Good Governance - Effective use of IT

Written evidence submitted by BSA (IT 23)

Introduction

1. The BSA – Business Services Association – is the trade body that represents companies, and their advisors, delivering outsourced and business services across the private and public sectors. A full list of members is provided as an annexe.

2. BSA members are involved across the full range of public service provision – including health, education, defence, environmental, waste management, housing and other local services, IT and digital services, security and transport.

3. Full members have a combined worldwide turnover of c.£80 billion and employ around two million people. In the UK the combined turnover is c.£30 billion and around half a million people are employed across the country.

4. The BSA has recently established an IT & Digital Services Committee to bring industry members together and help the government achieve its goals of streamlining public sector IT and creating better value for money. We believe that the government’s IT policies have historically been too disjointed.

5. We welcome any efforts to reform IT service procurement and contract scope. We are particularly encouraged by statements from the Cabinet Office indicating a greater level of central coordination and oversight of the IT programmes of Whitehall departments and their agencies. There needs to be a greater recognition that the lowest cost often does not represent the best value, and departments could save more money in the long term by understanding the benefits of broad, encompassing contracts which contain through-life support.

6. We wish to make the following key points:

a. IT procurement should be as centralised as possible, preferably overseen by the Cabinet Office.

b. Contracts should be as wide as possible to ensure the best value for money. This means incorporating the principle of whole-life service contracts so that IT support is constant and costed in.

c. Government should take steps to facilitate a forum for public sector IT providers to cooperate and coordinate system compatibility.

d. The clarity of procurement frameworks are favoured over the dangers of an unregulated market.

e. Greater public scrutiny of IT contracts over £1 million will encourage decision-makers to opt for smaller contracts of a lower value.

f. IT services should be more widely used in government interaction with citizens.

g. The government should recognise the value of outsourcing IT services effectively. The government does not have an adequate skills base in its workforce to run day-to-day IT operations, nor should it attempt to develop one, because to do so the cost would be untenably high and provide a much poorer quality of outcome than outsourcing to private sector specialists.

Question 1: How well is technology policy coordinated across government?

7. Government has been slow to recognise the benefits of central coordination of technology policy and IT contracts. We feel the quality of public services, as well as the fiscal conditions which underpin them, have been unnecessarily diminished by the disjointed structure of government procurement and the tendency of Whitehall to maintain and defend fiefdoms.

8. Centrally determined, well-constructed service contracts can be flexible enough to provide the level of bespoke support required for departments and agencies. The cost savings to the government could be vast, and should be encouraged at a time when the government is attempting to cut public spending but maintain quality public services.

9. We are pleased to note the government’s intention, stated in various departments’ structural reform plans, for the Cabinet Office and HM Treasury to work together on devising a new procurement process for ICT. We urge that this is as centrally coordinated as possible. We also note that the government’s self-imposed deadline for this is March this year, and we look forward to an elaboration on the direction of travel then.

Question 2: How effective are its governance arrangements?

10. IT contracts are valuable and can cost a lot of money. While we are encouraged about the government’s stated intention to bring a greater degree of continuity and consistency to IT procurement, through a process of greater centralisation, we are very concerned that initiatives to open up the bidding process to public scrutiny will harm value for money and serve to put a premium on small, limited contracts.

11. The government has announced its desire to publish performance details on all new contracts in excess of £1 million. While admirable in its aims, this initiative could have the effect of discouraging ministers and officials from pursuing contracts costing more than £1 million, harming the likelihood of a successful outcome.

12. This also endangers the principle of corporate confidentiality. Relationships with IT service providers could be harmed, and government expenditure on such services could rise as providers either fail to bid or price such developments into their contracts.

Question 4: How well is IT used in the design, delivery and improvement of public services?

13. The transformative potential of IT is not well exploited in the design, delivery or improvement of public services. At their best, IT programmes can free public services of bureaucratic waste, aid staff in delivery and enhance the experience of users. At their worst, they can exacerbate the waste of resources, hinder staff and complicate the experiences of those people for which such public services exist.

14. For example, there remains too much of a tendency for online interaction with government, such as applying for benefits or a passport, to be a ‘back-up’ option for use by technologically savvy citizens only. Paper-based forms should be phased out to a point where they are only necessary for those who are unable to use computers.

15. Rival and incompatible IT systems, which can severely hinder data compatibility between Whitehall departments and their agencies, are a block to joined-up government. It may seem reasonable for public service delivery to be divided up across governmental administrative structures, but for service users it can be difficult to understand why they need to provide the same information several times to different agencies. The previous government’s ‘Tell Us Once’ initiative was a step in the right direction.

Question 5: What role should IT play in a ‘post-bureaucratic age’?

16. Government has an important opportunity to use its new focus on a ‘post-bureaucratic age’ to enhance the status of IT in its operations, whether those are back-office or front-line. The effective use of IT has an enormous potential to reduce paperwork, enhance operational efficiency dramatically, and vastly improve the user experience of the public who use government services.

17. The government should prioritise efforts to shift the bulk of its interactions with the public to online mechanisms. While it will be important to provide a range of ways to communicate with governmental agencies, including by continuing to accept paper forms from those who may not be able to use online services for whatever reason, the emphasis should now be on internet-based services.

18. We are pleased that the Department for Work and Pensions, for example, will be moving Jobseekers Allowance and state pension applications online. This will almost certainly cut administrative costs.

Question 6: What skills does government have and what are those it must develop in order to acquire IT capability?

19. The BSA encourages the government to acquire further skills in IT only where those skills can be directed towards the informed commissioning of external providers. The training of IT staff to perform day-to-day operations is extremely costly and does not provide the best service possible.

20. We firmly believe in the value of broad, encompassing contracts. It is not enough for public sector organisations to purchase IT systems – they need holistic service contracts with scope for support, repairs and replacement to be cost neutral. IT support staff need to know and understand the systems completely, so it is important that they are drawn from the same organisation providing the hardware and software. These outsourced support staff should be based in situ in order to provide the fastest possible service.

Question 7: How well do current procurement policies and practices work?

21. Although there are successful IT contracts in the public sector, BSA members have to work within procurement architecture which they would neither design nor endorse. The problem is twofold: contracts are too limited by size and too limited by scope.

22. The success of Whitehall IT contracts is hampered by departmental silos. The structure of government is such that almost all procurement is presently done on a departmental basis, including IT, limiting the size of contracts meaning that scale economies cannot be exploited and the best value for money cannot be achieved. IT procurement needs to be more than centrally coordinated; it needs to be centrally conducted, with departmental specificities acknowledged and catered for.

23. This will enable greater cross-system compatibility, which will have positive policy outcomes. The difficulties encountered by the Child Support Agency as it was absorbed by the Child Maintenance and Enforcement Commission, for example, would have been avoided had IT systems been compatible. This should not, however, be interpreted as a call for a single IT service provider for the whole of government. The Cabinet Office should facilitate a forum whereby providers can coordinate their systems.

24. The scope of IT contracts at present needs a fundamental evaluation. Government requires far more than hardware and software to achieve its IT goals. Round-the-clock support provided by specialists, maintenance and upgrade services, and reliable, integrated communications solutions are required by government. It is imperative that the government recognises that costs can be far lower if IT contracts are signed with a whole-life intention.

Question 8: What infrastructure, data or other assets does government need to own, or to control directly, in order to make use of IT?

25. The BSA strongly believes that government should not undertake any activity which is not a core function of the state unless the government can provide that activity to highest quality. While policymaking and regulation are important functions which can and should only be undertaken by the state, the provision of IT services and support is often best undertaken by the private sector.

26. Our answer to this is simple: the government should not own or control directly any type of infrastructure in order to make better use of IT. Companies in the outsourced IT and support services sector have a history of success with private as well as public sector clients, and can help government achieve solutions for a lower cost and to a better quality.

Question 9: How will public sector IT adapt to the new ‘age of austerity’?

27. The public sector should put value, rather than cost, at the forefront of its considerations when procuring IT services. Fiscal pressures will mean an inclination for procurement officials to be tempted by the contract with the lowest up-front cost, but it is vital that wider cost considerations are made.

28. Our position should not be mistaken for one which is necessarily advocating ever more expensive contracts. Sometimes the best value contracts can come at the lowest price. But the principle of value is one which takes both costs and outcomes into consideration. Better outcomes can reduce costs in the long-run, and it is imperative that IT contracts do not become hamstrung by annualised budgets which encourage a focus on short-term expenditure.

29. The government has previously implied that, despite its efforts to reduce expenditure fast, it can be brought round to the idea of spending more money up front to save a greater amount in the longer term. This is exemplified by HM Treasury’s attitude to welfare reform plans. We urge that this principle be applied to IT contracts.

Question 10: How well does government take advantage of new technological developments and external expertise?

30. Private providers of IT and digital services have a vast array of expertise which is not fully exploited by the public sector. For the reasons stated already, procurement officials should gear the tendering process towards opting for the best value contracts, which may not necessarily be the lowest cost contract. A greater amount of capital will be saved in the long run as government is better able to make use of external expertise and support.

31. Whole-life contracts, which extend to support, maintenance and upgrades, can mean that the public sector can take advantage of technological developments as they happen and on a cost-neutral basis.

January 2011

Annexe: BSA members