It's time to kill big IT contracts, says taxman's CIO

By Nick Heath, 4 February 2010 15:10

NEWS

Phil Pavitt - the man in charge of the UK government's largest IT outsourcing deal - believes Whitehall needs to end its love affair with supersized IT contracts.

Pavitt has been busy reshaping the taxman's £9.75bn IT services contract, dubbed Aspire, since taking up the role of CIO at HM Revenue and Customs (HMRC) in September last year.

With main Apsire contractor Capgemini relying on 240 suppliers to help it deliver the contract, the sheer scope of the deal can cause headaches for the taxman's IT department.

HMRC CIO Phil Pavitt believes that big isn't beautiful when it comes to outsourcing contracts
(Photo credit: HMRC)

There have been cases of HMRC's internal IT team taking on work that should have been carried out by the outsourcer, resulting in the department "paying twice" to get the job done, the HMRC CIO said.

"We have a complication where the role of who does what after a number of years of being outsourced is complex and it does blur," Pavitt told the GovNet Government IT 2010 conference last week.

"It's time as an industry, and with my partners it is time as an outsourcer, that we began to reduce dramatically those programmes to sizes that can be understood, swallowed and delivered," he added.

Pavitt subscribes to the belief that no IT outsourcing contract should be larger than £100m.

"£100m is never £100m - in an £100m programme people forget why they started and the people responsible at the outset are rarely there at the end," he said.

"All major changes should become medium changes. I've met many programme directors who've said 'I'm doing a £100m programme', I say 'I feel very sorry for you, ring me back when you're doing a £20m one'."

Pavitt's comments follow a recent pledge by the Tories who - in reaction to the overspends in huge projects such as the £7.1bn Defence Information Infrastructure - said no IT project under a Conservative government would be larger than £100m.

The Conservatives' premise is that rather than relying on one large overarching system, government departments could be served by a network of smaller, cheaper systems able to understand each other's data.

The idea is that small interoperable systems within government would be able to have new functions and features bolted on and could be built up in a modular, Lego-like fashion.

The Conservatives hope that smaller IT projects will be easier to manage and less prone to delays and running tens or hundreds of millions over budget.

However, large IT transformation projects represent a financial risk for suppliers - who have to invest a lot of money upfront to make them work - and Tola Sargeant, analyst with TechMarketView, said limiting work to short-term £100m contracts could scare off suppliers from bidding on public sector work.

"I have heard suppliers complain recently that big public sector outsourcing contracts have come down in length from 10 to 12 years, to five to seven years," she said.

"They say that it is not long enough to carry out transformation and still make their money back.

"If it meant that the length of the contract came down then they might struggle to find suppliers who were willing to take up the contract."

A good compromise could be...