Tough truth about a tender exercise

10 April 2002
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11 April 2002

Goodwill and government support could not save the OGC's online contract pilot scheme. Its demise poses many questions, says Robin Parker

There is no denying the ambition behind the government's plans to make online tendering for Whitehall contracts commonplace in less than two years.

Since its inception in April 2000 on the wave of Tony Blair's e-revolution, the Office of Government Commerce (OGC) has had a total shake-up of the government's procurement practices in its sights.

But despite the immense goodwill riding on the £300,000 TenderTrust scheme, the OGC has pulled the plug after year-long pilots in 10 departments.

The project's collapse will derail long-term plans for e-enabling public-sector services. Proposed savings of £50 million for the government and suppliers will simply take longer to materialise.

Since TenderTrust pilots were originally due to end in November, then extended for three months to allay suppliers' concerns over security, the freeze on e-tendering is not surprising. But the brutal truth, acknowledged by the OGC, is that if suppliers are unhappy with the logistics of learning different tendering processes with each department, they will refuse to use the system.

The OGC, it seems, failed to foresee the huge variety in quality and age of software among departments. That is surprising. It should have taken stock of the situation before starting the project at public expense.

Nevertheless, the fact remains that if central government is serious about adopting modern e-business solutions, it must bring its IT systems up to speed.

The problem goes to the heart of Whitehall's relationship with the private sector, which will have an increasing role in financing and purchasing government and public-sector contracts. But this means the OGC faces the stiff task of educating departments in becoming best-practice clients capable of leading the e-business process.

The central question underlying the latest fiasco is just what the OGC's role really is, and how effective it can be. And, so far as e-business in Whitehall is concerned, the meaning of the New Labour catchphrase "joined-up government" remains unclear.

Some departments still remain a law unto themselves. The Foreign and Commonwealth Office, for example, began linking its 220 worldwide embassies with an e-procurement system last year.

The OGC is continuing with trials of a range of e-procurement systems separately and is embarking on reverse auctions at the Environment Agency and the Police Information Technology Association.

But because the agency carries no mandate, departments will decide their own e-procurement strategies and systems, based on generic guidance produced during the pilots. This could take a couple of years.

Nobody denies the need for thorough testing of e-business projects, but time is finite when the government aims to have 100 per cent of services e-enabled by 2005. How much longer can it keep changing tack?

By contrast, in an admittedly smaller market, the Scottish Executive seems to be forging ahead, setting its sights on £5 billion of annual purchases at more than 70 public-sector bodies. The first transaction on Scotland's public-sector e-procurement system was held by Highland Council at the end of March, for the provision of art products at Portree Primary School in Scotland.

Suppliers will be reassured to know they can link to public-sector buyers throughout Scotland on the same system. Purchasers, too, should gain from the leverage of the system, which could effectively provide the benefits of virtual consortia buying in the long term.

The OGC maintains, however, that such a "one-size-fits-all" model is unsuitable for a range of bodies with vastly different needs. But experience of the e-tendering project suggests suppliers find it impossible to deal with departments in a disparate way.

In its rethink, the agency will probably consider that most New Labour of approaches, the third way, combining the flexibility of TenderTrust with the supplier-friendliness of Scotland's effort.

A solution is some time away, but if it can deliver the goods with a clear strategy, the OGC may yet prove its worth.

SMapr2002

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