DVLA brings IT function in-house to save £30 million a year

Will Green is news editor of Supply Management
6 October 2015

The Driver and Vehicle Licensing Agency (DVLA) has abandoned the outsourcing of its IT operations and brought the function back in-house.

The organisation said a 13-year IT outsourcing contract with IBM and latterly Concentrix, which came to an end on 11 September, was costly, complex and “didn’t reflect modern ways of working”.

Historically the DVLA has spent an average of £120 million per year on IT, half of its non-pay spend, but it said moving to short-term contracts, typically no longer than two years, should help save around £30 million a year over the next decade.

The DVLA said IT, its single biggest category of spend, had been outsourced for around 22 years and work began two years ago to prepare for the end of the latest contract.

Andrew Falvey, commercial director at DVLA, told SM: “The decision was made not to go back to the market but to insource the staff involved and basically take back control of our own IT.

“The contract was of its time. It was perceived as being expensive. There was more than one company involved. Organisationally it was complex in terms of commissioning work. It didn’t reflect more modern ways of working, such as use of SMEs. It limited our choices in the market.”

The decision comes against a background of government rules to move away from large IT contracts. “The challenge to people like ourselves was to move away from monolithic IT outsources and move to more flexible and agile IT supply chains,” said Falvey.

He said around 300 staff had transferred over to the DVLA from the private sector and the department was now handling around 300 contracts, though these were being rationalised. “We think it’s probably the biggest insource of an IT function,” he said.

Falvey said they now bought everything through the government’s digital marketplace and had not issued an OJEU notice for an IT requirement for around three years.

He said they ran supplier days and worked with academia to remain innovative. “We need to make sure we stay in touch with innovation and we understand market trends and where technology is going,” said Falvey.

He said an important lesson from the change was to maintain good relationships with firms. “With any exercise like this you rely on the cooperation and support of your existing suppliers to enable a smooth transition,” he said.

“One of the key things is to maintain a healthy relationship. Don’t treat them as an outgoing supplier that you’ll never see again. Treat them as a potential future supplier to you.”

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