Public sector's mega IT projects are dead, suppliers told

Government will no longer offer easy margins, says Maude

The days of mega IT projects are over and the public sector will no longer offer "easy margins" to its tech suppliers, according to Cabinet Office minister Francis Maude.

On Wednesday, Maude told representatives of 31 of the government's key suppliers - most of which are tech companies - that the coalition government will not embark on any more multibillion pound IT projects, such as the £11.4bn NHS National Programme for IT.

"Government will no longer offer the easy margins of the past," he said at the summit for government suppliers in London.

"The days of the mega IT contracts are over. We will need you to rethink the way you approach projects, making them smaller, off the shelf and open source where possible."

Maude said when large suppliers deliver services to the public sector in future they will have to work alongside SMEs and be open to being partners in employee mutual groups and joint ventures.

"We will open up the market to smaller suppliers and mutuals and we will expect you to partner with them as equals, not as subordinates," he said.

The announcement follows the renegotiation of the contracts of government's 19 largest suppliers - again mainly composed of tech vendors - which is expected to deliver £800m in savings this financial year. The government has also announced that IT projects, worth £1bn in total, will either be scrapped or cut back.

The government will no longer embark on "mega IT projects"
(Photo credit: Shutterstock)

Maude added that the government will simplify the process of becoming a supplier to the public sector, describing the money and time spent during the procurement process as "horrifying".

"Bid cost[s] range from £20,000 to £200,000 for every month spent doing procurement, and public sector procurements take on average twice as long as the equivalent exercise in the private sector to complete," he said.

"Procurements are taking around 77 weeks, sometimes even longer."

According to the Cabinet Office, a number of projects are already being run by government to reform public sector procurement. One such project is a body of government and supplier representatives, including the UK IT association Intellect, which is identifying and setting out measures to tackle shortcomings in the public sector procurement process.

A group of central government and private sector staff, known as the Crown Commercial Representatives, is to be established to work with suppliers to reduce costs and identify opportunities for efficiencies across government.