HP’s tacit threat to government not to bid for contracts?

By Tony Collins

HP has written to the Treasury  questioning whether it is worthwhile competing for contracts if the Government is no longer interested in doing business with multinationals, says The Independent.

Cabinet Office minister Francis Maude is encouraging departments to spend more with SMEs and be less reliant on a small number of major IT suppliers. He wants departments to avoid signing long-term contracts which lock-in ministers to one major supplier.

The Independent says:

“In a striking case of Goliath accusing David of bullying, the American giants Microsoft and Hewlett Packard have complained that they are being unfairly picked on by the Cabinet Office minister Francis Maude.

“…the Government’s largest IT supplier Hewlett Packard has written to the Treasury to express its concern at plans by Mr Maude to award more Government contracts to smaller suppliers.

“At the same time Microsoft is fighting a rearguard action against the Cabinet Office to protect the million pounds it gets each year from Whitehall by selling popular Office programmes such as Word and Excel.

“Both companies are concerned that they are being singled out by ministers as unpopular and easy targets in their rhetoric about cutting public sector waste…

“Microsoft is attempting to prevent the Government from migrating its own computer systems from those that rely on the multinational to open-source documents that are free to use…

“Both companies look set to be disappointed – at least unless there is a change in Government. Mr Maude is understood to be looking to next year – when a significant number of big IT contracts are up for renewal – to push ahead with the new policy that could significantly denude the profits of IT multinationals.”

A Cabinet Office spokesman said it was unaware of HP’s letter to the Treasury and added: “We value the contribution companies of all sizes make to the UK economy, driving innovation, growth and jobs.”

A spokeswoman for HP told The Independent:  “HP is a proud and long-standing supplier of IT products and services to Her Majesty’s Government and provides vital public services to UK citizens.  We maintain an ongoing dialogue with government about our programme of work.”

A report by the Institute for Government Government Contracting:  Public data, private providers says that HP is the largest supplier to government with earnings in excess of 1.7bn in both 2012 and 2013.

In 2013, 86% (£1.49bn) of HP’s revenue from central government came from a DWP contract to supply infrastructure and systems for DWP and its job centres. “This contract is likely to be the largest single non-defence contract in central government,” says the Institute.

Capgemini, BT and Capita were the next largest suppliers to central government. Capgemini’s work is mainly from HMRC through the “Aspire” contract which is worth about £850m a year.

Departments are more open than they used to be but the Institute found big gaps in the information provided.

These gaps include:

– Contractual transparency –  contracts and contractual terms, including who will bear financial liabilities in the event of failures

– Information about how well contractors perform, allowing a vital assessment of value for money

– Supply chain transparency – information including the proportion of work subcontracted to others, terms of subcontracting (particularly levels of risk transfer), and details on the types of organisation (for example, voluntary and community sector organisations) in the supply chain.

Comment

What concerns Maude and his team is not the existence of major suppliers in central government contracts but the reliance by central departments on long-term contracts that lock-in ministers and lead to costly minor changes.

Nobody wants the major suppliers to stop bidding for contracts. What’s needed is for departments to have the in-house expertise to manage suppliers adroitly, and not to be adroitly managed by their suppliers which seems to be the position at present.

Thank you to openness campaigner Dave Orr for the information he sent me which helped with this article.

The IT giants who fear losing the government’s favour

Opening the door to data transparency

 

 

 

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