Supplementary memorandum submitted by
the Office of Government Commerce
1. Government policy is to facilitate and
enable electronic commercewith 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
had already had two contract extensions
totalling five months against the original timescalesleading
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
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
greater understanding of the difficulties
of implementing e-tendering for suppliersapplication and
installation needs to be simple and it must be compatible with
the government procurement process;
greater understanding of appropriate
standards for e-tenderingparticularly 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
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
|Costs 2001-02 to Feb 2003||Royal Bank of Scotland
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