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MPs call for NAO to check risky government IT projects

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13th Jul 2005
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The National Audit Office should be more closely involved in government IT procurement projects to guard against cost over-runs and weak decision-making, MPs said this month.

The Office of Government Commerce (OGC) now runs a sequence of reviews as IT projects progress through "gateway" points. In its report on the OGC's impact on government IT projects, the Commons Public Accounts Committee recommended that the NAO be notified when projects proceed despite receiving 'double red' ratings. The MPs also argued in favour of publishing the results of the gateway reviews.

Central government spends around £2.3bn on technology each year, equivalent to 16% of its total procurement expenditure. According to the PAC, 11 suppliers account for 80% of the market, potentially restricting competition and discouraging innovative new entrants.

The Office of Government Commerce was established in April 2000 to help government departments improve their procurement techniques. The office's chief executive John Oughton reports directly to the Prime Minister and is charged with helping to achieve the government's £21.5bn savings target set out in last year's efficiency review.

But the OGC has no authority over government departments and can only encourage them to get value for money in their IT procurement through voluntary initiatives. According to the MPs' report, the independent gateway reviews have been the OGC's most successful initiative, bringing more rigorous scrutiny and oversight to IT projects and highlighting risks early enough for managers to take remedial action.

Each quarter the OGC board analyses gateway review results broken down into red-amber-green status. Half of the 440 reviews undertaken up to March 2004 were rated amber (intermediate risk), 28% red (high risk) and 22% green (low risk). According to review process, 43% of projects improved as they progressed, but 19% got worse and 38% stayed the same.

The MPs also found evidence that the reviews were not being taken seriously by departments:

  • 30% of projects had by-passed the first two gateways and only entered the review process after the business case had been prepared.
  • When polled individually, just 45% of civil servants responsible for IT projects bothered to respond to requests for feedback on the effectiveness of the reviews.
  • A previous PAC report on Customs & Excise noted that the department "sailed around" the gateway review process.

    However, the gateway review process is not a panacea. During the committee's public hearings, Conservative member Richard Bacon pointed out that tax credits project - an acknowledged IT fiasco - received green ratings from consecutive gateway reviews.

    Since April 2003, the OGC chief executive has written to departmental permanent secretaries if any of their projects get two consecutive red reviews. He also reports to the Prime Minister on mission-critical projects. According to the MPs, both these initiatives have increased the visibility of government projects at the most senior level. The PAC concluded that the Comptroller and Auditor General should be copied with alert letters on "double red" projects.

    Comptroller and Auditor General Sir John Bourn told the committee said the extra monitoring should be practical for the NAO.

    Departments should have to explain to the NAO why they want to proceed with activities where substantial difficulties are highlighted, the MPs said. The Treasury should also consider withholding funds from IT projects where departments consistently ignored the gateway process.

    The PAC also called for gateway reviews to be published. In his evidence to the committee Oughton said his list of mission-critical projects was advice to the prime minister and should not be published. But the OGC would assess any requests for sight of gateway reports under the Freedom of Information Act on a case by case basis. The ultimate decision on publication will rest with the Information Commissioner, the report noted.

    John Stokdyk

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