Government looks to extend £800m savings on IT to rest of public sector

The government says it has saved £800m in IT costs over the past financial year by persuading its biggest suppliers to cut their charges and scrapping contracts. But how effective has the programme really been? Last December, the Cabinet Office announced a "new approach" to suppliers and now says it is sharing this new approach with other public bodies to help them get a better deal from suppliers at a time of deep spending cuts. The savings in central government's IT procurement between April 2010 and March 2011 came from supplier rebates, suppliers reducing their profit margins, "de-scoping" contracts (reducing their goals or simplifying), and cancelling contracts or parts of contracts, according to the Cabinet Office. Senior Whitehall officials – "crown representatives" – have been appointed to manage each supplier, acting on behalf of all government departments and providing a single point of contact for each supplier. The crown representatives, supported by a Cabinet Office team, are also responsible for encouraging competition in the IT market for central government by identifying up-and-coming suppliers with little or no business with Whitehall. The procurement programme has been overseen by Adrian Kamellard, executive director of the commercial portfolio team, which is part of the efficiency and reform group, run by chief operating officer Ian Watmore, a former chief information officer at the Cabinet Office and a former management consultant at Accenture. So far, the scheme has concentrated on central government procurement, but the Cabinet Office says it is keen to help other parts of the public sector get a better deal from their suppliers and has already approached the Metropolitan Police and the London Fire Brigade. "Although a first on this scale for government, the private sector negotiates with its supply-base as a matter of course – especially in the current economic climate," says a Cabinet Office official. "Suppliers have therefore generally engaged well in the process, and the majority have been proactive and supportive in helping departments to find ways to cost out of their contracts." The 33 suppliers who signed the agreementare reluctant to comment. Intellect, a trade association which represents more than 780 UK technology companies, says it supports the procurement agreement but wants the government to focus on the effectiveness of its IT rather than solely on cost. An Intellect official says: "We believe that now is the right time for the focus to move from immediate savings to the bigger question – how government can use technology to transform the way it works and deliver services radically. "This will enable much bigger savings in the longer term. This broader public procurement reform agenda and government ICT strategy will require the government to work with the industry on a more collective basis." Emma Watkins, head of public services at the CBI, the employers' group, says: "The really innovative part of the [government's] contract renegotiation process has been where providers have been invited to develop and propose the ideas that will make the substantial savings and transform service delivery." Could the procurement system work across the public sector? Colin Cram, a consultant specialising in procurement, thinks so. A common approach to procurement would allow public bodies to exert more influence over suppliers, in a similar way to multinational companies squeezing savings from their supply chain, he says. Cram wants the role of crown representatives to be broader. Instead of focusing on a single supplier, crown representatives should scrutinise different technology markets, such as systems integration or telecommunications. This would help give officials a better understanding of the products and services in each market and help government get cheaper and more up-to-date technology, he says. This content is brought to you by Guardian Professional. Become a Public Leaders Network member to get our weekly update direct to your inbox