The Government is reportedly paying up to 10 times more for IT projects than the standard commercial rate, MPs have warned.
The Government’s over-reliance on large contractors for its IT needs combined with a lack of in-house skills is a “recipe for rip-offs” according to a report by the Public Administration Select Committee (PASC).
The committee found the Government was “overly reliant” on a few large suppliers, resulting in the waste of an “obscene amount of public money”.
Committee chairman Bernard Jenkin said that according to some sources, the Government paid contractors between seven and 10 times more than the standard rate, however the Government did not collect the information needed to verify the claims.
The committee’s report said the Government’s overall record in developing and implementing new IT systems was “appalling”.
“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 report said. The committee criticised the dominance of Government IT by a small number of large companies.
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.”
The report argued that the Government needed to do a number of things to “break out” of its relationship with the few large suppliers. This included widening the supplier base by reducing the size of its contracts and simplifying the procurement process to engage with innovative small-and medium-sized enterprises. The Government should also improve the information held on IT spending so it is better able to secure the best price, and it should also publish the costs of IT projects to allow external experts to identify ways to save money, the report said.
Jenkin said: “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.
“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.”
Jenkin acknowledged that the coalition, like many governments before it, had set out an “ambitious programme” aimed at reforming how it used IT.
“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 said.
The committee's report supports the findings of the Skills and Demand in Industry report published by the Institution of Engineering and Technology (IET) last month.
The IET's research revealed that 34 per cent of organisations surveyed currently recruiting IT staff said they were finding it difficult to recruit IT managers.
Around a third (31 per cent) of respondents reported that new engineering, IT and technical recruits did not meet reasonable expectations for levels of skill, with the biggest skills gap amongst new recruits, particularly graduate recruits, being lack of practical experience
The IET is looking at addressing this area through their accreditation of university degree programmes and ensuring that practical content of accredited degrees met employers’ expectations, said IET senior policy advisor Hugo Donaldson.
“The IET and others do a lot of work trying to address skills shortages in the engineering sector, either through going to the government and trying to encourage them to design the education system in such a way as to encourage more people to take engineering and engineering-related subjects, or through things we do ourselves, like Flipside magazine [the IET’s science, engineering and technology educational magazine for teenagers,” Donaldson said.
Paul Davies, Head of Policy at the IET added: “The IET has focussed strongly on ways of increasing practical skills amongst engineering graduates in recent years.
“This effort has included professional registration for undergraduates who have completed a year’s work experience, as a means of helping employers distinguish those students who have already gained practical experience in the workplace.”