By Tony Collins
The Cabinet Office has denied it is operating a blacklist of poorly-performing suppliers – but says that suppliers deemed high risk may find it “more difficult to secure new work with HMG”.
In its statements to Kable’s Government Computing, the Cabinet Office also made it clear that suppliers deemed high risk can redeem themselves.
“Mechanisms exist to remove suppliers from the High Risk classification when performance improves dramatically.”
This suggests that Fujitsu would no longer be deemed high risk if it settled its dispute with the government over the NPfIT. Fujitsu has been seeking £700m after the failure of its NPfIT contract. A settlement has proved elusive and the case may go to court.
The FT said on Tuesday that Fujitsu has “in essence” been blacklisted. Neither Fujitsu nor the Cabinet Office are denying that Fujitsu has been put in the high-risk classification.
A Cabinet Office spokesman told Government Computing:
“We cannot comment on the status of individual suppliers, but we are absolutely clear that this Government will not tolerate poor supplier performance.
“We want to strengthen our contract management by reporting on suppliers’ performance against criteria and sharing the information across Government. This means that information on a supplier’s performance will be available and taken into consideration at the start of and during the procurement process (pre-contract). Suppliers with poor performance may therefore find it more difficult to secure new work with HMG.
“This policy will include the identification of any high-risk suppliers so that performance issues are properly taken into account before any new contracts are given.
“High-risk classification is based on material performance concerns. Suppliers deemed high risk will be subject to particularly close scrutiny when awarding new work.
“Overall, this is simply good commercial practice and in line with how we are improving the way government does business and emulating the best of the private sector.”
The spokesman said that contract extensions are within scope of the poor-performance policy but will be tackled in a proportional way – depending on the overall cost of the contract, the relative cost of extending it, and how critical the extension is.
The high-risk classification “applies to strategic suppliers who do business across Government, and is not limited to any specific sector”. Frameworks are also included.
“Our performance policy will apply to central government departments, where we have direct control of spending,” said the spokesman. But it is still unclear what direct control the Cabinet Office has of departmental spending.
That said, the Cabinet Office announced in June spending controls on central government that “allow government to act strategically in a way it never could before”. It added that there were “strict controls on ICT expenditure”.
That means that large ICT contracts to be awarded by departments must go to the Cabinet Office for approval; and the Cabinet Office has introduced a single point of contact for major suppliers, which means that the performance of strategic suppliers will be viewed in the round.
In the past suppliers have been able to tell departments that were about to award contracts that rumours of alleged poor performance in other departments were incorrect.
While not a blacklist the high-risk classification seems a good idea. Francis Maude, the Cabinet Office minister, is sending a message to suppliers that if they take legal action against a department it could stop them getting business across Whitehall.
But he’s also saying in effect: settle and we’ll remove you from the high-risk list.
Is there a danger that the power could swing too much in the government’s favour, allowing departments to poorly manage contracts with impunity? Probably not. Suppliers will have to take the high-risk list into account when signing deals.
They know that, in the insurance industry for example, if they mess up one contract word will soon get around.