BSF03: Memorandum submitted by Intellect


1. Introduction
1.1 This submission has been prepared by Intellect in response to the press notice issued by the Children, Schools and Families Select Committee on 22 May 2008.


1.2 Intellect is the UK trade association for the IT, telecoms and electronics industries.  Its members account for over 80% of these markets and include blue-chip multinationals as well as early stage technology companies.  These industries together generate around 10% of UK GDP and 15% of UK trade.


1.3 This memorandum focuses on the development in the procurement and design of the Information and Communications Technology (ICT) element of the Building Schools for the Future (BSF) programme. It follows the evidence that Intellect submitted to the Education and Skill's Committee's inquiry into Sustainable Schools for the Future in June 2006. Nick Kalisperas of Intellect presented oral evidence to the committee on 5 July 2006, which was referenced in the final report.



2. Summary


2.1 Intellect supports the BSF Educational Vision, which was published by Partnerships for Schools in November 2004. This vision states that the mission for ICT in schools is: "To help all children achieve their full potential by supporting every school in England to become a centre of excellence in the use of ICT for teaching and learning and for whole-school development."


2.2 Intellect and its members wholeheartedly believe that 21st century schools need 21st century technology. However, we have a number of concerns about BSF and ultimately about the programme's ability to deliver its vision of education.


2.4 Our main areas of concern, which are detailed in the next section of this document, are that the BSF procurement approach:

has limited ICT choice

has yet to create a vibrant market

does not always support the transformational aims and objectives of the programme



3. BSF procurement approach - limiting ICT choice


3.1 The consortium procurement approach, which brings together construction, facilities management and ICT into a single contract and which is favoured by Partnerships for Schools, places a greater emphasis on the construction element of each programme than on the ICT element. This is because the consortium scoring criteria give relatively little weight (c.15%) to ICT in the decision making process. As a result, BSF programmes may get the ICT service that happens to be linked to a particular constructor, rather than the one they would choose and regardless of whether it meets their needs.


3.2 In order for suppliers to offer genuinely innovative ICT products and services, the choice of the ICT supplier should be based on their educational vision, rather than the consortium that they happen to be part of. While raising the threshold level for ICT suppliers and giving more weighting to ICT in the decision making process would help to achieve this, the most effective means of encouraging suppliers to offer innovative solutions would be to separate procurement as part of a multi-stage process.


3.3 The consortium approach does concentrate accountability for delivering a BSF programme at a single point. However, Intellect members believe that, with the adoption of appropriate interface agreements between constructors and ICT suppliers, the value of free choice of ICT supplier outweighs this benefit.


4. BSF procurement approach - has yet to create a vibrant market


4.1 Whilst many of Intellect's members (large and small) have expressed interest in BSF, only a limited number of ICT suppliers are actually participating in the BSF programme. Some members - particularly the larger generalist ICT suppliers - report that they are not participating because of the procurement model, and in particular the consortium nature of it.


4.2 Bidding for the ICT element of a BSF contract has considerable resource and cost implications for suppliers due to:

the complexity of the procurement process

an inability to leverage economies of scale (since individual bids are for relatively small groups of schools)

the frequent lack of adequate due diligence and preparation by local authorities (which ultimately means the supplier takes on additional risk)


4.3 The high level of investment required to participate in this process is difficult for suppliers to justify, particularly when they have little control over the factors that determine a bid's success or otherwise, and when the end result is determined by their choice of consortium partner rather than by their bid's merits.


4.4 This is compounded by the terms and conditions (Ts & Cs) imposed by the BSF procurement process. We believe that the contractual terms and conditions - which in some situations result in an ICT supplier having potential liabilities that exceed the value of the contract - prove a significant disincentive. Liabilities of such a scale have not been reported in contracts for projects of a similar size and nature and for similar customers.


4.5 Moreover, Intellect and its members share a concern that small companies frequently have little choice but to accept unquantified risks, which may pose considerable problems in the future (for those companies, the schools and the programme).


4.6 Without changes to the procurement model, it is unlikely that the programme will attract more suppliers: particularly when the potential return on investment is considerably higher for other work. There is a significant risk that some tenders will attract bids from two or fewer suppliers. This will lead to capacity issues for those suppliers who remain in the market, but will ultimately mean that schools will receive lowest common denominator ICT and will be unable to deliver the intended educational outcomes.



5. BSF procurement approach - does not always support the transformational aims and objectives of the programme


5.1 Intellect members have broad experience of delivering transformational change enabled by technology. Transformation requires more than simply ICT; it also requires well-executed change management that takes a holistic view of the people and processes.


5.2 To be able to select truly transformational solutions for their schools, local authorities must understand the full range of options available to them at the visioning stage and be capable of communicating a clear and coherent vision to all stakeholders. This will often include a requirement for a significant change management programme.


5.3 The supplier community has considerable experience in this type of change management, which could be utilised to support the delivery of BSF's educational vision. An adequate revenue stream should be made available for change management, as it is undoubtedly a major success factor for the programme.


5.4 Additional clarity is needed on the sustainability of the programme given that it is based on a capital funding model. Intellect recommends that careful consideration be given to the longer-term operational funding requirements: failure to secure the future of BSF schools risks undermining the credibility of this transformation programme.


6. Conclusion


6.1 Intellect and its members strongly support BSF's educational vision and the role set out for ICT within it. However, we are concerned that the procurement approach adopted will not get the best out of the market for BSF schools. Crucially, we believe that the procurement approach limits ICT choice and has failed to encourage new suppliers to create a vibrant and competitive marketplace. As a result, it is not making the most of the skills and experience available in the supplier community to support the real transformation of education and learning.



7. Next Steps


7.1 Intellect is happy to provide additional evidence to the Children, Schools and Families Select Committee and to explore the issues discussed in this submission in greater detail.


July 2008