Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. Could I quote to you what has been said in your memorandum. You say: "Working with the OGC on PFIs in the past we have had one major concern. Dealing with OGC on any subject has been fraught with difficulties, unless one had a personal and longstanding relationship with someone within the OGC. Trying to find the right person to talk to if you do not know them is difficult. We understand that other Government departments have a similar problem. Organisation charts issued by the OGC are difficult to interpret." Have you brought this problem to the OGC's attention?
  (Mr Mitchell) We have dialogue with the OGC, and, yes, it was brought to their attention. I must say, in the recent past that has improved greatly, as the various organisations that came together to create OGC have actually started to bed down. What we saw was something I think that we have seen not only in Government but in our own organisations, when you bring various parts of an organisation and call it now one thing they do not, if you like, butt up perfectly together; there is now a far more cohesive structure within OGC, our understanding of their organisation has improved, and it is now far easier to identify the right person. I would say that that is one of the marked improvements that we have seen, of late.

  101. But you must be a major contractor, or the IT telecommunications side must be a major contractor; do the OGC not have a body of people who are dedicated to you, on that side of things?
  (Mr Mitchell) There are various forums that OGC run, in which we engage; and, again, it is through those vehicles that actually we have been able to express our concerns. And, as a result of expressing those concerns, that process has improved, in terms of matching people to their roles and making sure that our engagement with them is effective.

  102. What have they done to make it satisfactory now?
  (Mr Mitchell) I think what they have done actually is that within their own organisation that has bedded in. They have also opened up their communication, there is far more information available, even simple things through their own website has enabled us and our people to become far more aware of their structure, and therefore identification of the appropriate people, at the appropriate time, is now a far simpler thing than it was.

Mr Cousins

  103. In order to illuminate the comments you have just made to my colleague, Mr Beard, would it be possible for you to give the Committee a list of the PFI IT projects with which you have been involved?
  (Mr Mitchell) I would quite happily take that away and come back to you with an appropriate list of initiatives[1].

  104. And on this point of paragraph 4 of your memorandum, it is expressed in quite striking terms; now, in fact, your evidence here tonight is that this no longer represents the situation as it is now?
  (Mr Mitchell) I think that is a fair reflection, that the evidence that is given orally today shows an improvement that has been made in our position.

  105. So there is a considerable modification of your views about OGC in comparatively recent times?
  (Mr Mitchell) I think that is an effort on both parts. As I say, some of it we would attribute to the organisation bedding in, some of it you would attribute to our own reorganisational alignment; it takes two people to engage. We have gone through organisational change in a similar period as well, and I think those two things have resulted in the improvement.

  106. Is the organisational structure of OGC still difficult to interpret?
  (Mr Mitchell) No. I think that what has actually happened is that their organisation has changed, and I am sure that OGC, in their evidence, has probably conveyed some of that. What has become clear now is, I believe that they must be somewhere close to having the majority of their posts filled. I think when the organisation came together there may well have been some issues, and, maybe, as I say, organisations not butting perfectly; but now that is in place, and their website, and the information that is generally available on an organisation has made it easier to engage.

  107. Do forgive me, but you also say in this paragraph: "We understand that other Government departments have a similar problem." That is when they deal with OGC. What is that comment based on?
  (Mr Mitchell) I have to say that I think it will be inappropriate, as it was in the written evidence, for me to say what problems OGC were having, in the way that they intervened with other Government Departments; and, if need be, I would like, if you like, for the oral evidence to override that. I cannot comment on what issues OGC are having in the way they engage with other Departments.


  108. So you are withdrawing that part of your memorandum?
  (Mr Mitchell) I am sorry, I think what I was asked for by the Member was, do I have a view on the problems that other Departments are having, when they interact with OGC; is that the right interpretation?

Mr Cousins

  109. No, not really. What is that based on, what is that comment based on, the comments given to the Committee, in good faith; you must have believed it at the time?
  (Mr Barton) I believe that the comments are derived from the fact that prior to the formation of OGC there were very clear relationships between BT and the component parts of what became OGC; in particular, historically, that would have been the CCTA. In the formation of OGC, the period of change and the change the management process has gone through, I think there was a period of time, both to the external observer and, I think, probably, to some extent, to people inside the OGC organisation, where there was some lack of clarity about the nature of relationships and responsibilities, and, I think, in migrating from a process where those issues were clear-cut, there was a period of time when that was less clear to outside parties. But there has been very clear progress, in terms of, I think, in particular, in the ways that they have taken great care actually to communicate their objectives. So, I think, from personal experience, basically, we would find that the OGC was approachable on those issues and that we would be able to find the appropriate people. I think the comment derives really from the process of change which took place at the original formulation of OGC.

  Mr Cousins: I see; thank you. There are a lot of things to think about there.

Mr Beard

  110. Could I follow up on that, as well, because this memorandum that we are quoting was written in the last few weeks. What is the point of putting in a point, if your observation now is that it is all alright, but the actual memorandum does not say it is all alright, it ends with: "Organisation charts issued by the OGC are difficult to interpret."? Really, if you are now saying, "Well, it's really all alright," this is a miraculous conversion, is it not, because this is supposed to be only about a fortnight old?
  (Mr Mitchell) I take the point on board. We have taken soundings as recently as today and yesterday on what the current position is; we had a wider consultation prior to coming in to this oral evidence, and what we have said orally, I think, we would like to see perceived the comment that is placed here.

  Chairman: Right; we will leave that issue there and now turn to the framework agreement contracts.

Mr Beard

  111. Would you start this question of the framework agreements by just saying what a framework is, as far as you are concerned, and what the intentions and value of it are?
  (Mr Mitchell) In terms of how we perceive the framework, we look at it as, if you like, another way of commercially engaging with Government, and ultimately with the Government Departments. Jo, I do not know if you would like just to expand, on the framework side?
  (Ms Connor) Certainly. The framework agreements, which I deal with predominantly, with OGC buying solutions, is a particular way of going up to market. It allows various different Agencies within Government, both local and central, to be able actually to view the companies and what they have on offer, in terms of the services that they can provide. This is provided, more or less, by a website portal, and then they can choose, get quotes for the best offer of price, and then they can make a selection; so it is a far more competitive and effective utilisation of resource, financial resource, of both central and local governments. Framework agreements tend to sit within the EU Directorate itself, but specifically come out, and they come out through the countries and all the companies, such as BT, for instance, and we will bid against those to provide this series of different services.

  112. It is not quite clear what the difference is between that and normal contracting. As I understand things, the OGC put out various principles that are to be taken into account by anybody bidding for a particular contract; is that the case?
  (Ms Connor) Yes, it is.

  113. And then different people, including yourselves, will bid for that contract; is that right?
  (Ms Connor) Yes.

  114. So where is the advantage over just putting out the thing and saying, "Well, let's have tenders"?
  (Mr Mitchell) If I may come back to you. The situation that we have is, if you like, it sounds silly but the framework speaks for itself, there is a lot of pre-work that is done, in terms of qualification, clarification, of terms and conditions, that are known in advance. So, therefore, if you like, what the framework enables us to do is, if A to B is 100 per cent, the framework contracts enable us to get halfway down that road, and I am just using that as a figure, in general terms and conditions, in contractual bits, thus enabling us to do two things, one hopes; one is to react quicker, and the second is to make sure that we gained any cost benefit out of working out of such frameworks.

  115. Are you on the inside; are you involved in discussions as to what those guidelines and principles should be, before the thing is made public?
  (Ms Connor) No.
  (Mr Mitchell) Ken, would you like to come in on that?
  (Mr Barton) The principal benefit is that it takes out a large element of the procurement cycle, which would have to be repeated individually for individual contracts, so by agreeing pre-agreed terms and conditions and also by going through an initial qualifying process with suppliers, which has therefore competed their suitability to provide those services, that provides a more simplified service to the customer, and at the same time takes out some of those elements of a repetitive process for ourselves. That provides more general positioning inside those framework agreements for catalogues, but then that itself may be subjected to further mini-competition, so that further specifics or amendments to that, which are pertinent to that specific requirement, can then be dealt with. But the idea, basically, in particular, is to maintain a competitive environment but to reduce redundant elements which might have to be engaged in separately on each individual occasion by both supplier and purchaser.

  116. But when all these are being negotiated, do you, and Siemens, and NTL, and others, get together with the OGC to sort out what the prior conditions and qualifying terms shall be?
  (Mr Barton) The overall terms and conditions are negotiated on behalf of the customers by the OGC, and therefore people who are participating in those frameworks have signed up to those overall terms and conditions.

  117. So the people who are actually going to put in bids subsequently have already been involved in that part of the process, all of them?
  (Mr Barton) Correct; that is right.

  118. So a limited field, in the end?
  (Mr Barton) It is a limited field for those suppliers who are engaged and qualified under that framework agreement, if it is a multi-supplier framework agreement.

  119. Could I come back to the beginning; where is the advantage, as you see it, in this, from your point of view, or from anyone's point of view?
  (Mr Barton) The advantages from a supplier's perspective is because it allows you to engage in a shorter cycle of procurement, it allows you to be more responsive to a customer's real requirements and to get a separate—

1   See Ev 45. Back

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