Select Committee on Treasury Appendices to the Minutes of Evidence


APPENDIX 7

Supplementary memorandum submitted by the Office of Government Commerce

E-TENDERING PILOT

Background

  1.  Government policy is to facilitate and enable electronic commerce—with both citizens and businesses. Some of the focus has been to drive progress forward through target setting, where a number of targets for making government services available electronically have been set. Included within these targets was a specific target that, by the end of 2001, 50 per cent of government tenders should be electronic, increasing to 100 per cent by the end of 2002.

  2.  The procurement, piloting and implementation of an electronic tendering system formed part of government's move to embrace e-commerce, and offered the potential to provide civil central government with a system and service to replace the traditional paper tendering exercise with a web-enabled system to deliver additional functionality and increased benefits to all parties involved in the tendering process.

  3.  The e-tendering project was taken forward as part of a portfolio of projects within the newly-formed OGC. A pilot contract award was made to the Royal Bank of Scotland in March 2001 to pilot an e-tendering system and service (OGC TenderTrust) with 10 government departments and agencies. The pilot was intended to give OGC, and the government departments and agencies involved, first hand experience of e-tendering to ensure that the system met the demanding requirement of both public and private sector tendering prior to full roll-out.

  4.  The piloted system was the world's first smartcard internet-based secure electronic tendering system, with the intention of allowing purchasers and suppliers easily to manage the entire tendering process.

  5.  The pilot ended on 28 February 2002. OGC and the pilot departments and agencies will not be rolling out the piloted solution across government as it did not meet all its operational objectives. Specific areas of concern were that the piloted system:

    —  failed to deliver all mandatory requirements particularly those relating to system functionality;

    —  would not be fully networkable until the end of 2002, making it very difficult to roll-out across government and its large supplier base;

    —  had not given OGC or the pilot departments sufficient confidence in the system or the service to award a main contract;

    —  had already had two contract extensions totalling five months against the original timescales—leading to a lack of confidence in the service provider and its relationship with its sub-contractor.

  6.  The lessons learnt from the e-tendering pilot, along with feedback from other e-procurement pilots now underway, will allow government to make a full assessment of the technological options that will work best and ensure value for money.

  7.  The Chief Secretary announced in a written parliamentary question on 17 December 2001 (Official Report column 26W) that the targets for the number of government tenders processed electronically would be revised.

Lessons learnt and outcomes

  8.  The main lessons learnt from the e-tendering pilot, which will be published in a post-implementation project report, are:

    —  greater understanding of the difficulties of implementing e-tendering for suppliers—application and installation needs to be simple and it must be compatible with the government procurement process;

    —  greater understanding of appropriate standards for e-tendering—particularly the need to ensure that security measures in place are appropriate and do not make the system costly or cumbersome;

    —  recognition that there is a clear demand for e-tendering within government and from its supplier base;

    —  recognition that suppliers want to see only one system in place across government.

  9.  The pilot has been a valuable, cost effective exercise for government in:

    —  fully testing, and assessing, the benefits of e-tendering in a live environment;

    —  reducing the risk of a costly mistake in prematurely rolling out an unpiloted solution;

    —  demonstrating how OGC can bring together procurement colleagues across central government to work collaboratively;

    —  ensuring that the requirements of government and its suppliers are fully met prior to any full-scale roll-out across government.

OGC Costs of Pilot

Costs 2000-01
Procurement exercise
£90,000
Costs 2001-02 to Feb 2003
Royal Bank of Scotland
Consultants/Contractors/OGC staff
Legal Costs
£300,000
£200,000
£60,000
Total Costs
  
£650,000


  10.  The estimated costs of a premature roll-out that failed to deliver what is required are in the region of £27.7 million over the next four years.

11 April 2002



 
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