Andrew Binns, chairman of the Computer Software and Services Association (CSSA) outsourcing group, believes that the high cost of tenders and the perceived lack of real competition is putting off many suppliers.
‘The number of bids that succeed against an incumbent are small [5% to 10%] and there is a reluctance in the vendor community to spend large amounts of money on bid costs to pursue an opportunity they have little chance of winning,’ he said.
The Office of Government Commerce, set up to improve the way government procures goods and services, admitted that it does not know how many IT contract re-tenders are let to the incumbent supplier. ‘We have no information on this issue at this time,’ it said in a statement.
But suppliers warn that a lack of competition means the government is unlikely to get the best deal in the long term.
‘You have to be very selective about which prospects [to bid for] as you can’t afford to run too many of these in parallel. Even if you think you will win two out of three you have to be careful when you are spending these sums of money,’ said Drew Cameron, vice president at Computer Sciences.
He explained that the bidding process is still longwinded and expensive. ‘The annoying thing is that, regardless of the opportunity, the cost of the process is still the same. The first two or three years of potential profit are gone,’ he said.
While a private sector company may deliberate between a number of suppliers at first, it will decide on a single winner before going into the contractual details, said Cameron. In contrast, a government department negotiates down to a fine level of detail with several suppliers, thereby pushing up costs, before picking a winner.
Binns suggested that the government should consider paying some of the suppliers’ costs, or open up bids to independent assessment by a group such as the British Computer Society or the CSSA.
‘If the government was to fund some of the auditable big costs it would give more of an impression that there is a degree of openness in the bidding,’ he said.
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