Computer Law & Security Report (2005) 21, 266e268

UK GOVERNMENT IT PROCUREMENT REVIEW

The National Audit Office’s review of the OGC’sinitiatives in respect of IT procurements

Justin Harrington

Field Fisher Waterhouse, London

Abstract On 5th November 2004, the National Audit Office (NAO) issued a value-for-money review of the work carried out to date by the Office of GovernmentCommerce (OGC) in respect of IT procurements. It specifically reviewed tools,guidance and other literature issued by the OGC and assessed the OGC’s input inrespect of five major projects affecting three government departments. Of specificnote to lawyers, the NAO report does not comment upon the latest version of theSuccessful Delivery Toolkit produced by the OGC at the end of October 2004.� 2005 Field Fisher Waterhouse. Published by Elsevier Ltd. All rights reserved.

A. Background to the work of the OGC

By way of statistics:

� Central government currently spends approxi-mately £2.3 billion pounds, 16% of total pro-curement expenditure, on IT projects.

� Five suppliers won 60% of IT contracts awardedby central government.

Unfortunately, however, there is a perceptionthat government IT projects are characterised bydelay, overspend, poor performance and abandon-ment. While, in reality, these may be failings thatare common to the private sector, with theestablishment of the OGC in April 2000 following

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the Gershon Review of 1999,1 the Governmentsought to improve departments’ procurement ca-pability generally. The OGC was established as anindependent office of the Treasury, but has noauthority to direct departments on how to securebetter value for money. Instead, the OGC have toencourage departments to achieve best value. Thisrole was re-enforced when the Prime Ministerannounced a review by Peter Gershon of ITenabled projects in November 2002. Gershonhighlighted six key actions to improve the successrate of such projects:

� establishment of Centres of Excellence in eachdepartment;

1 Peter Gershon, Review of Civil Procurement in CentralGovernment, HM Treasury, April 1999.

ublished by Elsevier Ltd. All rights reserved.

UK government IT Procurement review 267

� accounting Officers to provide assurance thatnew projects do not contain the commoncauses of failure identified by the OGC andNAO;

� no ‘‘big bang’’ implementations unless ap-proved by a central scrutiny group. Instead,there should be modular, incremental devel-opment;

� no IT dependant government initiative shouldbe announced before a detailed risk and optionsanalysis had been undertaken;

� prioritise all projects as Mission Critical, HighlyDesirable and Desirable; and

� high risk and Mission Critical projects to have aresponsible Minister, Senior Responsible Owner(SRO) and Project Manager with strong trackrecords.

A further tightening of scrutiny has now takenplace with a new requirement that the ChiefExecutive of the OGC provide to the Prime Ministerevery four months a report on the status of ‘‘mis-sion critical’’ programmes and projects. In thisrespect a programme or project is ‘‘mission criti-cal’’ if it is essential to the successful delivery oflegislation, meeting a Public Service Agreementtarget, a major policy initiative announced orowned by the Prime Minister or a Cabinet Ministeror if the project does not work successfully, thereare catastrophic implications for the delivery of akey public service, national security or the internaloperation of a public sector operation. In February2004, there were 112 mission critical projects.

B. Findings and recommendations

The general finding of the NAO is that ‘‘theprocesses now in place are increasing the likeli-hood of project success, but more remains to bedone’’. It commented that while some initiativesappeared to have clear benefits, others had onlyrecently been introduced and so were more diffi-cult to judge. The Centres of Excellence forexample were only introduced in June 2003.‘‘What can be said is that the structures are inplace to minimise the risk of future IT failure andthat department and supplier behaviour is chang-ing positively as a result of the OGC’s work’’.

1. Gateway Reviews

Gateway Reviews were introduced in February2001 and for the first time exposed majorprojects to external scrutiny. The Gateway process

examines a project at each critical stage of itslifecycle. There are five OGC Gateway Reviews,three before contract award and two looking atservice implementation and confirmation of oper-ational benefits. In addition, there is a Gate 0 car-ried out at the very start of the project. Theprocess was tightened in June 2002 with theintroduction of the colour coded e Red, Amber,Greene system. The NAO noted in their report thatDepartments considered that Gateway Reviewswere the most effective initiative undertaken bythe OGC and their value was widely appreciated.That said, the issues raised in Gateway Reviewshave remained fairly consistent:

� the involvement of key stakeholders;� clear delineation of roles in respect of gover-nance;

� lack of quantifiable criteria for assessing thesuccess of projects in terms of improvementsto be delivered;

� better risk management;� better skills and resources.

The fear is that, unless there is evidence thatthese weaknesses are addressed, their recurrencewill reduce confidence in the ability of governmentto effect a step change in performance.

A further key finding of the NAO report is thatprojects are entering the Gateway Review processtoo late, typically at Gates 2 or 3 and after thebusiness case has been prepared. They also exitthe process too early, usually before Gate 5.

Controversially, the NAO have also suggestedthat SROs should routinely share Gateway ReviewReports with their departmental Centres of Excel-lence and management boards and that theyshould also consider, on a case by case basis, theirdissemination to key suppliers. Hitherto, GatewayReviews have been considered to be confidentialto the SRO and certainly not something that wouldbe shared with suppliers.

2. Developing skilled programmeand project managers

There is a shortage of programme and projectmanagers; in this respect the NAO recommends theestablishment of a cadre of experienced pro-gramme and project managers within the civilservice. The OGC’s ‘‘Successful Delivery SkillsProgramme’’ is not fully exploited by departmentswho should ensure the recruitment and retentionof people with programme and project manage-ment competencies.

268 J. Harrington

3. Guidance

The NAO suggests that OGC guidance sometimeslacks coherence (a criticism here was that therewere differing views as to what clients’ needs andexperience were) and that OGC guidance some-times is not easily accessible.

The NAO recommends Gateway Review teamsshould refer to information in the Successful De-livery Toolkit in their Gateway Reports, the ratio-nale being that it will ensure such guidanceremains relevant and ensure review teams areaware of OGC guidance.

Centres of Excellence should ensure that theyalign all their guidance with that of the OGC.

4. Relationship with suppliers

The NAO notes that the OGC has successfullyestablished a close working relationship with In-tellect. In addition, it has set up the Senior IT Forumand published the Government Procurement Codeand IT Supplier Code of Best Practice, both of whichthe NAO considers are major steps in developinga sustainable relationship with the private sector.The NAO recommends these parties continue towork together in order to ensure the ‘‘step change’’that public sector IT procurement requires.

5. Departmental Boards

Departmental Boards need to provide leadershipand commitment to the acquisition of commercialskills and establish links with suppliers. It recom-mends the appointment of a board level commer-cial director within departments, engaging withsuppliers as ‘‘intelligent customer’’ as would be thecase in the private sector. In this respect it notesthe example of the Home Office which has ap-pointed a commercial director with a private sectorbackground who reports to the Home Office Board.

Ultimate responsibility for project successshould rest with Departmental Boards who shouldexercise clear leadership and commitment toensure that guidance is followed, skills are de-veloped and maintained, risks properly identifiedand that the rigour of the Gateway process isingrained in departments. The NAO considers thatAccounting Officers should routinely ask the fol-lowing six key questions:

� What steps have been taken to ensure thatrisks to successful delivery have been ade-quately considered before policy announce-ments are made?

� Have you implemented the six key actionsresulting from the Gershon Review (set outabove)? Have you got the right team in place?

� Have you set a target for improving Gatewayresults? How are you ensuring that lessons arebeing learnt across projects?

� Do you seek regular briefings from your Centreof Excellence?

� Is there sufficient skill and experience at Boardlevel to exercise effective oversight of a majorIT project?

� Do you have a commercial director or equiva-lent representation at board level? How oftendoes the board engage with suppliers?

C. Conclusion

The general comments of the NAO appear toendorse many of the actions effected by theOGC. It seems certain however that many of thepoints noted above are likely to constitute re-curring themes in IT procurements over the nextfew years.

Justin Harrington, Partner, Technology Law Group, Field FisherWaterhouse, London