SMEs and Public Sector ICT Procurement
Its Scotsoft season and I’ve been asked to speak at the DigiLeaders SME Salon about Public Sector ICT procurement.
My views on procurement have been formed from a few viewpoints:
Like most citizens I would like:
Sadly there is evidence that UK and Scotland central and local government falls short of these objectives. On best value in particular, failed projects and budget overruns are easy pickings for the IT and mainstream press. Even on matters within the competence of Scottish Government, Audit Scotland reckon we spend £739M or £140 for every citizen of Scotland. Its difficult to find international figures for comparison, but that seems like a lot.
Selling ICT services to central and local government has been a frustrating task for local small and medium businesses. SMEs complaints of effective exclusion from the process might be summarised as:
The structure of these GSIs mean they inadvertently stifle innovation by fitting customers requirements to their global cookie cutter approach. Because the procurement is difficult, time consuming, and under close strutiny, the temptation is to award longer contracts. Its tempting for GSIs to sweat their sweet 7 year contracts, applying change requests charges wherever possible to fill out the profits, thus raising lifetime project costs.
Meanwhile the citizen doesn’t benefit from your local SME ICT services providers lower project pricetags, and doesn’t access the passion, ideas, innovation and expertise they would bring. Wee companies don’t have an exclusive on Innovation, but a stroll around CodeBase will show you that they are where the rubber hits the road in innovative application of new technology to business in these parts. Your GSIs and global software companies have offices and people in Scotland, but have to fly in their R&D and core product development people here to impress.
UK and Scottish Governments have recognised this oligopoly and have taken steps to award a greater share of business to smaller local businesses through Supplier Diversity ensuring small and medium sized enterprises have fair access to public sector contracts in Scotland. This has expanded the number of suppliers on those National frameworks to include those few SMEs determined to invest in the process. At a local government level contracts such as Edinburgh city Council ICT channel 25% of value to SMEs.
So the situation is improving in terms of best value, but there is still much more that can be done to give Government agencies access to the ideas and innovation that SMEs can bring to bear. Too often the procurement exercise is too inflexible to invite novel or genuinely innovative responses.
In this environment Scottish Government CivTech approach has been a breath of fresh air. It brings the tech startup approach to government procurement by issuing open technology challenges instead of constrained procurement exercises.
Its first iteration has run a competition awarding modest funding to early stage companies such as Wallet.Services, partnering them with a CivTech challenge sponsoring agency.
The effect has been to tap into the innovation hub that is CodeBase, bringing fresh ideas to acknowledged problems of Tourism, Healthcare and the Environment. Word is getting out in the corridors of SEPA, NSS, Transport Scotland, and beyond. Daily visitors from the Government agencies are educated in new and novel approaches. The startups gain hugely valuable domain expertise and insight and accelerate their development, and share and polish their ideas and business models.
No doubt some of these startup ideas are naïve, but come the end of its 3-month accelerator phase, at the very least they will have informed associated public sector procurements, hopefully leading to a more open and less prescriptive procurement processes.
Perhaps this bold CivTech experiment will validate a route to better and best value digital public services.
Having seen the workings of Scottish Government at close hand I do not underestimate how difficult it was to steer the Civtech approach through Scottish Government procurement, so all credit to the CivTech team and Digital Directors who made it happen.
Its early days but lets watch progress closely – wouldn’t it be great if the CivTech approach could be applied in an open forum to large projects with real citizen impact?
This post first appeared here on the Wallet.Services blog.