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Improving IT procurement: The impact of the Office of Government Commerce’s initiatives on departments and suppliers in

Sir John Bourn, head of the National Audit Office, reported today on progress made by the Office of Government Commerce (OGC) to improve the procurement of information technology (IT) systems by departments and agencies. He concluded that OGC has put structures in place to minimize the risk of future IT failure and that department and supplier behaviour is positively changing, but that the OGC and departments need to ensure that this momentum is maintained for improvements in IT procurement to be realised.

In 2002-03 central civil government spent £2.3 billion on IT, representing 16 per cent of all procurement expenditure. The history of failure of major IT-enabled projects has been characterized by overspends, delays, poor performance and abandonment of projects at major cost. In December 2002 Cabinet ministers agreed six actions proposed by Peter Gershon, then Chief Executive of OGC, designed to improve the successful delivery of government IT programmes and projects. Those actions included establishing departmental Centres of Excellence in programme and project management and a requirement for departments to prioritise all existing and new projects as Mission Critical, Highly Desirable and Desirable.

OGC has introduced four key initiatives aimed at improving IT and other procurement: (i)Gateway Reviews, to provide independent assessments of IT-enabled projects at stages of the procurement cycle; (ii) Centres of Excellence within departments, to provide a co-ordinating function for programme and project management; (iii) the Successful Delivery Toolkit, bringing together best practice in a single reference point; (iv) and the Programme and Project Management Specialism and the Successful Delivery Skills Programme which aim to improve the commercial skills of departments.

Departments reported that the Gateway Review process, introduced in February 2001, was the most effective of OGC initiatives. The NAO found that the process is improving IT procurement and should increase the likelihood of successful delivery. Since a Red-Amber-Green rating system for Gateway Reviews was introduced in June 2002, 43 per cent of IT-enabled projects have improved their red-amber-green status as they have passed through successive Reviews, and 38 per cent have maintained the same status. There is a major risk, though, that projects are entering the process too late – after the business case has already been prepared; and exiting too early – before assessments of the continuing need for the service, value for money, and contract management arrangements can be made.

The OGC’s Successful Delivery Toolkit has the potential to generate improvements but inexperienced users can find it difficult to know what advice is available from OGC, and how to make best use of it at the right time. There is clear evidence that departments lack appropriate project and programme management skills and experience, presenting a major risk to the successful delivery of IT-enabled projects.

The NAO found that OGC’s close working relationship with “Intellect”, the IT industry representative, is helping to build trust between the industry and the public sector. Case studies involving five IT-enabled procurement programmes found good practice in establishing formal links between departments, agencies, and suppliers as well as good working relationships between individuals. More can be done, though, to make project teams aware of frameworks and codes of practice that have been established, and to clarify the respective roles and responsibilities of industry and clients.

Today’s report makes eight recommendations to OGC and departments, including the need for OGC to action their review of the impact of its non-Gateway Review activities, such as use made of its Successful Delivery Toolkit. For their part, departments need to ensure that their Boards exercise clear leadership and commitment to make certain guidance is followed, skills are developed and maintained, risks properly identified and managed, and the rigour of the Gateway process becomes ingrained in departmental thinking.

"Government Departments have a chequered history in the handling of IT-enabled projects and programmes. OGC has made significant strides in identifying reasons for past failure and in establishing structures, such as Gateway Reviews, that allow for increased scrutiny and independent check upon the feasibility and progress of IT-enabled projects and programmes. These remain, however, early days and my report makes recommendations to build on these foundations in order to reduce the likelihood of future failure."

Sir John Bourn

Notes for Editors

  1. This report makes use of survey information and findings carried out for the NAO study Improving Procurement: Progress by the Office of Government Commerce in improving departments capability to procure cost-effectively (HC 361, 2003-04).
  2. Case studies of five mission-critical IT projects were conducted for this study. These were: the Department for Work and Pensions’ Payment Modernisation Programme and Jobcentre Plus Implementation, the Home Office’s Case Information Database Enhancement Programme and the Prison Service’s Offender Assessment System Project, and the Driver and Vehicle Licensing Agency’s Partners Achieving Change Together Project.
  3. Press notices and reports are available from the date of publication on the NAO website at Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  4. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 800 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.

PN: 63/04