Central government is wasting millions of pounds because of the outdated way in which it manages the tendering process for large-scale IT projects, making a mockery of the coalition's bid to cut wasteful spending, according to benchmarking firm ProBenchmark.
The company analysed major public sector contracts and found that, when existing contracts are re-tendered, up to 80 per cent of the time the buyer has no desire to change supplier owing to the complexity and costs involved.
However, the outdated re-bidding process used by central government teams means that costs can run to £8m for a single contract, and the whole process can drag on for 18 months or more.
ProBenchmark claimed that the total cost of re-tendering in the current round of public sector cuts will be at least £200m, far more than any savings that may be delivered.
"Nobody benefits from the current tendering process," said ProBenchmark director Simon Scarrott. "The government doesn't get a cheaper deal, and the vendor doesn't give a better price. It's a one-size-fits-all, not an intelligent, selective process."
Scarrott argued that the government needs to adopt a new approach to managing the re-tendering process for its outsourcing contracts, which involves researching the market price for a particular contract and establishing whether the current supplier is market-compliant.
This would save time and money, he explained, being only a fraction of the cost of a full tender process, which typically involves drawing up a long list of potential providers that is eventually whittled down to one, even if there is no intention of switching to another outsourcing provider.
"Historically there is a community of procurement professionals who are self-employed and do very well out of extending the tendering process," Scarrott said.
"If you create a procurement process that rewards long, slow and often, that ' s what you'll get and that's what we have."
However, the government is moving in the right direction, according to Scarrott, although it may take some time to get there.
"There is a move towards a central intelligence for buying and procurement, and that the Office of Government Commerce is pushing towards it is a plus," he said.
"There is a momentum towards acting in a more grown up and cost-efficient way, but there are years of prejudice and legacy to overcome."
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