UK government IT suppliers have 'free ride' with taxpayer money

Many contracts unchecked on value for money, MPs warn

UK government IT suppliers have a "free ride" on the back of taxpayer cash, with many of their contracts unchecked on value for money, a powerful group of MPs is warning.

The Committee of Public Accounts found that in nearly one third of contracts where suppliers were dealing with personal or security information, there was no risk register for identifying, analysing and managing risks.

Some 41% of government contract managers have not tested the value for money of new services purchased under existing contracts. Around £240 million pounds was spent annually on managing contracts costing £12 billion for IT, security, cleaning and catering.

In an alarming 56% of contracts, there is no contingency plan in case of supplier failure. Additionally, less than half of government organisations surveyed have an individual with overall responsibility for contract management, and there is no documented plan for managing 28% of deals.

The report, "Central government's management of service contracts", says Whitehall's failure to properly manage contracts has a direct impact on the public, highlighting the major problems with paying students their Education Maintenance Allowance last year.

In contrast, the Home Office has saved £17 million a year on an IT contract with Fujitsu by benchmarking the service against market prices.

The report accuses the government of being "too cosy" with suppliers, after 38% of contract managers failed to apply financial penalties where suppliers under-performed.

Richard Bacon MP, a member of the committee, says the government needed to "wake up" following "a litany of cut corners and complacency" on the part of contract managers.

In over a third of contracts there was no provision for financial incentives for improved performance, he says.

"A good contract should include both sticks and carrots in order to encourage suppliers to improve their game," he says. "Sadly, the moment the ink on the contracts was dry, the government appears to have lost interest in doing the job properly."

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