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By | Kat Hall 22nd March 2016 08:02

Gov to take axe to big IT contracts soon, will hand chunks to SMEs

Supplier oligopoly will take a hit, says Public Accounts Committee

Chief executive of the civil service, John Manzoni, has promised the government will start chopping up its big IT contracts in the next year and kick its dependency on just a handful of suppliers.

Amyas Morse, auditor general at the National Audit Office, told the Public Accounts Committee yesterday that 51 per cent of government IT spend still goes to just five suppliers; with 65 per cent of government spend going to the top ten suppliers.

No one knows exactly how much money is spent on IT across the public sectors, but estimates have placed it between £16bn-£20bn per year.

Addressing Manzoni, Morse said: "Have you got any intention as this develops that it will be more distributed ... that in a few years time we will be able to see something different?"

Manzoni said the stats were as they are because the government is still in its "very early days" of contract disaggregation of "big monolithic IT contracts, which have been part of the IT landscape for decades." He was unable to say how many percentage points those figure would be reduced by.

But he told MPs that in the next 6-12 months a number of large contracts will end, and by then he would have a clearer picture of what future supplier distribution would look like.

He said: "Disaggregation is significantly cheaper than status quo ... the Cabinet Office disaggregated the supplier of its desktops and printers, which was at least 50 per cent cheaper."

Concerns over a handful of IT suppliers dominating government spend were raised back in 2011 by former Cabinet Office minister Francis Maude, who identified "a powerful 'oligopoly of large IT suppliers' which was locking out smaller, more innovative and efficient suppliers."

Manzoni cited HMRC's Aspire deal as being an example of one of those big contracts due to be chopped up. However Sally Collier, outgoing chief exec of the Crown Commercial Service, also noted that breaking up a number of those big legacy contracts such as Aspire is not without risk.

A lack of skills in government has also been identified and criticised for its failure to yet introduce significant public sector IT reform. Manzoni has previously said Whitehall needs to bring in "thousands" of technical staff to rescue its high number of failing projects.

Earlier this month, the National Audit Office slammed the Cabinet Office for failing to accurately measure its spend with SMEs, which it has claimed reached more than 25 per cent under the last Parliament.

"We cannot be certain that the amount government spends with SMEs has increased since it set its original target in 2010," it said. ®

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