IT giants 'ripping off Whitehall', say MPs

Government departments have been ripped off by a "cartel" of big IT firms, a damning report by a committee of MPs has found.

Some were paying as much as 10 times the commercial rate for equipment and up to £3,500 for a single desktop PC.

The public administration committee said an "obscene amount of public money" was being wasted on IT.

The government said it was already making "significant improvements" to the way it bought computer equipment.

Prime Minister David Cameron vowed to end the era of vast government IT projects that he said had dominated Labour's time in power.

The coalition has called a halt to schemes costing more than £100m as it looks to reduce the UK's budget deficit.

In its report, the public administration committee recommends that departments across Whitehall use more small and medium-sized IT suppliers to increase competition and bring down prices.

Committee chairman, Conservative MP Bernard Jenkin, said that according to some sources, the government had paid contractors between seven and 10 times more than the standard rate.

But ministers themselves did not collect the information required to verify these claims, he added.

The committee said Whitehall's overall record in developing and implementing new IT systems was "appalling".

It warned: "The lack of IT skills in government and over-reliance on contracting out is a fundamental problem which has been described as a 'recipe for rip-offs'.

"IT procurement has too often resulted in late, over-budget IT systems that are not fit for purpose.

"Given the cuts that they are having to make in response to the fiscal deficit it is ridiculous that some departments spend an average of £3,500 on a desktop PC."

The £3,500 figure is taken from the Cabinet Office's business plan for 2011-2015, but officials have stressed that it covers more than just hardware and also includes infrastructure and applications.

The MPs' report concludes that "the current government seems determined to succeed where others have failed and we are greatly encouraged by its progress to date".

But it warns that the government will be "doomed to repeat the mistakes of the past" if it does not learn to be more "intelligent" in its dealings with IT suppliers and improve the way it compares costs across different departments, known as "benchmarking".

The last Labour government spent £16bn in IT projects in 2009.

It came under particular criticism for the spiralling cost of its delayed NHS scheme, which eventually reached more than £12bn.

Last autumn, the coalition government announced it would allow hospitals to source more of their own equipment, as part of a plan to cut costs by £700m. This came on top of £600m of savings already announced by Labour.

In March, Tony Blair's former IT chief Ian Watmore - who has returned to the Cabinet Office under the coalition - told the committee that some Labour ministers had ordered expensive computer projects because they wanted their policies to "sound sexy".

Mr Jenkin called for an overhaul of the entire system of procurement, saying: "The government has said that it is overly reliant on an 'oligopoly' of suppliers; some witnesses went further and described the situation as a 'cartel'.

"Whatever we call the situation it has led to an inexcusable situation that sees governments waste an obscene amount of public money."

A Cabinet Office spokesman said: "We have already made significant improvements to the management of IT projects including introducing new ICT [information and communications technology] controls, increasing transparency, and creating robust governance arrangements.

"We hope these will go some way to address the problems of the past the committee have rightly highlighted."