Report: Major IT firms are ripping off the UK government

In the United Kingdom, a committee of MPs has found that major IT firms have been ripping off government departments when it comes to purchasing and installing new IT infrastructure. The report claims that some departments were paying as much as 10 times the retail, commercial prices for new PC hardware, sometimes costing up to £3,500 (US$5,700) for a sole desktop PC. The committee stated that an "obscene amount of public money" was being wasted on IT.

The report recommends that government departments move away from large firms and source their IT needs from small and medium-sized businesses to avoid being ripped off, as the UK government attempts to reduce the budget deficit. The government claims departments had paid IT contractors 7-10 times the going standard rate, and that this must be stopped.

The lack of IT skills in government and over-reliance on contracting out is a fundamental problem which has been described as a 'recipe for rip-offs'. IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose.

The report warns that departments must be more “intelligent” when dealing with IT suppliers to avoid being ripped off in the future, after it slammed the overall record as “appalling. ” In the UK, the previous government spent £16bn on IT projects in 2009 and the current government is attempting to end the gross waste of money in the sector.

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Procurement is the problem. EU legislation says that a tender / mini competition process must be used before any thing is purchased (within a set amount) - i.e. desktops, servers, consultancy, etc. This takes a lot of time with the government and also the suppliers which adds over-heads. The suppliers also want a guaranteed amount of business too as they have put a lot of effort in to meet the tender requirements. If we got rid of the procurement and tender process then millions upon millions would be saved...but on the flip side, you can imagine the amount of bent back handers going on behind the scenes.
its a mess.

snuffy said,
Procurement is the problem. EU legislation says that a tender / mini competition process must be used before any thing is purchased (within a set amount) - i.e. desktops, servers, consultancy, etc. This takes a lot of time with the government and also the suppliers which adds over-heads. The suppliers also want a guaranteed amount of business too as they have put a lot of effort in to meet the tender requirements. If we got rid of the procurement and tender process then millions upon millions would be saved...but on the flip side, you can imagine the amount of bent back handers going on behind the scenes.
its a mess.

The problem is not the tendering procedure which is there for a reason. The problem is that the procurement rules are too heavy, and the business requirements can only be met by large companies whose core business is actually not IT - it's winning contracts. Once you are on the deck you are practically there forever and can get away with murder. The bureaucracy tolerates things any sane private entity would never accept. On one hand public bodies don't want to insource IT development or even management on the other they get ripped to shreds. The solution in my mind is to establish proper IT/contract management, enforce discipline and foremost - come up with sane procurement rules which don't strangle competition and reward good performers.

£3,500 for one desktop computer which is probably a base Dell model worth about £350. Jesus some parts of our Government really are crap with their cash.

While large IT firms have the power to sway significant rates, one shouldn't make a mistake that medium and small firms charge significantly less. They are all in the money-making business. And, if they do not have the right staff in-house, they would get a contractor who would charge more than a handful of change.

The lack of IT skills in government and over-reliance on contracting out is a fundamental problem which has been described as a 'recipe for rip-offs'. IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose.

FFS I am trying to get a job, give me one

It's not just the UK government it's any IT provider that offer pubic sector service. Having worked in this area for over 20 years there's many a tale I could tell. Having to get NHS dept heads to sign requisition paperwork to have a PC moved 2 foot across the room to another desk (5 minute job) and charging them £500 for the privilege. Government dept heads agreeing to buy new PC's that are only just capable of running Windows at a cost of £1800 each! It angers me so much as at the end of the day it's us UK taxpayers that are funding all this. I can recall having to go in to a govt office and strip out 100 Dell PC's that were less than 6 months old and still under warranty and instructed to put them in to a skip and replace them with the current (far less powerful than the Dell PC's at the time) PC that the IT service provider (in this case Siemens) had agreed to issue as standard! Businesses should be very wary of IT companies and ensure that they know exactly what it is they are getting for their (our) money when they put the contract out to tender.

EGG[ said,]It's not just the UK government it's any IT provider that offer pubic sector service. Having worked in this area for over 20 years there's many a tale I could tell. Having to get NHS dept heads to sign requisition paperwork to have a PC moved 2 foot across the room to another desk (5 minute job) and charging them £500 for the privilege. Government dept heads agreeing to buy new PC's that are only just capable of running Windows at a cost of £1800 each! It angers me so much as at the end of the day it's us UK taxpayers that are funding all this. I can recall having to go in to a govt office and strip out 100 Dell PC's that were less than 6 months old and still under warranty and instructed to put them in to a skip and replace them with the current (far less powerful than the Dell PC's at the time) PC that the IT service provider (in this case Siemens) had agreed to issue as standard! Businesses should be very wary of IT companies and ensure that they know exactly what it is they are getting for their (our) money when they put the contract out to tender.

Exactly. Government needs IT staff on hand working for them directly, salaried or they'll never be able to get away from this scenario. The private sector will charge as much as it can get away with... clearly.

LordBattleBeard said,
You mean the last government was inept and wasteful with public money? shocking!

I'll say it again... Oh pleeeaase! Government being wasteful was not something unique to the previous Labour government.

hougtimo said,
Perhaps if Labour hadn't created a massive smoke screen of bureaucracy then we might have noticed sooner.

Oh pleeeaase! The toffee-nosed ones are just as bad, if not worse, when it comes to the art of bureaucracy.

TCLN Ryster said,

Oh pleeeaase! The toffee-nosed ones are just as bad, if not worse, when it comes to the art of bureaucracy.

Never said they weren't, did I? It's just a simple fact that the currently level of bureaucracy is down to Labour.

They're right, but the only way to fix this is to hire some IT staff directly into government departments (at around 120 pound per day) instead of relying on contractors with 500 pound per day rates.

kingius said,
They're right, but the only way to fix this is to hire some IT staff directly into government departments (at around 120 pound per day) instead of relying on contractors with 500 pound per day rates.

In 2006 I was earning £1000 per day installing scripted computers, basically plug in and turn on and run the setup script. We often finished an lunch and because there was a schedule we could not do any more.