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OGC: hiatus? What hiatus?

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Comment The government procurement sheriff is working on a revision of its vexing model contracts for IT projects in order to reconsider views it ignored in its last consultation.

Unsurprisingly, the Office of Government Commerce (OGC) is staying tight-lipped over the debacle, which has seen it at loggerheads with the IT industry for nearly two years.

An OGC spokesman confirmed new contracts were on the drawing board, but was giving little away.

"There will be a refresh in the summer. There will be an open consultation," he said.

After the OGC's last contract consultation in summer 2004, all but the most trivial of objections raised by industry and independent experts were subsequently ignored by the OGC. It went ahead with its own new model contracts anyway last December.

The OGC started embedding the contested terms with public sector buyers, but widespread condemnation continued, led by trade association Intellect. Here's where the OGC's story and reality appear to part company.

In September 2005, the OGC capitulated, and said there would be a one contract trial of the new terms to see if they were a good idea after all.

“We are having a hiatus on the embedding to allow us to see the DISC project and the model contract terms in reality and consider the points raised by Intellect,” an OGC spokesman said at the time.

DISC is an ambitious group of IT projects at the Department of Constitutional affairs that is being used to assess the new contract terms.

Yet the assessment may be too late for some. The controversial model terms are already in common use in the public sector, and the OGC is still promoting their use, despite its supposed hiatus.

Industry has asserted all along that the OGC's terms were likely to result in the pitiful record of government IT being sullied all the more.

It is worth noting that the contentious terms of the OGC's contracts, concerning the allocation of risk, are of a shaky tradition that reaches way back to the Private Finance Initiative, which was banned from IT projects because its allocation of risk was dangerously imbalanced; through to the NHS embarrassment-in-waiting, the National Programme for IT; and even to a major component of DISC that is known as the most infamous government IT bodge of all time, the mighty Libra project.

Why then, after admitting that its contract terms might need revising, had the OGC continued to promote their use in public sector contracting? Would these terms not risk more IT failures, wasted money, political embarrassment?

The OGC this week seemed to be in denial. "There is no hiatus," a spokesman said, adding also that the intention all along had been to get the controversial contracts well and truly embedded.

"It was always the intention to undergo a refresh of the model contracts once they had had some time to embed properly, as we would then be able to take into account feedback from their adoption by a broad range of users," he said in an email.

When reminded of the previously declared hiatus, the spokesman said it had only been a hiatus of embedding, not of the contracts themselves.

But the OGC has always been in denial over this. When it introduced the contracts, suppliers were pulling their hair out because all but a few minor points they had raised in the consultation had been ignored. The OGC maintained that there were merely "one or two minor points where we had a slight difference of view".

Industry has become so exasperated with the OGC that Intellect yesterday introduced its own new model contracts, to give suppliers some ammunition to use in negotiations with government customers armed with the OGC's onerous terms and conditions.

But both sides are as bad as each other. This spat, which effects every government department and authority, and every IT supplier in the industry, has been conducted behind closed doors by a coterie of civil servants and loafered business executives. Intellect arguably does a disservice to the industry by keeping its contractual deliberations among a few hundred members in an industry of companies that number five digits.

That secrecy plays into the OGC's hands, by restricting the trade association's power base. Intellect's new terms, by the way, were put on the drawing board at the beginning of 2005, after the OGC had stiffed industry with its original new model contract terms. It then strung Intellect along with high level chit chats while continuing to embed the new terms.

Will the new new contract terms that come out of the OGC's next consultation look any better? The signs are not good. Even the DISC test is of limited use in determining the prudence of the old new terms (though it has given the OGC more time to get their terms more deeply embedded).

According to one source close to the OGC, the DISC test will merely determine whether the outcome of the procurement produces a contract that is acceptable to both parties. Funnily enough, early signs from the market, according to Roger Bickerstaff, a public sector contracts lawyer at the IT practice of Bird & Bird, are that suppliers are swallowing the new terms. Perhaps they need the business that bad - that is, after all why suppliers swallowed the terms in the past. Perhaps Intellect's model contracts are too little too late. ®

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