back to article UK.gov: IT contracts should be no more than 7 years. (Not 18, Fujitsu)

The British government has once again told departments to break their addiction to big contracts, specifying that deals with suppliers should be no longer than a paltry seven years. The advice from the Cabinet Office, Exiting Major IT Contracts: Guidance for Departments (PDF), stated that in past years many government …

  1. John Robson Silver badge

    Surely...

    it should be 'until the next election'

    1. Anonymous Coward
      Anonymous Coward

      Re: Surely...

      Not really, you don't want to overly politicise the operation of departments. Although you may get a change of government 99% of the departments and workings stay the same with regular people doing regular jobs.

      If you now have an IT Team who have to (or risk having to) change their IT infrastructure and suppliers on an arbitrary 5 year anniversary (or sooner) on the whim of the new party trying to score political points or to spite a previous administration it would be chaos and unworkable.

      You need to run the workings independently of the political wing.

      1. Anonymous Coward
        Anonymous Coward

        Re: Surely...

        "it would be chaos and unworkable."

        I see you've encountered the Universal Credit project, then.

  2. Anonymous Coward
    Anonymous Coward

    Or the...

    next round of pass the brown envelope...

  3. ExampleOne

    Limiting the length of contracts offers little reasonable benefit when the same people will simply win the next round of contracts.

    1. Smooth Newt Silver badge
      Happy

      Winning the next round of contracts

      Limiting the length of contracts offers little reasonable benefit when the same people will simply win the next round of contracts.

      At least they will then have to justify why they should keep the contract, especially in the light of any major screw-ups. It is work and cost for the Government to pro-actively terminate a large contract, so the threshold for that is very high.

      On the other hand it is far easier to assign a contract to someone else when it comes up for renewal, and there is usually a queue of others suppliers happy to get the business instead. Even if the original supplier still gets the renewal, it does put them under some pressure.

      1. Anonymous Coward
        Anonymous Coward

        Re: Winning the next round of contracts

        At least they will then have to justify why they should keep the contract,

        Actually, there's a more compelling reason for shorter contract lengths, and that is because baseline contracts as-bid are minor components of the generous profits made by the vendors. All the fat is in the variation orders, and those become greater the more changes are needed, and (in commerce as well as government) you get more changes over time. In a seven year outsource contract, the vendor will be lucky to break even in years one and two, having bid almost at-cost for the baseline, by year three the variations are flowing through nicely, and in years six and seven they'll be making out like bandits.

        Every time the buyer renegotiates, the current situation becomes part of the low margin baseline. The vendors know this, and do put prices up to counter the lower opportunities to ream the client, but in a competitive bidding scenario it is difficult to win if they bake their desired 40% profit margin into that initial bid.

      2. zaax

        Re: Winning the next round of contracts

        Because they are the only ones big enough to run such contracts?

  4. DuchessofDukeStreet

    So a 7 year contract (assuming longest permissible) with mandatory supplier change at the end of it? Two years at the start where the incoming supplier is still trying to learn how it works and scraping together all the information/knowledge that wasn't handed over at transition, and two years at the end where everyone's focussed on getting their new job and wrapping stuff up (no development projects, no long term strategic enhancements). About three years acceptable operating levels if you're lucky.

    Great news if you're a public sector procurement "expert" Stinking pile if you're a user, employee or taxpayer...

    1. handleoclast Silver badge
      Black Helicopters

      Supplier changeover

      @DuchessofDukeStreet

      I'm sure there are solutions to the problems of supplier changeover.

      1) Arrange a covert cartel with your competitors.

      2) Use contractors exclusively.

      3) As your contract ends, drop all your contractors so your competitor can pick them up.

      4) Pretend to the gov't that this hasn't happened and that you're going to spend the next two years fumbling along so please fork over extra dosh.

  5. chivo243 Silver badge

    Changes

    for the sake of change is just silly. Change for the sake of improvement? I'm all for it.

  6. Milton Silver badge

    Missing the point

    How about "Government contracts should be managed by well-qualified, skilled, experienced and properly informed managers"?

    Or "No politician or government employee shall, for a period of at least 7 years after leaving the government or civil service, benefit from any relationship of any kind with any entity which has tendered for government work or performed it within the last 7 years"?

    Or "Instead of being predictably, serially, perpetually ripped off by vast consulting groups and suppliers of extremely dubious competence, the government will forge a high-standards in-house IT division to build excellent capability in delivering realistic, effective solutions within a security-conscious environment oriented toward the public good"?

    Or, in fact, ANYTHING that will actually begin to rid government IT procurement of incompetence, corruption, waste and failure?

    No, thought not.

    Instead, let's just fart around with some PowerPoint dross and pointless gestures first, then see if we can arrange for whoever's our minister this week to get the promise of a six-figure "advising" sinecure for half a day a fortnight on the board of whichever three-letter bunch of liars are next in line to gorge on the taxpayers' cash, shall we?

    1. Anonymous Coward
      Anonymous Coward

      Re: Missing the point

      I understand the frustration, but it's not a very practical suggestion. If you want to constrain people's careers and opportunities for 7 years after their employment with you you would either need to compensate them for that period of drastically reduced unemployability (a.k.a. paid gardening leave) or offer very generous retraining packages to enable them to find similarly lucrative work in a different industry. Either way you're going to take a lot of flack for adding a gold^H^H^H^Hplatinum lining to civil service severance packages.

      1. veti Silver badge

        Re: Missing the point

        Backbench MPs get, IIRC, £74,000 a year, plus the kind of pension arrangements most of us can only dream of. If they don't want to put up with a few years of "reduced employability" (seriously? exactly how many MPs do you think are remotely qualified to work in the IT industry anyway?), then tough titty.

        1. Anonymous Coward
          Anonymous Coward

          Re: Missing the point

          MPs would only create such rules if they didn't apply to them (in much the same way as they exempted themselves from the public sector pay freeze). You're never going to get this to stick to them, so you can take that particular straw man right off the table.

          The original poster was talking about applying this to all government employees. Most civil service workers don't get paid £74kpa and their pension arrangements are no longer particularly generous compared with the private sector, so you can shelve your moral outrage (a.k.a. envy) about pay rates. If you did try to pull this stunt on the encumbents by changing their T's and C's they'd be looking to be compensated handsomely, and if you tried to pull it on new recruits only you'd very quickly find yourself having to significantly raise pay rates or offer other sweeteners to attract anyone even vaguely employable.

          In reality what would happen is that all civil service jobs would end up outsourced to private companies, so that the individuals doing those jobs weren't subject to the new "government employee" anti-corruption rules. Outsourcing of public sector work is already happening anyway (mostly starting with IT staff), so it would really only be an acceleration of the trend. You'd end up with very few people subject to the new rules, as the civil service would have been reduced to a skeleton staff solely maintaining the outsourcing contracts, but whom have practically zero employability elsewhere - hence sky high pay rates and/or severance packages would end up being applied.

          You might be OK with outsourcing, but I think it just adds extra middle men taking a cut of the bulk of the civil service payroll whilst looking to cut corners on service provision anywhere where the contract fails to offer robust enough penalties for doing so. And the staff generally no longer care about the service part of the civil service as long as they're ticking the boxes asked for by their new employer.

          Anonymous, for obvious reasons.

    2. Harry Stottle

      Re: Missing the point

      and, in addition...

      why not have a simple rule along the lines of:

      if any project requires ongoing support from more than (n) personnel after year(y), then the contract should include the training of suitably vetted or recruited in-house staff with, say, a 12 month hand-over period...

      I'm sure one size wouldn't fit all, but as a template, that's the kind of model that might begin to wean us off the current model.

  7. nematoad Silver badge
    WTF?

    Eh?

    "...needs to be well planned and executed."

    Just for the avoidance of doubt. We are talking about government IT projects, aren't we?

  8. Anonymous Coward
    Anonymous Coward

    It all sounds great. Beak contracts down into small pieces and get the cheapest price on everything. In reality integrating even 3 or 4 providers of services into one seamless, integrated service is impossible. You end up with chaos. One supplier = one throat to choke and no ability to deflect attention elsewhere. There is an IT problem and as our IT supplier its YOUR problem, as opposed to speaking to the service desk who blame the windws team, who blame the network team, who blame the security team, who blame the DBAs, who blame the dev team. Where every team is a different supplier...

    1. Roland6 Silver badge

      In reality integrating even 3 or 4 providers of services into one seamless, integrated service is impossible.

      Not impossible, however, what people are missing is the shorter the contract the more of the ownership and risks associated with the integration of contract into the departments business and IT, falls on the department.

    2. Doctor Syntax Silver badge

      "In reality integrating even 3 or 4 providers of services into one seamless, integrated service is impossible."

      The converse can apply. A project can involve so many specialities that no single supplier can provide them all. It might still be handed to a single lead contractor who then arranges - and integrates - sub-contractors. It can work. I've even been a sub-sub-contractor on a few, even when the main contractor was the big C.

    3. veti Silver badge

      One supplier = one throat to choke and no ability to deflect attention elsewhere.

      Doesn't happen anyway in the public sector, because the dynamic whereby politicians have to identify with and champion their pet projects makes them, basically, hostages to their own contracts.

  9. Lee D Silver badge

    I'm much more concerned that they should have decent cancellation clauses, prescribed service levels, and compensation for failing to deliver.

    Because then it literally doesn't matter how long their contract is, they have to make it work, or they lose it.

    Like tax law evaders, I'm much more concerned that supposed "experts" deliberately draw up laws that allow such evasion, the same way supposed expertly-governed IT projects fail to lay down their requirements and punish contractors who fail to deliver or who deliver a piece of junk far too late.

  10. Anonymous Coward
    Anonymous Coward

    I can think of a couple of clauses that would fit right in...

    The supplier of good under a government contract that does the job previously done in a government department should pay tax like an employee...

    and..

    A resource TUPE'd across should cost the same or LESS than they did when in house when supplied back under the contract...

    and...

    Goods supplied under the contract must be supplied at average market value/price (as checked form time to time by a no-win, no-fee remunerated 3rd party) price less a MINIMUM of x%. (Penalty for gouging will be 200% of resultant margin between available price and price charged)

    1. Korev Silver badge

      A resource TUPE'd across should cost the same or LESS than they did when in house when supplied back under the contract...

      You mean a human not a "resource" surely?

      1. Doctor Syntax Silver badge

        You mean a human not a "resource" surely?

        Your guess is as good as mine. This is a commentard who doesn't even understand the difference between goods and services, corporate and personal taxation or even understand averages.

    2. Doctor Syntax Silver badge

      "The supplier of good under a government contract that does the job previously done in a government department should pay tax like an employee."

      Oh dear. Goods are things. Let's say the good is a banana. How does a banana do a job previously done in a government department? Or, let's parse it differently, the supplier does a job previously done in a government department in which case what sort of a job in a government department supplies bananas? Substitute any other good for "banana" and it still doesn't make sense. You clearly don't understand the difference between goods and services. It's primarily services which this is all about.

      Next, the services are being provided by companies. Taxation on companies is totally different to taxation on employees. Here's a big hint. Never go into business. You'd end up in all sorts of trouble with HMRC.

      What else have we got?

      Oh, look at this: "Goods supplied under the contract must be supplied at average market value/price"

      Another big hint: if some offerings are above average price others are below it because that's how averages work. Under this arrangement average market price would be as good as the government could buy. Anyone able to offer at below average price is excluded or given the chance of a bigger profit margin by marking up to average.

      1. Loud Speaker

        How does a banana do a job previously done in a government department?

        You clearly have little contact with government departments. According to most documentation available, bananas appear to be capable of high achievement in this role.

  11. Roland6 Silver badge

    Surely the "no more than 7 years" applies to cloud providers?

    Many government departments are at least talking about a shift to the cloud, using the cloudy Big Boys: AWS and Azure.

    1. Anonymous Coward
      Anonymous Coward

      Re: Surely the "no more than 7 years" applies to cloud providers?

      Many government departments have already moved a lot of their services to the cloud. Many being applications being moved out of 3rd party provided Data Centres over to AWS instead.

    2. Mark M.

      Re: Surely the "no more than 7 years" applies to cloud providers?

      They'd just be the systems hosts. Proverbial datacentre lock ins for decades. The government departments still needs to source and pay some 3rd party company to actually, you know, like *develop* the applications and infrastructure that would be put in the Cloud-based datacenters?

      That's where 80% of the Government IT problems lay. Knowing precisely what you want in the virtual datacentre and getting someone who can actually do it rather than faff around spinning out the contract for little or no actual work being delivered. Another 15% is continuing to use the Waterfall development process instead of an Agile development process in Government IT moneypits.

      1. Anonymous Coward
        Anonymous Coward

        Re: Surely the "no more than 7 years" applies to cloud providers?

        If you'd ever worked in anything related to development in government IT then I think you'd come to the conclusion that the management of the departments have absolutely no idea what their staff actually do.

        This results in them speccing software to do what they think their staff do, only to discover that this is so wrong that their staff can't work with the system that they specced, resulting in an unusable IT system and a change request.

        If the supplier is external then they can be blamed for cocking it up. If the development team is inhouse then if they are blamed, but are almost as certain to pass the true state of affairs up to higher management in self defence.

        ergo, inhouse teams are unwanted and everything must be outsourced. An obliging crowd will then attack the outsourcer on the basis on them being an external organisation and won't go after the root cause of the problem, which is the managers who aren't competent.

    3. Anonymous Coward
      Anonymous Coward

      Re: Surely the "no more than 7 years" applies to cloud providers?

      At least "the cloudy Big Boys: AWS and Azure" pay their UK taxes.

      Oh, hang on a minute...

    4. Doctor Syntax Silver badge

      Re: Surely the "no more than 7 years" applies to cloud providers?

      If the same logic is being applied it should but almost certainly won't. Eventually - but no doubt well over 7 years into the future - exactly the same rules will be talked about in relation to cloud suppliers.

      1. Roland6 Silver badge
        Happy

        Re: Surely the "no more than 7 years" applies to cloud providers?

        If the same logic is being applied it should but almost certainly won't.

        Well given cloud is 'commodity IT', the contracts should be reviewed in 2 years...

  12. James 36

    "Disaggregation is complex, in reality it typically takes longer than anticipated (up to 4 years), is resource intensive and needs to be well planned and executed."

    and that is totally in line with the way Gov IT procurement likes to work which it is why it has been so successful

  13. Anonymous Coward
    Anonymous Coward

    if not for this

    Come on, if it weren't for excessively long contracts, why would anyone still be doing business with IBM?

  14. Anonymous Coward
    Anonymous Coward

    Cloud?

    FFS, 'Cloud' is just someone else's computer. The govt has leaped onto the bandwagon of the emperors new clothes and when the first massive security breach happens, which it will somehow, then the whole thing will revert back to 'in-house'. But in the meantime let's pour taxpayers money into companies who do everything they can not to pay UK tax.

    An absolute pre-requisite to winning a UK Govt contract worth in excess of £5m should be open-book accounting showing the gobt the true UK revenue and the tax paid on it to UK HMRC. Anything less than 100% of the tax due being paid and they should be instantly disqualified from winning.

  15. ddeasy

    constrain the relevant organisations from modernising technical environments

    If only there were skilled professionals who were able to negotiate contracts that aligned with the service lifecycle and applied the principle of continual service improvement. I guess I will have to ask someone from the Chartered Institute of Procurement & Supply if their "Global Standard for Procurement and Supply" methodology works well with the ITIL framework ?

  16. Anonymous Coward
    Anonymous Coward

    Government it planning

    I worked for 10 years on two and a bit (temp loans for catchup and bale out work) outsourced it servicedesks . The big boys were mostly creaming off the profits and dealing with strategic decisions while the service desks bau including 3rd party suppliers. Mixed bag of knowledge of those in the departments. It could be made to work without the big guys but it needs some tough questions asking of the possible replacements and maybe unfortunately paying some independent consultants. As several people have said though major issue is lack of good design on new systems. The civil servants know how to do their jobs it's just the systems don't always work as well as they should and that includes the manual processes before it goes onto IT. Some govt dept have good internal it staff but just need a good independent Servicedesk and some external support for some projects. It would be possible to break free of the big guys but it takes a lot of courage to make those decisions.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019