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Office of Fair Trading to probe Government IT contracts

The OFT wants to establish if the public sector is paying over the odds for ICT.

Question mark and magnifying glass

Amid concerns Government departments are paying over the odds for ICT, the Office of Fair Trading (OFT) has launched an enquiry into the supply of goods and services into the public sector.

The OFT has urged suppliers and purchasers to get in touch about the experiences of ICT procurement. In particular, the organisation is seeking information about the structure of the sector are there too many or too few suppliers? Are there barriers to entry that prevent SMBs competing in the market?

It will also be looking at whether the cost of switching suppliers is too prohibitive and if the practice of outsourcing ICT has led to a shortage of essential technical skills within the government.

Speaking at the Economist CIO Forum yesterday, government chief technology officer Liam Maxwell welcomed the move. "The government has spent 15 years outsourcing everything. That's a massive problem for government, as it means we've outsourced IT expertise."

He said this meant the nature of the CIO's role had changed. "We were surrounded by CIOs but they were negotiating with suppliers rather than running IT systems," he said.

Maxwell added that it was important that value for money was addressed, explaining there were some glaring anomalies in the system.

"Rural payments were crazy. It cost us 723 per transaction to pay a farmer. It literally would have been cheaper to hire a taxi, put the cash into the cab and deliver it to the farmer than use our payment system," he said.

Pointing to the success of the G-Cloud initiative, Maxwell said it brought commoditisation to the procurement process, allowing government departments to buy services in an open market, and there had been notable successes.

"In one case, a contract that had had a bid from a traditional vendor of 52 million was won by a bid of 940,000 and in another a 4 million bid was beaten by 40,000 from an SME."

The OFT is set to address the question of whether there's an imbalance in the procurement process itself.  OFT chief executive Clive Maxwell said, in a statement, that information and communication technology is a crucial part of any modern economy and key to improving productivity in public services as well as businesses.

Given the vital role that this technology plays in the delivery of public services and the cost to the taxpayer, the OFT believes it is important to explore whether there are any restrictions on competition.

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