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ProBenchmark In the News
Government wasting millions on pointless IT contract re-tendering
(Sourcingfocus.com - October 05, 2010)
Central government is wasting millions of pounds because of the outdated way in which it manages the tendering process for large-scale IT projects, making a mockery of the coalition's bid to cut wasteful spending, according to benchmarking firm ProBenchmark.
The company analysed major public sector contracts and found that, when existing contracts are re-tendered, up to 80 per cent of the time the buyer has no desire to change supplier owing to the complexity and costs involved.
However, the outdated re-bidding process used by central government teams means that costs can run to £8m for a single contract, and the whole process can drag on for 18 months or more.
ProBenchmark claimed that the total cost of re-tendering in the current round of public sector cuts will be at least £200m, far more than any savings that may be delivered.
"Nobody benefits from the current tendering process," said ProBenchmark director Simon Scarrott. "The government doesn't get a cheaper deal, and the vendor doesn't give a better price. It's a one-size-fits-all, not an intelligent, selective process."
Scarrott argued that the government needs to adopt a new approach to managing the re-tendering process for its outsourcing contracts, which involves researching the market price for a particular contract and establishing whether the current supplier is market-compliant.
This would save time and money, he explained, being only a fraction of the cost of a full tender process, which typically involves drawing up a long list of potential providers that is eventually whittled down to one, even if there is no intention of switching to another outsourcing provider.
"Historically there is a community of procurement professionals who are self-employed and do very well out of extending the tendering process," Scarrott said.
"If you create a procurement process that rewards long, slow and often, that ' s what you'll get and that's what we have."
"There is a move towards a central intelligence for buying and procurement, and that the Office of Government Commerce is pushing towards it is a plus," he said.
"There is a momentum towards acting in a more grown up and cost-efficient way, but there are years of prejudice and legacy to overcome."
