Examination of Witnesses (Questions 80-99)
MAVIS MCDONALD
CB, MR ANDREW
PINDER AND
MR HUGH
BARRETT
MONDAY 13 MAY 2002
80. I thought you said a year ago.
(Mr Barrett) No, I did not say that.
81. I beg your pardon; I misunderstood you.
(Mr Barrett) It was certainly this calendar year and
I would suspect within the last three months, but I cannot be
absolutely certain about that.
82. What happens if it is scrapped? Is this
the sort of project you will have to re-start all over again or
do you just abandon it?
(Mr Barrett) I do not have that level of detailed
knowledge about the particular project, I should have to refer
you to the Lord Chancellor's Department for that.
83. Rosie Eagelson, the General Secretary of
the Association of Magisterial Officers is quoted in the paper
as saying that when you try to introduce private finance into
something as complicated as the criminal justice system, the results
are disastrous for those working in the courts and for the taxpayer.
Would you agree? Is there a real problem in trying to introduce
private finance into this area?
(Mr Barrett) I have no knowledge of that area in detail
to allow me to comment.
84. Are there any areas of Government where
you would think it was in general very dangerous to introduce
a private finance system just because of the inherent way that
particular area is run?
(Mr Barrett) No.
85. So you do not agree in this case then.
(Mr Barrett) None that I am aware of.
86. Are we getting too dependent on too few
IT suppliers?
(Mr Barrett) There is a concern that this is the case
and it is a concern that has been reflected in the press on a
number of occasions.
87. Indeed one reason for asking that question,
as the article implies, is that we now may actually have to buy
ourselves out of this contract. In other words, not only do we
not get our money back, but we have to pay more money to the contractor
to stop the contract when the thing is no use to us. That does
seem quite extraordinary. It certainly indicates that we are very
much over a barrel as far as some of these IT contractors are
concerned.
(Mr Barrett) I can talk about the general issue of
whether Government is over-dependent on a number of IT suppliers.
There are two things to say. The first is that we within OGC are
conscious that there are some big players in the marketplace who
are not competing in the Government marketplace as they should
do.
88. I am sorry. You said "there are some
big players . . . who are not competing . . . as they should do"?
(Mr Barrett) They are not devoting enough resources
to trying to win business in the Government marketplace.
89. Who are you to say? Is that not their decision.
You seem to indicate they have some moral responsibility.
(Mr Barrett) No, they do not have a moral responsibility,
but it would be helpful to the competitiveness of the marketplace
if we had some other players in the marketplace.
90. So why are there not and what are you doing
to encourage that?
(Mr Barrett) They are not doing it for a number of
reasons. The first is a very strong perception that Government
buys on lowest price and that is not a business they say they
want to get into. The second reason is that they have concerns
about the protracted length of the decision-making process and
it costs them a tremendous amount of money to bid. The third factor
is that they are somewhat concerned about the damage to their
reputation if they do work for Government. On the other side there
are benefits to doing business with Government which I shall not
go into at the moment. On the first issue, which is about the
perception that the Government awards contracts on the basis solely
of lowest price, we have done a lot of work with Departments producing
revised guidance and training for those people making decisions
to reinforce the message, which I understand is one which this
Committee has supported on numerous occasions, that what is important
is value for money not lowest price. On the second, we are working
with colleagues in Departments to look at shortening the decision-making
process so that we can take substantial cost for bidders, and
therefore at the end of the day, for Government, out of the procurement
process. On the third, on the grounds of reputation, my answer
is very simple. If you are not involved in a disaster, you have
no worry about any damage to your reputation.
91. I can understand that. Your argument on
the third one is a little bit weak, if I may say so, because naturally
Government projects are likely to have that much more publicity
so there is that much higher risk to their reputation in that
sense.
(Mr Barrett) Yes, but the advantage of doing business
with Government is that it is certainly a triple-A-rated organisation
and they have no worries about paying bills. There are tremendous
benefits to doing business with Government.
92. May I go back to the first one? It is very
interesting that you should say there is still a worry that Government
is seen as going simply for the simplest price. That tallies extraordinarily
well with something which Mr James from the Dome told us just
the other day, when he also said that one of the great worries
about the way the Dome was handled was that Government simply
went for the cheapest possible option the whole time. That was
one of the reasons why the Dome failed so badly. He did say that
one of the reasons the Dome failed was because they were going
for the cheapest option rather than going for a more expensive
option and getting a better long-term result. You seem to have
said very much the same thing, that you believe this is how Government
is seen.
(Mr Barrett) Yes, there is a perception out there.
93. You also said you were trying to tell people,
not least thanks to the work of this Committee, that that was
not the case.
(Mr Barrett) Yes.
94. You do not yet seem to have been successful,
if I may say so. Can you give me some examples of how you are
trying to get that across to people, that they should really be
providing good value and not just lowest price?
(Mr Barrett) An example is producing guidance of this
type, which is a value for money evaluation in complex procurements
which is a document which is circulated to Permanent Secretaries
within Government and helps to put a framework in place to legitimise
the consideration of non-financial issues when making a complex
procurement judgement. That is an example of a piece of guidance
we have produced.
95. You say that has gone to Permanent Secretaries.
(Mr Barrett) Yes; indeed.
96. Does this information go further down the
tree?
(Mr Barrett) Yes; it then goes down to practitioners.
My view is that it is very important you get top of the office
support for these messages and try to reinforce through the mechanisms
that OGC has in place with its supervisory board and the other
ways we work across civil central Government to get those sorts
of messages put across. Yes, you have to work at the professional
level, you have to put it into professional training for procurement
people that value for money does not equal lowest price and that
is a message which will take time for the industry to recognise.
At the end of the day they will only believe it when they see
contracts awarded on the basis of best value for money, not lowest
price. That will take time.
97. So far you have not awarded any major Government
IT contracts on anything except the lowest price.
(Mr Barrett) No, that is not what I said. What I said
was that there was still that perception that that is the most
important factor and it will take time to change that.
98. You have given some contracts which were
not on the bottom price, have you?
(Mr Barrett) I have not awarded contracts on that
basis.
99. You have never awarded a major IT contract
except to the lowest bidder.
(Mr Barrett) I have never awarded a contract to the
lowest bidder. In my awarding of contracts I have always awarded
it on the basis of best value for money.
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