There are already examples of technology being used to improve public services but there is scope to go much further.”

This news follows an announcement earlier this week that the Cabinet Office has secured some £70 million worth of savings from renegotiating licencing and maintenance contracts with SAP and Microsoft. The new frameworks will run up to 2015 and follows a similar deal with Oracle.

Copyright © 2012 IDG Communications, Inc.

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