Government IT slammed for tech ‘cartel’ reliance

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The Government has been accused of blocking out small IT providers in favour of using a core group of tech giants, costing taxpayers unnecessary sums of money.

In some cases, the the Public Administration Select Committee (PASC) found departments had spent an average of £3,500 on a desktop PC.

The PASC report on Government and IT, called ‘A Recipe For Rip-Offs,’ said there were a variety of ways in which smaller providers had been prevented from gaining contracts.

It found there was an “over-reliance on a small number of large suppliers,” whilst small and medium-sized (SME) IT contractors, which “tend to be less risk adverse and more innovative,” were virtually excluded.

Martin Rice, chief executive (CEO) of Erudine, an IT SME, described the situation as a "cartel."

“The Government has said that it is overly reliant on an ‘oligopoly’ of suppliers; some witnesses went further and described the situation as a 'cartel,’” said Bernard Jenkin, chair of PASC.

“Whatever we call the situation it has led to an inexcusable situation that sees Governments waste an obscene amount of public money."

The report said there was a lack of IT skills in Government and an over-reliance on contracting, which had led to the “recipe for rip-offs.”

If you want big savings… if you want to get into the billions, you have to go to the big companies with big balance sheets and big ideas.

Intellect, the IT industry trade body, agreed with the suggestion that smaller providers were blocked out, although contested the use of the term ‘cartel.’

“Government's current go-to-market approach presents significant barriers to new entrants to the market, especially in terms of the change-averse culture in government and the preference given to suppliers with UK government experience,” Intellect said.

PASC called on Government to urgently carry out an independent, external investigation “to determine whether there is substance to these serious allegations of anti-competitive behaviour and collusion.”

“The Government should also provide a trusted and independent escalation route to enable SMEs confidentially to raise allegations of malpractice,” the report read.

Detailing the ways SMEs were being blocked, PASC claimed lengthy, complex procurement processes favoured bigger companies.

"Procurements that go through the most rigorous process take an average of 77 weeks to complete in the UK. This length means that many small businesses cannot commit staff to work on a bid for the duration of the procurement process," the report read.

Andrew Corbett, director of the UK IT Association (UKITA), said there was a “cartel” of the 'Big 19' top outsourcing IT companies.

“They are huge and highly capable which is why they get to be awarded the contracts. The projects always over-run hugely and nobody seems to be responsible for it,” Corbett told IT Pro.

Earlier this year, HP managing director Nick Wilson said it was hugely unlikely the Government would be able to stick to its £100 million recommended limit on IT projects. The Coalition would need to invest in big initiatives with major companies if it was to make significant savings, Wilson said.

“If you want big savings… if you want to get into the billions, you have to go to the big companies with big balance sheets and big ideas,” he added.

Mistreatment of SMEs?

PACS said it had received numerous reports from SMEs about poor treatment by both Government departments and large vendors who sub-contracted work to them.

“The other thing the 'big boys' routinely do is to not pay the invoices smaller companies that work for them on time,” said Corbett.

“The smaller company has done the work, they have agreed to pay on 60 days but when the smaller company chases after 90 days they are effectively told ‘we will pay you when we want - and if you take any action against us, you will never get another piece of work from us again.’

“Often they are actually waiting to see if the smaller company goes bust and so they can avoid paying altogether.”

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