IT Trade Body Disputes ‘Heavy-Handed’ PASC Report

Intellect says that allegations of an industry cartel in the recent PASC report are “completely unfounded”

Intellect, the trade association that represents IT suppliers of all sizes, has responded to yesterday’s report, Government and IT – “A Recipe For Rip-Offs”: Time For A New Approach, contradicting claims that SME’s are at a disadvantage to large ICT companies.

The report from the MPs on the Public Administration Select Committee (PASC) looked into government IT procurement, and described successive administrations as wasting “an obscene amount of public money” on a small number of large companies.

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

According to some sources, the government often pays between seven and ten times more than the standard commercial rate for its work, according to Jenkin. However, the government does not collect the information needed to verify these claims.

SMEs not disadvantaged

The report advises government to widen its supplier base by reducing the size of its contracts and greatly simplifying the procurement process to engage with innovative SMEs. Most importantly, departments need the capacity to deal directly with a wider range of suppliers, the report states.

However, according to Intellect’s SME champion Alistair Hardie (pictured), small and medium-sized ICT companies do not see any sign of large companies colluding.

“On behalf of our SME members I don’t believe SMEs are disadvantaged by large ICT companies in any unfair way at all,” said Hardie, quoted in a blog post by Intellect’s Sureyya Cansoy. “As we all know, many public sector procurement practices remain SME unfriendly but that is not the fault of large ICT companies.”

Cansoy also wrote that allegations of anti-competitive behaviour and the suggestion of an industry cartel were “completely unfounded,” as well as being “inaccurate and misleading”.

“The implication is that leaders of public sector businesses in our industry have been involved in criminal activity,” said Intellect in a statement. “As the trade body for the ICT sector, we want to make it clear that this is not the case and cartels do not exist in our industry. On the contrary, this is a highly competitive market.”

Cansoy did agree, however, that government tends to over-prescribe its requirements, and that the cost and length of procurement is one of the biggest barriers for SMEs and new entrants to the market. She welcomed the view that the supplier base should be widened to offer more opportunities to SMEs, as part of a “diverse ecosystem of different suppliers, large and small, doing different things”.

Open source opportunity

The PASC report has also elicited a response from the open source IT community, which sees this as an opportunity for the government to step away from the “costly proprietary lock-in” that has seen some projects spiral out of control. The government’s ICT cost-cutting strategy, announced in March, promised to create a level playing field for open source software and impose compulsory open standards, starting with interoperability and security.

“This report should add further weight and urgency to government’s commitment to open source technology and drive the introduction of open standards throughout the IT procurement process so that interoperability and openness can once again place delivering responsive services for citizens and business at the heart of government IT policy,” said Phil Scott-Lewis, head of UK public sector at Red Hat.

The government has been admonished in the past for over-spending on IT projects and, in particular, cancelling costly projects half-way through their deployment.

Topping the list of recent costly failures is the overambitious NHS National Programme for IT (NPfIT) which wrote off £12.7 billion, and next was the £7.1 billion Defence Information Infrastructure (DII) project. Soon after the current coalition government’s election, the ailing £5 billion National Identity Scheme was scrapped.