Press Release - Department of Trade & Industry: The
Radiocommunications Agency's Joint Venture with CMG
8 December 2000
Sir John Bourn, head of the National Audit Office, reported to
Parliament today that the Radiocommunications Agency* has
successfully entered into a partnership with CMG plc**, a global
Information and Communications Technology group, which could result
in significant financial savings.
In June 1998 the Agency and CMG plc established a joint venture
company, Radio Spectrum International, owned 30 per cent by the
Secretary of State for Trade and Industry, on behalf of the Agency
because the Agency does not have the legal right to own shares. In
addition to providing the Agency with IT services, Radio Spectrum
International exploit commercially the Agency’s expertise in radio
spectrum management by selling consultancy services and IT systems
to overseas administrations.
In 1994 the Agency was unable to meet its requirement for IT
services from in-house resources and was heavily reliant on
expensive contractors. The Agency was keen to achieve financial
savings by bringing this reliance to an end. After considering
various options the Agency decided a partnership with a private
sector company would give it access to a wider range of skills and
resources than it had in-house, be available when needed and at a
lower cost than their existing arrangements. The partner, through
its understanding of the Agency’s systems and operations, would be
in a strong position to sell the Agency’s systems and the Agency’s
expertise. The new company has so far won consultancy contracts in
Russia, Greece, Egypt and India although income has not so far been
sufficient to cover the high initial start up costs for this new
venture.
The partnership was at the time an innovative solution in the
public sector to the problem of obtaining IT services and
exploiting the intellectual skills base. The Government is
encouraging departments and Agencies to exploit their skills and
assets commercially through the Wider Markets Initiative which is
aimed at improving the management of public sector assets. In his
report Sir John draws attention to the main lessons learned by the
Agency which may be of benefit to other public sector bodies
contemplating entering into partnerships:
- the need for clear objectives at the outset of the
process;
- trying to maintain a competitive bidding process or, in the
absence of this, ensuring adequate benchmarks exist to measure
value for money;
- considering the implications of linking projects (in this case
the provision of IT services and the commercial exploitation of the
Agency’s skills base) where one element is unproven;
- recognising the importance of aspects such as the alignment of
business interests, trust-based relationships and effective
collaboration but also building in contractual protections;
and
- having a formal process for deciding on the percentage stake to
take in a joint venture company.
Sir John said today:
"The partnership entered into by the Agency demonstrates
that public sector bodies can produce innovative solutions to
traditional problems. The project demonstrates that, properly
managed, risk taking and innovation can lead to improved value for
money for taxpayers."
Notes for Editors
*The Radiocommunications Agency is an Executive Agency of the
Department of Trade and Industry and its main functions are:
- formulating policy on the planning and management of the UK
civil radio spectrum;
- co-ordinating UK views and participating in international
negotiations on the use of radio;
- authorising use of radio by licensing or exemption;
- formulating technical and operating standards for radio;
and
- enforcement of legislation on the use of radio equipment and
investigation of radio interference.
**Established in 1964, CMG is a global Information &
Communications Technology group, which operates in a wide range of
markets including finance, transport, telecommunications, media,
petrochemicals, utilities, retail, manufacturing and government
agencies.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 68/00
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