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

Supplementary written evidence submitted by Cabinet Office



Q25.  How many data centres does government currently own itself?

Q26.  How many data centres are actually owned by System Integrators and service providers to Government?

A survey commissioned by CIO Council during June 2010 identified 220 Data Centres across Central Government.

Outside of Central Government, the Police have at least 88 Data Centres, while the estimate for Local Government and the wider public sector is in excess of 600 Data Centres.

Information is not currently held which distinguishes ownership for these Data Centres. Confirmation of ownership is planned for early stages of the Data Centre consolidation initiative.


Q586.  Chair: at the end of a long interchange, a note is effectively requested of Ian Watmore asking how many people there are in the Open Source team at the Cabinet Office/ERG and whether they come from the Open Source community

Q23.  Please confirm the number of people from the Open Source community working within the CO/ERG team. Also, who is on the Open Source Advisory Panel and what is their background in open source?

The Cabinet Office has a Grade 6 full-time resource dedicated to Open Source matters. Though the post-holder does not come from the open source community, they have brought a range of skills to the post, which has helped to foster strong links to the community. Accountability for the work delivered by the Grade 6 rests with the Government Chief Information Officer via the Director of ICT Strategy and Policy.

Given the importance of Open Source in the ICT Strategy, the CIO Delivery Board is in the process of allocating the responsibility of the delivery of open source actions to a delivery board lead from a large delivery department. This will allow Government to leverage the appropriate number of resources and knowledge base of the particular department to ensure that the Open Source actions can be further developed and delivered.

The Cabinet Office has fostered strong working relationships with the open source community. The main portal for engaging the open source community is the UK Public Sector Group. This was originally set up by Open Forum Europe (OFE)[65] and is now co-chaired by the Cabinet Office.

The UK Public Sector Group (PSG) consists of over 37 individuals representing different organisations with interests in all aspects of open source technology. The Public Sector Group includes representation from the larger open source supplier community including Redhat, Alfresco, and Canonical. There is strong SME representation in the group through organisations such as Sirius and OPUSvL. Academic organisations such as London School of Economics are also represented in the group, as are community groups like the Free Software Foundation Europe. Bi-monthly PSG meetings provide a forum for discussion and feedback and the opportunity for the open source community to identify obstacles to the adoption of open source solutions in government.

Who is on the Open Source Advisory Panel and what is their background in open source?

The Open Source Advisory Panel has been established by the UK Public Sector Group (PSG). The panel is currently resourced by five independent expert practitioners, nominated by Open Forum Europe, and approved by PSG. The expert practitioners have all either implemented or procured open source solutions or have detailed expertise in a specific area (eg legal), and who in turn are able to provide access to community specialist expertise, supplier/government contacts networks, and open source users from across Europe.

The Open Source Advisory Panel currently consists of:

Tod Cury: A Senior Government Advisor to OFE, and is an Independent Open Source Consultant providing independent business and IT consulting to open source industry vendors, government and commercial organisations. He was previously the Head of Red Hat's UK Public Sector business and has been directly involved in many of the leading OSS implementations in the UK and has advised OGC on their implementation guide for OSS.

Alan Bell: The CTO of OFE and has co-authored technical guidelines on the use of Open Source Software in industry. He is Director of The Open Learning Centre which provides consultancy services to small and medium enterprises seeking to benefit from Free and Open Source Software internally, as well strategic advice to businesses wanting to manage their contributions to open projects.

Chris Puttick: Spent the last five years as CIO of Oxford Archaeology and recently moved to providing consultancy CIO services. Specific technical expertise in collaboration solutions, networking, the Internet, remote/flexible working and virtualisation/cloud technologies. Management expertise in strategy, implementing open and flexible infrastructures and desktop, project management and business development. Experience in the public, private and third sectors. History of successful Implementation of IS solutions with open source technologies since 2002, including web-based collaboration and document management, VOIP telephony, virtualisation and desktop applications.

Bob Blatchford: He is COO of OFE and included in his responsibilities are OFE's own IT and web based solutions, as well as leading OFE's European programmes on Open Procurement within Government. He has a wealth of practical experience of Open Source and Open Standards based procurement issues and best practice, as well as access to a European network of suppliers, user communities and legal expertise.

Andrew Katz: Partner in legal firm Moorcrofts LLP. Moorcrofts has a niche specialism in advising clients on all aspects of open source software. As a former software engineer (and qualified NeXT developer), Andrew Katz has himself released software under open source licences. Andrew Katz is recognised as a leader in the field of open source licensing in the UK. He was involved in the drafting of the UK Creative Commons Licence, and has contributed to the GPL Version 3 project. He is also a founder editor and contributor to the International Free and Open Source Software Law Review.

Q540.  Chair: Don't we actually have to press for deregulation of the contracting process and a change to the European Directive?

Since this Government came to office, it has taken steps to radically simplify and streamline public procurement. In particular, it has conducted a "LEAN Review" to identify and then eliminate wasteful practices which form part of the procurement processes that are lengthy and burdensome without changing EU rules. Resultant changes are now in the process of being implemented.

In addition the Government is also actively participating in the European Commission's current review of the Procurement Directives. The Government has engaged with Commission Officials since the outset to press the case for radical simplification. Government officials are also working with counterparts in other member states to harness shared interests in simplification.

The Commission published a Green Paper on 15 January on the "Modernisation of EU Public Procurement Policy" and an explanatory memorandum was submitted to Parliament on 7 March 2011. A formal response from the Government will shortly be sent to the Commission.

These outcomes should free up public procurement markets and enable a light touch, modern regulatory framework. We will continue to work with both public and private sectors to finalise the Government's response.



Q1.  Do you have figures for the average price per desktop in government? If so, what is that figure and what is being done to reduce it?

There is currently no agreed common definition for a desktop nor method for attributing cost against a definition.

We are committed to putting in place a cross-departmental asset register which will incorporate the components of a desktop computing service so that we can have a single definition. Until that is in place, baseline information required in updates to all departments' Business Plans will include the cost of desktop per FTE and the contemporary definition used by the department to calculate that cost.

Reducing desktop costs within the context of creating a common ICT infrastructure is an explicit aim of the Government ICT Strategy. Like much else in ICT, desktop computing solutions have previously been individually crafted for departments, largely using output specifications by System Integrators. A common ICT infrastructure based on agreed, open standards to avoid vendor lock-in and to open up procurement directly from SMEs together with the use of cloud computing to deliver a utility service has as much to offer in reducing desktop costs as it does to reducing ICT costs as a whole.

Q2.  Is OGC still operating the Common Assessment Framework (CAF), measuring the performance of major ICT suppliers to the Government on a twice yearly basis?

2.2  If not, why is CAF is being discontinued?

2.2  If so, please supply the most detailed recent tables and evidence from CAF comparing major ICT suppliers' performance

The OGC (now part of ERG) took a decision to suspend the CAF process whilst the role and work of the Crown Commercial Portfolio team was considered as a whole.

The establishment of a network of Crown Representatives in April 2011 and the supporting analysis that will be developed in ERG is expected to provide better insights into supplier performance than was the case with CAF. Any successor to CAF will have to impose minimal burdens on suppliers and departments, while adding value over and above that secured via other routes.

As a result, a new process for the measurement of supplier performance is currently under review. We are working on a model which will be lighter touch than CAF and which will cover a wider range of major suppliers i.e. beyond purely ICT suppliers. Once the review of the proposed plans and approach are completed, we will be issuing guidance to Departments in the next six to nine months.


Q3.  To what extent will existing contracts limit/delay the ability of the Government to implement these reforms?

3.1  What is the average length of a Government IT contract? Which contract that the Government has currently entered into has the latest end date?

3.2  To what extent did the contract renegotiation conducted following the establishment of the Coalition Government allow you to mitigate this risk? Please give examples

3.  Existing ICT contracts are not a barrier to implementation of the reforms—on the contrary they have informed our work and helped us leverage several hundred million pounds in savings through the renegotiation programme. Discussed as part of the contract renegotiation programme they informed the proposals agreed in the Memoranda of Understanding (MoU) signed between suppliers and the Crown. The MoUs contain a range of savings opportunities for central government to be delivered in 2010-11 and beyond. Cabinet Office has been working with departments to deliver these savings since the first MoU was signed in September 2010.

A key learning point from the renegotiation process was that the government can leverage a better deal from its suppliers by acting as one corporate "crown" customer rather than by individual departments engaging separately with the same suppliers. In view of this, a new model for managing government's relationship with its key suppliers is being implemented, and a number of Crown Representatives (CRs) have been appointed to undertake this role. The CRs will work with departments to ensure knowledge about performance on existing contracts is shared and taken into account in contract awards, and that the government is able to manage its existing supply base effectively.

The CRs will also work with departments to develop a pipeline view of government's spend over the next four years (taking account of both existing and new procurements). This will be used to develop our strategy for managing ICT spend more effectively and to formulate plans for more effective engagement with the market working to achieve better value for government in the goods and services it purchases.

3.1  We do not hold contract information for all ICT contracts across central Government. Suppliers submitted details of their revenues on central Government business with some contract data attached. From the data we do hold (covering 17 of government's top ICT suppliers), it appears that the average duration of contracts is between two to five years. Aspire, through Capgemini, is the largest ICT related contract with the longest duration (13 years from 01/07/2004 to 30/06/2017). However, we would like to caveat that this is not exhaustive as the purpose of the data collection was to ascertain supplier revenue levels in HMG, not detailed contractual data.

3.2  Existing ICT contracts do not pose a risk to delivery as such, but their detail will need to be factored into future plans for managing ICT spend, and the Crown Representatives—supported by the Chief Information Officers who work with them, will be looking to do this as part of their new role. We will take existing commitments into account in developing strategies for engaging with current ICT suppliers and in working to develop new entrants to the public market.


Q4.  The original commitment was to openly publish OGC Gateway Reviews by the end of 2010. Why has this been delayed?

The Government is committed to publishing assurance data on government funded major projects, including Gateway Review data, as set out in the Structural Reform Plan. Work is in train for the publication, by December 2011, of an annual report on government's major projects, and we will require departments to publish project assurance data on a regular basis. Further details will be available over the next couple of months.

The Government has already offered unprecedented public access to data and reports through the Management Information (MI) agenda. Our proposals on Major Projects will open up to public scrutiny information on areas of expenditure previously not available to the public.

Q5.  Will the new procurement systems and procedures address the issue of the over-specification of requirements which has been raised by a number of witnesses?

This is our plan which we are addressing in a number of ways, for example the streamlined LEAN sourcing processes we are developing in support of all procurement procedures, will also address the specification of requirements part of the process, with the aim to ensure these are relevant to what's being sourced, with more focus on the "outcome required" from the contract rather than focusing too much on the "detailed technical input".

In addition, plans are now underway to improve the skills of Government Procurement resources through targeted training courses, which will address the need to challenge over specification.

Q6.  Will large SIs still sometimes have exclusivity, for big projects? If not, how will the cost of any large capital investments which need to be made by the private sector be recouped?

We are committed to opening up Government contracts to a wider range of suppliers in addition to the existing large SIs. We are doing this by breaking down large scale projects into more manageable chunks with a presumed upper limit of £100 million.

Whilst we cannot prejudge the outcome of future procurements, we can and will be more open and are already encouraging new potential suppliers including SMEs and new suppliers to the UK to bid for work.

It's up to successful suppliers to plan for how they account for any capital investments and not Governments role to do so. This is accounted for within bid prices from suppliers which then form the basis of the contract, including where applicable and agreed through negotiation, any cost of finance.

Q7.  Will the "upper limit" of £100 million take into account the issue of "scope creep" or will there be ways to get round the upper limit by simply incrementally adding more and more elements on to the project once it has started?

Our plans are that change within existing and new major contracts must be more transparent and where appropriate channelled through and approved by the Crown Representatives already in place to ensure that any change to initial scope, resulting in an increase in original contract value is transparent, managed and approved before commitment is made.

Q8.  Is it the case, as reported, that the Cabinet Office cannot become involved with contractual and procurement discussions without being invited to by Departments?[66] If so, how will the new policy commitments on procurement be implemented? If it is not true, what mechanisms exist to compel Departments to comply with the new policies on procurement?

Cabinet Office is already providing leadership on the management of strategic suppliers and the major contracts Government has with these suppliers through the recently formed Crown Representatives, and on centralising the procurement and ongoing category management of common goods and services. This work delivered in partnership with Departments has yielded significant results in the region of £3 billion to date and will do so over the CSR.

Performance and compliance is being managed more consistently and visibly than in the past in line with the Governments transparency commitments, with reports produced and presented to the Minister for the Cabinet Office (MCO) and Chief Secretary to the Treasury (CST) on a regular basis.

New policies and procedures to support these initiatives have been communicated to Departments through delegated authority from HMT and Cabinet Office.

Q9.  Does the policy of open standards and open source mean that OGC procurement notices will stop specifying particular proprietary products and will seek to procure, for example, "word processing software" rather than "Microsoft Word"? If so, when will the policy be implemented by OGC

This is our plan, as "Government Procurement" works in partnership with "Government ICT" in developing and implementing our open source and open standards actions as contained within the recently published ICT Strategy. Exact timing on when these changes will be implemented within OGC procurement notices will be communicated during the first quarter of 2011-12.


Q10.  Does the MPA include responsibility for reviewing existing major projects and major suppliers, or solely major projects?

The mandate from the Prime Minister gives the MPA vital new powers, such as:

—  the authority to require each new project or programme to complete a Starting Gate Review;

—  integrated Assurance and Approval Plans for each Major Project or Programme, which will be validated by both the MPA and HMT and will be tied in to funding approval; to escalate issues of concern to ministers and Accounting Officers; and

—  publication of project information consistent with the Coalition's Transparency agenda.

A major change, resulting from this new approach, will be that for the first time there will be visibility of the health of Government's Major Projects portfolio and mandated tools and techniques to inform good decision making and an ability to intervene or support projects in difficulty.

Thus through this powerful new mandate and by working in partnership with HM Treasury (including Infrastructure UK), the Major Projects Authority (MPA) aims to significantly improve the success rate of Major Projects across Central Government. For some Major Projects this may mean the review of existing contracts and suppliers.

However, the main responsibility for reviewing large contracts, as recommended by the Green Review, and managing government's largest suppliers lies with the recently appointed Crown Representatives and the Commercial Portfolio Team. As both teams are based in the Efficiency and Reform Group (ERG).we will co-ordinate mutual reinforcement where our work streams overlap.

Q11.  Who are the members of the MPA? And how were they selected and appointed?

The operational arm of MPA has been formed from the Major Projects Directorate (which was formerly part of the Office of Government Commerce) and other parts of the Cabinet Office. It has a skilled team of project specialists who have extensive assurance review experience across a wide range of subject matters. The MPA's Project review teams will also include accredited Civil Service reviewers sourced from across government who are matched for project reviews based on appropriate experience and specialist skills. The work of the MPA will be supervised by a Steering Group and Board, drawn from experts within government and independent executives. The MPA Governance has a Board consisting of senior stakeholders and external experts to review and challenge MPA's strategy and operational performance. The Governance structure and the MPA Board's membership were approved by the ERG Board.

Q12.  To whom does the MPA report and what authority does it have over government departments?

The Major Projects Authority will report to the Efficiency and Reform Group Board which is chaired jointly by the Minister for the Cabinet Office and the Chief Secretary to the Treasury.

Whilst the MPA is supported by a mandate issued to departments by the Prime Minister early in 2011, its strength is derived from a partnership between Cabinet Office and Treasury which means that HM Treasury approval will not normally be granted if suitable assurance is not being carried out, or will be granted under strict conditions regarding future assurance. The MPA will work closely with each Department to agree how the requirements can best be implemented in their environment.


Q13.  Who heads up the skunkworks team?

Q14.  To whom does the skunkworks team report?

Government skunkworks will report to the Director of ICT Futures (currently being recruited), but in the interim reports through the Director of ICT Strategy and Policy.

Mark O'Neill, CIO at Department for Communities, and Local Government (CLG), is the interim Head of Skunkworks. We are in the process of appointing a permanent Head of Skunkworks.

Q14.  What overall headcount does skunkworks have?

Q15.1  How many are civil servants?

Q15.2  How many are external resources?

The current overall headcount for skunkworks is three, of which two are civil servants and 1 is an external resource. We are currently assessing resourcing requirements and a draft business case is under consideration. The business case has identified a team of eight within the skunkworks team, all of whom would be civil servants.

Q16.  What is its annual budget?

Q17.  How much of the budget is allocated to commissioning projects from external sources?

A business case for future resourcing of skunkworks is currently under consideration.

Every skunkworks commissioned project will have its own supporting business case and bid for resources.

Q18.  How will the skunkworks achieve behavioural/cultural change?

The Government Skunkworks will work in partnership with the Major Projects Authority (MPA) to embed a new approach to the way Government designs, sources and delivers ICT solutions as part of the spend control process. Skunkworks will also provide a new channel to engage with SMEs and developers to deliver cheaper and more innovative ICT solutions. It will also work to embed agile methods into the procurement and delivery of ICT solutions.

Q19.  How will outcomes be measured or otherwise audited?

Government is currently reviewing how best to measure and audit outcomes delivered by skunkworks. Once we have decided how to do this we will look to publish our performance data, in line with the Government's commitment to increase the transparency of the way we work.


Q20.  In oral evidence to the Committee, Mr Watmore stated that SMEs were being encouraged to work with government in two ways: either directly, or by subcontracting via prime contractors. (see Q520 and Q537). However, the Committee has received evidence demonstrating that Government Departments are currently telling their SMEs that the Cabinet Office Efficiency & Reform Group (ERG) has instructed them to switch away from their existing direct SME contracting arrangements to procurement models operated by either the Department for Work and Pensions (DWP) through Capita on the Cipher contract, or the Home Office CIX service for the procurement of all IT contractors and interims. Is this the case?

How does compelling SMEs to work for large IT and IT services suppliers help deliver the policy objective of a more diverse and open marketplace where SMEs can work directly for government departments?

What market analysis or benchmarking has been conducted to show that this is the best and most cost effective route for central government departments?

As part of the centralising government procurement programme, supply chains for contractors and interims are being simplified to deliver better value for money and more detailed management information to better inform future procurement decisions. Spend is being channelled into three current channels: a) existing framework contracts where spot buying is undertaken centrally (this is known as Home Office Cix), b) department-specific arrangements based on their unique needs (such as FCO's arrangements with Hays) and c) an existing contract with Capita, owned and managed by DWP and available to all government departments.

This contract leads to around 80% of all spend being channelled to SME providers and that every requirement is advertised and available for open competition. In effect the Capita service has been replacing small but more costly contract staff agencies.

The analysis undertaken by ERG demonstrates that channelling spend in this way results in better value for money and facilitates the development of an open market in which SMEs can work with government to help deliver cost savings.

Q21.  The Buying Solutions Multi Disciplinary Consulting (MDC) Category with large government suppliers has been extended for another year. This is apparently in breach of legal requirements, taking a maximum four year contract into a fifth year. Is this the case?

21.1  On what legal basis is this contract being extended?

21.2  How does this decision to extend an existing contract with larger suppliers to government fit with the policy of opening up government procurement to more SMEs?

21.3  As Buying Solutions has recently competed 26 other Management Consulting and Accounting Services framework contracts why was the MDC contract not re-competed at the same time?

After consultation, Buying Solutions considers that there are sufficient circumstances that justify an extension to the current framework. The Buying Solutions MDC contract is widely used within central government, more so than any other framework contract for consultancy. In order to safeguard front line delivery that might be dependent on the services provided via this contract, a decision was taken to extend the life of the contract for a short period of time whilst Buying Solutions create a more suitable replacement.

Buying Solutions are currently working on a new, replacement procurement process that will include seeing all requirements for consultancy below £100k to be completed on the open market. This will provide an opportunity for all suppliers to win government work not just those within framework contracts. The new process is anticipated provide more frequent competition and greater opportunity for all firms; including SMEs to win Government work.

Buying Solutions has not recently competed 26 other framework contracts. The Management Consultancy and Accounting Services framework is a single framework that was compete approximately two years ago. Departments have used this framework to arrange call off contracts from as they do the MDC framework.


Q22.  Although the evidence from the Minister for Cabinet Office (IT 56) stipulates that they will require SRO's to stay in post until an appropriate break point in project/ programme life, they do not state how this will be ensured. Please confirm how this stipulation will be successfully implemented.

Government ICT will publish as part of the ICT capability strategy how we, working in conjunction with the Major Projects Authority, will implement this. This will require consultation with departments and wider stakeholder community and appropriate Ministerial committee clearance. The Capability Strategy is scheduled for publication in autumn 2011.

April 2011

65   Open Forum Europe (OFE) is an independent, not-for-profit organisation, which was launched in the UK in March 2002 to accelerate, broaden and strengthen the use of Open Source Software in business and government. OFE's role has now expanded Europe-wide and is a strong supporter of Open Standards and openness and pursues the vision of facilitating open competitive choice for ICT users. Back

66   See for example Back

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