IT supplier negotiations deliver limited savings for Home Office

Third quarter 2011-12 savings total £24.2m as committee criticises West Midlands-Surrey police procurement and e-Borders programme

The majority of procurement cost savings in the Home Office for the third quarter of 2011-12 came from ICT, according to its permanent secretary Dame Helen Ghosh.

According to a report by the home affairs committee, Ghosh said that the £24.2m came in particular from the purchase of hardware, software and ongoing support. The total savings achieved so far in 2011-12 comprise £75m, which Ghosh said had been “achieved through negotiating price reductions on existing contracts, grouping our needs to benefit from volume discounts and stopping spend where appropriate to do so.”

It also included “savings on new goods and service requirements generated through effective negotiations with suppliers.”

The committee’s report on the work of the permanent secretary makes the point that the savings have to be put into context: the Home Office is required to reduce its total budget by £1.8bn over the present parliament.

Ghosh told the committee that the Home Office would consult on extending compulsory national framework agreements for police procurement. The frameworks currently apply to four categories of equipment, which include commoditised hardware and commercial off-the-shelf software. Categories that could be subject to compulsory national framework agreements in future include mobile phones, utilities and consultants.

In its discussions, the committee took evidence from the chief constables of West Midlands and Surrey police, Chris Sims and Lynne Owens, about the joint procurement exercise that the two forces are undertaking.

The report details that the overall costs for the procurement process are estimated at £5m, with the Home Office agreeing to contribute up to £2m. West Midlands and Surrey police will fund the rest on a 2:1 basis, with contributions of £2m and £1m respectively.

The committee and expressed “a number of concerns” about the “precise scope of the services that the procurement exercise encompasses.”

It added: “More worryingly, the committee is not convinced that Surrey and West Midlands police fully understand, or are fully able to articulate, the process they are undertaking. The Home Office is partly funding the procurement process, at a cost of several million pounds, and has some responsibility for ensuring that there is an effective communications plan in place to explain the process to interested stakeholders and ultimately to the wider public.

“The committee is also concerned about the timing of the procurement exercise. It would have been preferable to wait until police and crime commissioners were in post, in November 2012, before proceeding with this costly process.”

In response to Ghosh’s evidence about progress on the e-Borders programme, the committee commented that the programme “has proved highly problematic since work on it began in 2003. The predecessor home affairs committee published a critical report in December 2009 outlining its concerns.

This was followed by the termination of contract with Raytheon Systems in July 2010, the outcome of which is still the subject of arbitration. The committee remains concerned about progress on the programme. The letting of the post-Olympics part of the contract will be a crucial determinant in its overall success or failure.”

This article is published by Guardian Professional. For weekly updates on news, debate and best practice on public sector IT, join the Guardian Government Computing network here.

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