Naked Law

Costs driven up in Highways procurement

We frequently see both the costs and timescales of public sector procurements extended beyond the original intentions of the relevant organisations.  This can be down to a number of factors, and generally a combination of several: over-ambitious timescales (often driven by organisational or national politics); lack of sufficient planning for advisors' fees, be they lawyers, financial advisors or technical consultants; the ever present risk of scope creep; and protracted negotiations - to name but a few.

But still, the Highways Agency's telecoms procurement (late by 3 years, over-budget by £12.5m in advisors' fees) seems an extreme example.  The Public Accounts Committee's report concludes that "Most of the additional time and cost was incurred in meeting the Agency’s requirements for high quality bid documents" - an admirable aim in itself, but the PAC also found that:

"The Agency never had a clear idea about the time and cost needed to complete the procurement. In every updated forecast, the Agency’s revised budget and timetable were optimistic, often by considerable margins."

"The Agency did not deploy effective controls over the work of its advisers".

So a salutary lesson for public sector procurement managers.  Inevitably, and rightly, a lot of time is often spent working out an organisation's requirements for the goods or services to be procured.  However, taking time to properly scope advisor requirements and to build good working relationships with them can be equally important - both in terms of budgeting for and managing likely costs and in making use of their expertise in sense-checking the proposed procurement structure and timetable.

IT outsourcing: the future is green?

Much to the envy of my fellow Naked Lawyers, last Friday I was fortunate to lunch at Claridges. Not solely, I might add, so I could sample the rather good food (asparagus, duck, chocolate parfait) but also because the IT industry trade association Intellect was holding one of its Industry Leadership lunches there. I was pleasantly surprised by the mix of multinational and much smaller suppliers that were represented, along with the usual raft of consultants and legal and financial advisors.

After lunch there was a talk by Guy Hains, President and CEO of the European Group for CSC who spoke about recent trends in IT outsourcing. I found the following points particularly interesting:

• the feeling that the industry should put together some kind of guidance or code dealing with the transfer of outsourcing deals from one supplier to another (eg at the end of the first supplier’s term). This is an area fraught with difficulty, not least because contractually the purchaser and original supplier are usually stuck with whatever they agreed at the outset of the project, at a time when (generally) they are friends and the end of the relationship seems too far off to worry about. I am sure some industry consensus on how to manage the handover from the outgoing to incoming supplier would not go amiss.
• the indication that purchasers are becoming more concerned about green issues including the environmental impact of their IT kit. Guy’s view was that suppliers need to be addressing this and seeking to drive down the costs of greener solutions, or risk being left behind. Certainly the introduction of the WEEE directive and other environmental protection legislation means that both purchasers and suppliers have an interest in reducing the negative environmental effects of their IT – but of course purchasers will not want to pay more for this in the long run.

PUK "will make amends ere long"

I've just received email notification that Partnerships UK has published the revised guidance on the standard OGC IT contract (see here, though you'll need to register first).  See my previous post on the list of changes PUK published recently.  From a quick glance at the latest version, there don't appear to have been major revisions in the past couple of weeks, though it's only available as a pdf so I haven't been able to run a direct comparison.

PUK's email says that they "plan to implement the changes within the next week and [that I] ... will be provided with a further notification when Version 2.1 of the Guidance has been published on the website".