Buyers should approach the government ICT Services Contract with care

7 October 2011

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7 October 2010 | Angeline Albert

Public sector buyers should use the OGC Model ICT Services Contract with caution because it’s like  using a “sledgehammer” to buy, according procurement lawyer Sam De Silva.

De Silva, who is head of the IT and outsourcing practice at Manches told attendees at yesterday’s CIPS Conference in London that the government’s model contract for complex IT projects has major flaws and is “an extreme approach” to purchasing.

The model includes a claw-back option whereby the supplier would be paid but the public body has the right to recover all of the payment. Reasons for the claw-back can include missed timeframes and specifications.

The CIPS Council member said: “As a model it’s a good place to start but buyers should renegotiate from there.”  He recommended purchasers put in place milestones in contracts whereby certain percentages can be clawed back at different stages of the deal.

The model also stipulates that public purchasers pay for value delivered but not for work in progress. This means suppliers receive no revenue before the contract performance point – when the public body starts benefiting from the service.

“Suppliers have nothing to show on their books for maybe years because they get no profit recovery during the initial stages. The government thought they could create a template for IT like construction, but a bespoke model is needed.”

He said the shortcomings of the model is not helped by the fact that documentation about it cannot be found in a Google search as it is actually hosted on a national archives website, following the closure of the OGC website.

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