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The UK government is way off its target of sourcing a quarter of its IT gear and services from small businesses by 2015.

That's according to a report out this month by Parliament's Public Accounts Committee (PAC) that criticises the government's ICT strategy.

The panel, chaired by Labour backbencher Margaret Hodge, interviewed folk from the Cabinet Office, Ministry of Defence and Ministry of Justice before drawing up its dossier.

"The government has a long way to go in its aspiration to achieve 25 per cent of its procurement spending with small business by 2015," the committee claimed.

Part of the problem is that government departments can ignore the Cabinet Office's demand to channel business towards small companies. Civil servants are free to wander off and make their own departmental buying decisions - and this has exacerbated fragmentation, we're told.

"The Government Procurement Service (GPS) manages the central contracts, but departments are ultimately responsible for their own spending decisions," the PAC report stated. "The Cabinet Office requires departments to use the central contracts, but there are currently no consequences for departments which do not comply."

So a bit like the PAC, then: a lot of noise, but not much resulting action.

Right now, just ten per cent of IT gear and services sold to the UK public sector comes from SMEs - but the PAC questioned the accuracy of this figure, citing "major gaps in SME data".

"This limits the Cabinet Office's ability to measure progress," it added.

If this smacks of deja vu, that's because senior civil servants told the committee back in March that information - such as prices, licensing agreements and other product details - wasn't freely flowing between officials because there was "tension" between departments: secrecy is rife among mandarins who want to maintain individual control over procurement.

To shift technology purchasing to the centre of government, departments needed "trust and confidence" that those managing the process will be "accountable for failure". Detailed service-level agreements managed by Government Procurement Services could be helpful here.

Inaccurate information from the departments has led the Cabinet Office to set "inappropriate targets", meaning they have not been "sufficiently stretching" and made it harder to demonstrate any savings.

Pocket change spent on small biz

Whitehall tech types had hoped the UK government's online catalogues of approved suppliers - the G-Cloud and CloudStore - to push up the proportion of business it does with SMEs.

But the level of spend since spring 2012 to date is less than £45m. To put that into context, in fiscal 2012, central government spent £6.9bn on ICT and £45bn on all goods and services.

And herein lies another problem: the PAC report highlighted that the majority of government procurement is not from the centre, with some £200bn splashed in fiscal 2012 by the wider public sector.

"There is therefore considerable potential for savings which lies beyond the initial focus of the government's reforms," the report added.

Since coming to power, the Coalition devised a series of reforms designed to cut costs that included attempting to centralise procurement with GPS and directing all spending above £5m to the Cabinet Office for approval.

The committee said that coordinating the management of suppliers was welcome but long overdue. It advised the treasury to use its financial clout to force tax-avoiding suppliers to pay their share, and get better at delivering successful projects.

"The government is still not fully using its negotiating position as a large customer to challenge those who pay little UK tax on their profits or those who have failed to deliver effectively in previous contracts," the MPs stated.

Suppliers' performance and record of tax payments should be considered by Cabinet Office Minister Francis Maude when dishing up contracts.

A Cabinet Office spokesman, said:

“We welcome the committee’s acknowledgement of the impact being made by our procurement reforms. At the time of the last election, government procurement was uncoordinated and bureaucratic. We’ve stripped out unnecessary procedures, improved the way we buy, and enforced sensible controls on spend. We have worked hard to improve contract management across government because the public rightly expects government suppliers to meet the highest standards, and for taxpayers’ money to be spent properly. And we have set out clear plans for stronger leadership at the top of professions within government. Smarter purchasing by government realised savings of £3.8 billion in 2012/13 alone; and a tighter grip on ICT spending, along with progress on the digitisation of services, saved a further £500 million. But we know there's more to do and so we will keep pushing ahead with our reforms.” ®

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