Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80-99)


MONDAY 13 MAY 2002

  80. I thought you said a year ago.
  (Mr Barrett) No, I did not say that.

  81. I beg your pardon; I misunderstood you.
  (Mr Barrett) It was certainly this calendar year and I would suspect within the last three months, but I cannot be absolutely certain about that.

  82. What happens if it is scrapped? Is this the sort of project you will have to re-start all over again or do you just abandon it?
  (Mr Barrett) I do not have that level of detailed knowledge about the particular project, I should have to refer you to the Lord Chancellor's Department for that.

  83. Rosie Eagelson, the General Secretary of the Association of Magisterial Officers is quoted in the paper as saying that when you try to introduce private finance into something as complicated as the criminal justice system, the results are disastrous for those working in the courts and for the taxpayer. Would you agree? Is there a real problem in trying to introduce private finance into this area?
  (Mr Barrett) I have no knowledge of that area in detail to allow me to comment.

  84. Are there any areas of Government where you would think it was in general very dangerous to introduce a private finance system just because of the inherent way that particular area is run?
  (Mr Barrett) No.

  85. So you do not agree in this case then.
  (Mr Barrett) None that I am aware of.

  86. Are we getting too dependent on too few IT suppliers?
  (Mr Barrett) There is a concern that this is the case and it is a concern that has been reflected in the press on a number of occasions.

  87. Indeed one reason for asking that question, as the article implies, is that we now may actually have to buy ourselves out of this contract. In other words, not only do we not get our money back, but we have to pay more money to the contractor to stop the contract when the thing is no use to us. That does seem quite extraordinary. It certainly indicates that we are very much over a barrel as far as some of these IT contractors are concerned.
  (Mr Barrett) I can talk about the general issue of whether Government is over-dependent on a number of IT suppliers. There are two things to say. The first is that we within OGC are conscious that there are some big players in the marketplace who are not competing in the Government marketplace as they should do.

  88. I am sorry. You said "there are some big players . . . who are not competing . . . as they should do"?
  (Mr Barrett) They are not devoting enough resources to trying to win business in the Government marketplace.

  89. Who are you to say? Is that not their decision. You seem to indicate they have some moral responsibility.
  (Mr Barrett) No, they do not have a moral responsibility, but it would be helpful to the competitiveness of the marketplace if we had some other players in the marketplace.

  90. So why are there not and what are you doing to encourage that?
  (Mr Barrett) They are not doing it for a number of reasons. The first is a very strong perception that Government buys on lowest price and that is not a business they say they want to get into. The second reason is that they have concerns about the protracted length of the decision-making process and it costs them a tremendous amount of money to bid. The third factor is that they are somewhat concerned about the damage to their reputation if they do work for Government. On the other side there are benefits to doing business with Government which I shall not go into at the moment. On the first issue, which is about the perception that the Government awards contracts on the basis solely of lowest price, we have done a lot of work with Departments producing revised guidance and training for those people making decisions to reinforce the message, which I understand is one which this Committee has supported on numerous occasions, that what is important is value for money not lowest price. On the second, we are working with colleagues in Departments to look at shortening the decision-making process so that we can take substantial cost for bidders, and therefore at the end of the day, for Government, out of the procurement process. On the third, on the grounds of reputation, my answer is very simple. If you are not involved in a disaster, you have no worry about any damage to your reputation.

  91. I can understand that. Your argument on the third one is a little bit weak, if I may say so, because naturally Government projects are likely to have that much more publicity so there is that much higher risk to their reputation in that sense.
  (Mr Barrett) Yes, but the advantage of doing business with Government is that it is certainly a triple-A-rated organisation and they have no worries about paying bills. There are tremendous benefits to doing business with Government.

  92. May I go back to the first one? It is very interesting that you should say there is still a worry that Government is seen as going simply for the simplest price. That tallies extraordinarily well with something which Mr James from the Dome told us just the other day, when he also said that one of the great worries about the way the Dome was handled was that Government simply went for the cheapest possible option the whole time. That was one of the reasons why the Dome failed so badly. He did say that one of the reasons the Dome failed was because they were going for the cheapest option rather than going for a more expensive option and getting a better long-term result. You seem to have said very much the same thing, that you believe this is how Government is seen.
  (Mr Barrett) Yes, there is a perception out there.

  93. You also said you were trying to tell people, not least thanks to the work of this Committee, that that was not the case.
  (Mr Barrett) Yes.

  94. You do not yet seem to have been successful, if I may say so. Can you give me some examples of how you are trying to get that across to people, that they should really be providing good value and not just lowest price?
  (Mr Barrett) An example is producing guidance of this type, which is a value for money evaluation in complex procurements which is a document which is circulated to Permanent Secretaries within Government and helps to put a framework in place to legitimise the consideration of non-financial issues when making a complex procurement judgement. That is an example of a piece of guidance we have produced.

  95. You say that has gone to Permanent Secretaries.
  (Mr Barrett) Yes; indeed.

  96. Does this information go further down the tree?
  (Mr Barrett) Yes; it then goes down to practitioners. My view is that it is very important you get top of the office support for these messages and try to reinforce through the mechanisms that OGC has in place with its supervisory board and the other ways we work across civil central Government to get those sorts of messages put across. Yes, you have to work at the professional level, you have to put it into professional training for procurement people that value for money does not equal lowest price and that is a message which will take time for the industry to recognise. At the end of the day they will only believe it when they see contracts awarded on the basis of best value for money, not lowest price. That will take time.

  97. So far you have not awarded any major Government IT contracts on anything except the lowest price.
  (Mr Barrett) No, that is not what I said. What I said was that there was still that perception that that is the most important factor and it will take time to change that.

  98. You have given some contracts which were not on the bottom price, have you?
  (Mr Barrett) I have not awarded contracts on that basis.

  99. You have never awarded a major IT contract except to the lowest bidder.
  (Mr Barrett) I have never awarded a contract to the lowest bidder. In my awarding of contracts I have always awarded it on the basis of best value for money.

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