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Report of the Digital Government Review


Partnerships: understanding each other’s needs

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Fundamentally all suppliers are working with the public sector to provide great public services, but it needs to be recognized that suppliers also have demands from their own shareholders and stakeholders.

These two drivers (better public services and shareholder requirements) cannot always be expected to align to the same goal. There is also a wider policy context with a government that wishes to rebalance economic activity across regions and be a world leader in technology and digital services.

When the current Government renegotiated large ICT contracts at the start of this parliament the language and debate became extremely heated. There appeared to be a desire to demonise all large suppliers rather than to highlight the bad while praising the good and hence showing what was desired. There were clear failings in the private sector – but the procurement decisions were themselves made in the public sector. We should aim to work together to produce those better outcomes rather than simplistically labelling all large suppliers as bad.

Part of the goal of a healthy approach to procurement is to increase the alignment between the goals of buyers and suppliers with both sides making informed decisions and acting with awareness of each other’s needs.

This does not mean that the public sector should be trying to please private sector stakeholders. It means that the public sector needs to understand that the private sector needs to satisfy its stakeholders. It means that the public sector needs to understand that, for example, a small supplier has less capability to participate in a complicated procurement process than a large supplier.

For this private sector this means that it needs to understand the public sector’s objectives and needs. If the public sector can be clear about these objectives and needs then it allows outside suppliers to move faster, it lowers barriers for new entrants, it will lead to better procurement and it will lead to better outcomes. If the public sector is not clear about its objectives then this will benefit incumbent suppliers who will be in a stronger position to understand needs through their existing relationships.

As an example of this we can look at much of the current work ongoing in central government where online digital services are being rebuilt. Developers employed by government are building many of these new services.

Government does not want to buy off-the-shelf components for these new services; it wants to build them itself using agile methods, either with extra people bought in from outside government or with its own staff. But it has decided that it wants to build the online components itself. It has determined that at the present time this will produce better outcomes.

Meanwhile, others parts of government are buying in different ways. Whether it be data connectivity via the PSN or hosting on a cloud platform we can see that government is thinking more in terms of commodities that it can connect to – and to match this it needs procurement and pricing models that suit.

These are just two examples. Things will change over time. Maybe a new round of innovation will occur in the hosting area, and government will decide that building its own data centres will produce the best outcomes? Given the growth of public cloud services this is extremely unlikely but the point is that needs do change over time. Items that were custom-built can become commodities, whilst items that were seen as commodities can revert back to being custom-built.

Whatever happens, as we move towards open standards, a common architecture and a platform for government, it will become increasingly important that both suppliers and government understand what government intends to build both (1) in an agile fashion with control within government, and (2) what government intends to simply buy as a commodity from the market.

By setting this out clearly government will enable suppliers and the public sector to prioritise their activities.

Recommendation 30

Priority: High

Government should annually publish a forward-looking procurement strategy to signal its intentions and thereby foster an informed, diverse and flourishing market of suppliers

It will also be necessary to reset the unhealthy antagonistic relationships between government and some suppliers. There are reasons for these poor relationships. As media coverage of government ICT failures amply demonstrate many people were also extremely dissatisfied with the performance of some suppliers and with the performance of politicians and the public sector that managed them.

It is possible to drive a hard bargain while still remaining partners.

These recommendations will help improve procurement but we still need to consider public sector skills to help ensure that we have an informed buyer making good decisions and driving these hard bargains. The next chapter will explore this skills problem in the wider context across the civil service.

“Admitting problems and seeking help to solve them should not be seen as a weakness – not admitting them or admitting them late definitely is” – Large Company

“Agile methods have many merits and, within the context of well-designed programmes, can be highly effective for small projects, e.g. the development of web-based systems. But Agile methods are not a panacea.” – Civil Society Organisation

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