Government And IT - "A Recipe For Rip-Offs": Time For A New Approach - Public Administration Committee Contents

Written evidence submitted by DWP

In response to the follow up question to Q315, in which the committee now asks for a copy of the Universal Credit Gateway Zero review.

The Cabinet Office Major Projects Authority Starting Gate review into Universal Credit is attached at Appendix A (not printed).

In response to the follow up question to Q319, in which the committee now asks for details of the open competition for the Universal Credit system.

The Department for Work and Pensions is running a fully open competition to select suppliers to develop and maintain new IT solutions in support of business change, including IT for Universal Credit. The Department advertised for a full range of Application Development (AD) and Application Maintenance (AM) services in an Application Deployment competition which was advertised in the Official Journal of the European Union (OJEU) in June 2009.

Over 70 suppliers expressed an interest in response to the advert; and the competition has progressed through a series of stages, including a pre-qualifying stage and further down select stage, leading to a period of competitive dialogue with short listed bidders.

The bidders' final responses are being selected and the Department plans to select preferred bidders in May 2011, and then seek approval to sign contracts via Cabinet Office as soon as practical.

In response to Q340 from Greg Mulholland, in which he asks for the number of SMEs with which the Government has direct contracts and the number with which it subcontracts.

The Government does not hold a central record of data on the numbers of contracts it holds with SMEs either directly or as sub contractors on government contracts, however, individual departments may collect this data for their contracts. From January 2011, as part of the Prime Minister's Transparency commitments, all departments are required to publish each new contract let over £10,000 and state whether this contract has been let to a SME. This information is available on the new Contracts Finder website alongside tender documents and opportunities. As part of the business plan process each department is also required to measure and publish the percentage of their third party spend that goes directly to SMEs. The Government is investigating how best to collect data on spend with SMEs as sub-contractors.

In response to the question asked in the informal session by the Chairman about the ending of the Department's Desktop Services contract and whether that presented an opportunity to extend the use of Open Source.

The contract for Desktop Services between the Department of Work and Pensions and Fujitsu has now ended. Initially, to ensure business continuity, the Department will use the existing contracts with HP whilst it considers a longer term contracting strategy. The Department is committed to examining the use of Open Source for the delivery of Desktop Services, with any decisions to implement Open Source being subject to the full assessment of the technical and operational implications as well as value for money assessments.

In response to the question asked at the end of the informal session by the Chairman, in which he asks how different are the costs of running back-office systems at DWP compared with other organisations where the CIO has worked.

I have been the Department's CIO for seven years, since 2004. My assessment of the cost of running this Department's back-office systems is that it compares very favourably with its peers. The Department has made significant strides in reducing its IT costs over the last few years and continues to do so.

In 2009 Gartner's benchmark of DWP's IT capabilities found that the Department's operating costs, as a percentage of overall operational expenditure, were better than that found across the banking industry. It also noted that the number of employees engaged in IT activities in the Department was five times lower than for those across the banking industry; and that proportionally the Department spends less on IT to enhance and transform its business than those of peer group organisations.

Since this benchmarking exercise the Department has embarked on an operational review of its IT which will further reduce the IT cost base.

In response to the question asked at the end of the informal session by the Chairman, in which he asks if anything has been done to investigate and benchmark the root cause of different costs, for example with large systems like Oracle and SAP, and for copies of the benchmarks.

The Department has not benchmarked the IT component of its back office Shared Services separately, only the outputs from the Department's back office business processes, which include the IT costs, for example the cost per invoice and the cost per payroll account.

The last time the Department's business outputs were benchmarked was by Atos Origin in 2007. They are now out of date. Ministers agreed last year that the Department should refresh these earlier output benchmarks and the work was commissioned from PWC and is currently in progress. The results of this benchmarking exercise will be available in summer 2011.

April 2011

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Prepared 28 July 2011