Warning lights still flashing for public sector IT contracts - National Audit Office

By Steve Malone

Posted on 5 Nov 2004 at 11:33

British government IT contracts still run the risk of going badly wrong despite new safeguards put in place says the National Audit Office in a report published today.

In 2002, the Office of Government Commerce (OGC) introduced a 'Gateway' review scheme which put in place a system whereby a review should be undertaken of a project at critical stages such as feasibility, procurement strategy and investment decision. At each stage, a project is designated red, amber or green.

The NAO says that the review process has been a success in monitoring government IT projects before they run completely out of control. Nevertheless, of the 250 reviews conducted to March this year over a quarter were rated red with major problems and around half have an amber rating with serious problems remaining. Less than a quarter were rated at 'green' with only minor problems. The report concludes that there is a 'major risk...that projects are entering the process too late... and exiting the process too early '

On the positive side, things are improving. The report says that 43 per cent of projects have improved their red/amber/green status whilst another 38 per cent have maintained their status.

The NAO says that the main reasons for the failure of government IT projects are lack of senior civil service and ministerial leadership, a missing clear link between the project and the problems it is trying to solve, poor project and risk management, a lack of understanding and contact with suppliers. Finally, the NAO says that projects are too often driven by the initial quote given rather than the long term value for money.

The report also highlights the fact that until recently five companies accounted for 60 per cent of government IT contracts. This, the report says, restricted competition and those suppliers could 'dictate the terms of the contract'.

The NAO says that the problems thrown up by IT projects is often not the technology itself. It says that the Gateway review system has been a success but that government departments should continually evaluate projects and these reviews should take place regularly and at a senior level. It also says that departments lack sufficient project and programme management staff.