When the coalition first looked at ways of cutting excessive costs, it didn't take long for them to fix their gaze on IT procurement, long seen as a byword for red tape and shady, excessive, backroom deals.
Rohan Silver, the former government adviser on Tech City, said he was surprised at how close the relationship between big business and government was and how few government contracts were awarded to small and medium enterprises (SMEs).
In 2010, 70% of IT contracts went to just seven companies. The rules put in place by the previous government – rules that made this figure possible – were scrapped by the coalition, which in turn promised to award 25% of IT contracts to SMEs.
That 25% is an achievable and respectable figure. But despite the government's pronouncements on the UK's burgeoning digital production and creative sectors, the Guardian has previously exposed a clear bias towards London – specifically Tech City – for funding andsupport.
Recently, business secretary Vince Cable, spoke encouragingly about expanding the government's focus to organically grown tech clustersaround the UK: "What I want to do is develop the concept of a cluster of clusters. [Tech City head] Joanna Shields is very keen not to see Tech City in a parochial sense, but to see it as a UK phenomenon, and to build on the strengths of other parts of the UK. And I'd like to build that with her."
In practice, Tech City, London and the south-east still dominate the government agenda. As part of its transparency promise, the government developed the 'Contracts Finder' website, which details all government procurement opportunities, since 2010, over the value of £10,000.
Half government IT spend is on firms in the south-east
According to the ONS there are currently 129,165 IT firms in the UK , of which 32,710 (25%) and 28,785 (22%) are in London and the south east respectively. In the north west there are 9825, the south west houses 10,435, the north east has 1995 and the west midlands plays host to 8515. Wales, Scotland and Northern Ireland have a combined total of 10,175 IT firms.
Of the 1,034 IT contracts listed on the site, 587 (56%) went to companies in the southeast, of which 264, or 25%, were based in London. The gulf is most striking when you compare those figures to similarly sized tech clusters such as Manchester and Bristol, which have been awarded 21 and 22 contracts respectively.
Smaller clusters such as Newcastle, Leeds and Birmingham had a total of 50 contracts awarded in the last three years. The remaining contracts were awarded to companies scattered around the UK and other countries, including Ireland, Germany, Holland and Kenya.
Questioned over London bias, the Cabinet Office deferred to the progress it has made in moving away from the £20bn a year previously being spent on an "oligopoly" of large suppliers: "We've created a more open and competitive marketplace by breaking down the length and size of contracts to no more than £100m, sharing procurement needs earlier and simplifying entry requirements and application procedures – this opens up opportunities to dynamic SMEs and encourages innovation in government IT.
"We want to make sure that we get the very best value from every contract, and where long-legacy IT service contracts are still operating, we're reviewing, renegotiating and improving them. Over half a billion pounds was saved last year alone."
The Cabinet Office was also keen to point out that it is making important changes to IT procurement by introducing a system called G-Cloud, which was set up with the specific purpose of advertising the government's IT contracts and promoting suppliers.
"There are over 800 companies on G-Cloud at the moment – 83% of them SMEs. Sales through CloudStore are increasing across government and 63% of purchases to date have been from SMEs."
The Cabinet Office did not suggest ways in which the government is working to encourage bids from SMEs outside London.
"The hurdles are impossible for SMEs"
Vin Summer, founding director of a Manchester-based software solutions company, Clicks and Links, has had numerous problems with attempting to secure government IT contracts both inside a large company and as part of an SME.
"I have given up on trying to get government contracts myself because of the difficulties," he told the Guardian. "Despite some attempts at changes, government procurement remains a complex and lengthy process which requires far more time than most SMEs have. The process seems designed to discourage, and the hurdles that you have to jump over – accreditations, accounts, policies, legal documents, etc – are fine for large companies that have departments dedicated to such things, but impossible for SMEs."
He also pointed to "London-centred thinking" among government departments and Intellect, the IT trade association he has chosen to leave. "They are supposed to work together to widen access, rather than protect incumbents. There is little effort to reach out to other locations. Central government seems to also give the impression that the only small tech companies in UK are in Shoreditch – as opposed to Manchester, Salford, Cambridge, Bristol and the rest."
Where's the government support for local IT firms?
Shaun Fensom, founding director of independent trade association,Manchester Digital, believes that a more bespoke approach is needed to get more non-London IT companies onboard: "The way procurement is done needs to change. An example is the idea of inviting ideas from SMEs that are not part of the main delivery, but which could lead to savings, efficiency improvements, etc, then selecting the best ideas and funding the SMEs to develop them. This runs in parallel with the main procurement."
Fensom said a group of local digital businesses had discussed the idea of a local procurement event with Liam Maxwell, the government's chief technology officer, which would provide an open forum to discuss the challenges and requirements of government, as well as meet local firms.
Despite Maxwell's enthusiasm, Fensom says the idea has gone nowhere.
The coalition was clear about saving money through a less costly procurement process and opening it up to SMEs, which, to its credit, it has done and continues to do so.
Despite the encouraging rhetoric, the figures still show that many UK IT companies are still struggling to penetrate the London-centric attitude to procurement in central government. Without proper acknowledgment, there is a continued danger that the government is missing out on access to skilled and innovative suppliers.
Source: The Guardian
