Paid Feature The UK's public procurement practices are beginning to look rather outdated. Indeed, in a green paper on transforming public procurement, published to provoke debate in December last year, Cabinet Office minister Lord Agnew commented that “for too long, modern and innovative approaches to public procurement have been bogged down in bureaucratic, process-driven procedures”.
During the pandemic, standard public procurement procedures were sidestepped in order to respond to the immediate need. Contentious issues such as possible corruption and lack of transparency aside, if nothing else Covid highlighted the need for greater flexibility in the procurement framework. The public sector needs to be able to fast-track services on demand and scale them as appropriate.
Procurement for the public good
Procurement is a critical function in government. Taxpayers’ money is at stake, and so procurement should be carried out efficiently, to high standards, in order that we, as citizens, can be sure that our money is spent appropriately and that public interest is safeguarded. The government’s green paper? sets out a number of principles for public procurement, namely: the public good; value for money; transparency; integrity; fair treatment of suppliers and non-discrimination.
Public procurement can and should play an important role in shaping society and it affects citizens’ well-being. The OECD says: “For instance, when used strategically, procurement can significantly improve the life of citizens through agile and high-quality public services, such as health care and education. Similarly, it could work as an enabler for job creation, social inclusion, innovation and building trust in public institutions.”
The UK public sector is committed to digital transformation for all the right reasons - to enable the delivery of agile and high-quality public services, make for easier collaboration, improve accessibility and transparency - all those attributes found in the principles for public procurement. But the shortcomings of public sector procurement are most keenly felt in IT: while it ought to play a determining role in transforming the sector, it has become an issue that holds digital transformation up.
Confirmation of the extent of the public sector IT procurement problem can be found in the July 2021 Cabinet Office report, Organising for Digital Delivery, which outlines the enormous issues and costs the country faces in modernising legacy systems. The authors reported that almost 50 per cent of current Government IT spend (£2.3bn out of a total central Government spend of £4.7bn in 2019) is dedicated to “keeping the lights on” activity on outdated legacy systems, with an estimated £13bn-£2 bn risk over the coming five years.
In addition, research commissioned by HPE found that 61 per cent of public sector organisations feel that current procurement policies are a barrier. It’s a sentiment that stands up to scrutiny. For example, the Home Office (the department with the largest single technology spend), while having a clear understanding of the risks and after three or four years of effort, has not been able to retire any of its 12 large operational legacy systems.
Government has launched several policies over the years, including the partially successful Cloud First in 2013, to encourage the shift to digital services and a transition to the cloud. But public sector IT procurement frameworks are focused on capital expenditure, and don’t necessarily fit with the pay-as-you-use, opex-focused operating model that goes with moving to the cloud.
Says Russell MacDonald, HPE strategic advisor to the public sector: “There's a chronic problem in IT of over-provisioning and under-utilisation. When we look at how public money gets wasted, quite often that's because of capital funding. We have multi-year procurements which means public sector organisations buy hardware that they don't know they need yet, which then sits unused or with lower rates of utilisation until such time that they do use it, which might be some years later.”
Adds Russell: “One of the challenges of Cloud First was that it was a massive change for the public sector in lots of different ways. The sector was used to managing IT in a traditional way and moving to the cloud meant new skills, a new operating model, and a different funding model.”
The public sector’s dependence on outsourcing is another factor in the problem it now has with IT. Although outsourcing has kept the public sector IT going through the last few decades it has meant that IT expertise has remained outside the Civil Service.
Russell cites a recent National Audit Office report - The challenges in implementing digital change - that “sets out the lessons for the centre of government and departments to learn from the experience of implementing digital change It will be particularly useful for senior decision-makers who may not have direct technical experience or who have not yet grasped the scale of the challenge.”
These senior decision makers should first of all understand “the move to the cloud will not solve all the challenges of legacy systems”, The NAO recommends. “Successful delivery of digital business change programmes requires organisations to equip non-technical leaders with the right skills, and design suitable approval and governance frameworks.”
A divided model for investment
HPE wants to “encourage the public sector and suppliers to work more in partnership and for departments to engage with suppliers earlier in the process,” Russell says.
Things are slowly changing. The introduction of the Direct Award Framework and agile agreements like Digital Outcomes and Specialist (DOS) and Tech Services through Crown Commercial Service aim to move the public sector towards working with specialised suppliers in a more agile way.
Buying processes are being simplified to work on smaller projects that contribute to the direction and requirements of the government’s digital transformation strategy. “We are seeing a change,” says Russell,” because there are new procurement frameworks coming out. For example, there are now special procurement frameworks for hyperscale and public cloud.”
But this also contributes to a divided model, where new investment goes towards cloud-based digital services so that there’s little left over to modernise the decades-old legacy systems that the public sector so wants to change. Says Russell: “You can't just say, ‘we're putting everything in the cloud’. And equally, you can't just say, ‘we're going to do nothing with it’. We need to modernise within the public sector, particularly in an age where environmental concerns and social value are an important part of the procurement framework.”
A hybrid-cloud environment is the way forward for the public sector, says Russell. There will always be a place for on-premises infrastructure, due to data security and sovereignty issues if nothing else. Hybrid-cloud environments would help the public sector adhere to the principles of public procurement by ensuring that data and applications can run more cost effectively wherever they reside - on-premises, at the edge or in the cloud and that the sector’s services always have capacity to meet demand.
“We need to recognise the move towards IT as a service,” he says. “Our GreenLake brand, for example, is all about providing IT products as a service, and we have agreed a memorandum of understanding with Crown Commercial Service on GreenLake pricing.”
Hybrid-cloud solutions solve other public-sector IT issues. Data interoperability, visibility and transparency are improved for example. “It brings some cloud benefits to the on-premises world,” says Russell, “like software defined infrastructure, automation, pay for what you use pricing, and the agility and flexibility that comes with that.”
Regardless of the nods towards hyperscalers and the like, it’s clear that the procurement framework needs to change. As Russell says, a lot of budget, resources and skills are still tied up in maintaining legacy IT systems. The commercial world is reaping the benefit of hybrid-cloud environments, and it’s time, he adds, that procurement frameworks allow the public sector to do this too.
HPE has made a film, called Consciously Hybrid, that explores the challenges facing the public UK sector as it wrestles with delivering digital-first public services. Watch Consciously Hybrid now (no registration required).
This article is sponsored by HPE.