Large suppliers still dominate government IT

By Tony Collins

In 2012, the then Cabinet Office minister Francis Maude, lamented the high costs of government IT and spoke of an “oligopoly” of large suppliers. He suggested things would change.

“… contracts were consistently awarded to a limited number of very large suppliers on long-term exclusive contracts.

“As a result there was inadequate competition and an abdication of control. The concept of having one supplier, aggregated supply, increased project risk and removed competitive tension.

“The Government repeatedly found itself paying large amounts for systems that were delivered late, over budget and which often did not fully meet the original policy requirement.  If indeed, they were delivered at all. There are plenty of well-documented disasters – such as DH’s now terminated National programme for IT.

“Ultimately, the last Government lost control of IT – it outsourced not only delivery, but its entire strategy and ability to shape the future of our public services.

“At the same time smaller, more innovative and efficient suppliers were finding themselves locked out of the supply of services to Government because of what was described by Parliament as a powerful “oligopoly” of large suppliers.

“Procurements took so long only the big companies could absorb the cost – which they naturally passed on to us.

“All in all, we had an approach that was bad for users, bad for the taxpayer and bad for growth.”

Public sector IT spending was up to £20bn a year, he said, adding that “public sector productivity was actually declining”.  He outlined how things were changing.

What has happened since?

A report published today by the National Audit “Digital Transformation in Government” raises a question of how much has changed.

Efforts to boost the SME share of government IT business “have had some impact”, says the National Audit Office, but it adds that “most government procurement with digital and technology suppliers continues to be with large organisations”.

“In 2015-16, 94% of such spending was with large enterprises, a fall of less than one percentage point since 2012-13.”

Today’s NAO report is mainly about the Cabinet Office’s Government Digital Service – GDS. It points out GDS’s strengths and weaknesses but in general does not give any advice on the sensitive point of whether it should have more or less influence on government IT.

On digital transformation, it says that the work of the NAO shows that attempts to transform government have had mixed success.

“Many public services appear increasingly unsustainable. Those responsible for major programmes have continued to exhibit over-optimism and make slow progress towards their objectives.”

It adds,

“Digital transformation has a mixed track record across government. It has not yet provided a level of change that will allow government to further reduce costs while still meeting people’s needs.

“GDS has also struggled to demonstrate the value of its own flagship initiatives such as Verify, or to set out clear priorities between departmental and cross-government objectives.

“GDS’s renewed approach aims to address many of these concerns as it expands and develops into a more established part of government. But there continues to be a risk that GDS is trying to cover too broad a remit with unclear accountabilities.

“To achieve value for money and support transformation across government, GDS needs to be clear about its role and strike a balance between robust assurance and a more consultative approach.”


The National Audit Office report is strong on facts and quality of research but avoids the big question of how GDS can bring about change when the top brass in departments prefer autonomy to what they see as GDS’s interference.

GDS’s existence goes to the heart of how the civil service runs. It is one part of the civil service trying to bring about change in other parts of the civil service.

And the evidence so far is that the civil service doesn’t like change.

The NAO report disappoints because it doesn’t address how government IT is to change if departments are to continue to run empires unchallenged by GDS or the heads of the civil service. Sir Humphrey is still king.

GDS scrutinises departmental IT spending – spending applications are reviewed by a team of eight people within GDS’s Standards Assurance team – but, much to Sir Humphrey’s delight, GDS’s influence seems to be waning.

When Jack Straw was Justice secretary, he told MPs in 2007 that when he abandoned projects there was a fuss at first and soon nobody noticed the project did not exist.

“There is always the option to abandon things. I did that in the Foreign Office with much complaint that the world might end.

“What happened was that we saved a lot of money and no one ever noticed the fact that that scheme did not exist…it is very frustrating that so many people, including the private sector, are taken in by snake oil salesmen from IT contractor who are not necessarily very competent and make a lot of money out of these things. I am pretty intolerant of this.”

How much has changed? Outsiders including Jack Straw and Francis Maude, together with insiders such as Chris Chant have pointed to the need for major changes in the way departments manage huge IT budgets and there have been some improvements: HMRC’s is breaking up its monolithic “Aspire” contract, citizens may notice that it is possible now to renew passports and driving licences online and GDS has had an impact in making departments think hard about whether they really need to spend the amounts they do on major IT contracts.

But major change in the costs of government IT seems not just a long way off but unattainable while the dominance of Sir Humphrey remains unchallenged.

Digital Transformation in Government – NAO report

6 responses to “Large suppliers still dominate government IT

  1. If I can quote what a world-weary American murder detective said – people do evil because they want to and because we let them.
    As a tribute to this wise man, we can say – people are incompetent (or negligent, or apathetic, or fraudulent) because they want to be, and because we let them.
    I always seem to be lecturing people that they should try to take as much responsibility for their institutions and for democracy as they can. It is dangerous to demonstrate naivety or innocence or apathy because others will, whether consciously or unconsciously, take power from us and use it for their own purposes.
    I’ve probably bored you in the past by suggesting that the large computer companies employ experienced, focused salesmen, whereas our government institutions have bureaucrats with a different psychology when purchasing computer systems. And, of course, the private companies have to make profits and are accountable to shareholders, whereas the bureaucrat is playing with taxpayers’ money and is accountable to other bureaucrats.
    If that doesn’t suggest an imbalance in the balance of power, then it becomes even more unbalanced if our government institutions ‘give away’ their managerial responsibilities as well. It’s horribly, obviously that basic.
    Yet again, I get the impression that those within our government institutions live on a different planet to the rest of us.
    Thanks for your excellent efforts, Tony.


    • Thank you Zara – thoughtful comments, as always. The officials, if they were arguing in their defence, would probably say they have to contract out to the large suppliers because they don’t have the skills internally, as so much of their IT has been outsourced.
      But it’s within government’s power to change pay structures to make it easier for the civil service to attract talented people; and GDS announced in September 2016 that it is to take over the digital academy launched by the Department for Work & Pensions. It aims to train 3,000 civil servants a year. If that’s achieved, it will make it less likely that Whitehall will rely on large IT suppliers in future – unless of course permanent secretaries would rather take the easy option of continuing to contract out to large suppliers in the expectation that they can blame those suppliers when things go wrong, though of course the reality is that the suppliers’ lawyers are far better equipped to blame government when a contract goes awry than vice-versa. Tony Collins

      Liked by 1 person

      • zrpradyer

        Hi Tony,
        Thank you for replying and the extra information.
        I do get upset because there are good people being sacrificed of at least being blocked while government slowly begins to address problems that could have been solved many years ago.
        Have a good weekend.


  2. Tim Morton

    Hi Tony
    only one point GDS is Government Digital Service not Data Service
    Great blog as usual though


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.