OGC IT Contracting Guidance

25 March 2004

Hazel Grant

The Office of Government Commerce (OGC) has issued new guidance to help government departments deliver IT projects successfully. The guidance comes in two parts:

  • A “Decision Map for Procurement”; and
  • “Guidance for IT Contracting”.

What’s in the guidance?

The Decision Map for Procurement is intended to guide government departments through a number of decisions on how to plan an IT procurement. Key issues covered include:

  • Outcomes, outputs and inputs: one of the first decisions is to set the appropriate approach for the project. Is there sufficient stability and confidence about the long term goal? If so, then the responsibility for achieving an outcome can be passed to the contractor (e.g. in the case of HM Land Registry this might be an e-conveyancing service available to the whole of the conveyancing community). Where the requirement is stable and an output specification can be prepared then a contract for outputs is the most likely solution. (In the e-conveyancing example, that might be a central system built to an agreed specification and performance). Lastly, where there is low stability and frequent change the guidance suggests that contracting for inputs is a better solution. (In the e-conveyancing example this might cover application development expertise, software design and hardware and software supplies).
  • Skills and capabilities: departments, agencies and NDPBs need to assess their contract and commercial skills to decide what type of contract they can best manage.
  • The market: customers are advised to consider what the market can offer and, where relevant, to wait or redesign a project.

A number of flowcharts and checklists, together with a toolkit are provided to help make the decisions on these key strategic issues.

The Guidance for IT Contracting looks at strategic contracting issues, tactical contracting issues and deal shapes. Key issues in this part of the guidance include:

  • Maintaining competition: emphasis is placed on the need to maintain a competitive environment both during the contract and at the end of the contract for the re-competition. Customers are advised to look at the issue of single or multiple suppliers, length of contract, definition of requirements, termination and ownership of any project assets.
  • Single or multiple suppliers: the guidance looks at when and how an authority might contract with one supplier or a number of suppliers. Multiple suppliers may be relevant where separate contracts can be awarded for different components of a project, or where separate contracts can be awarded for different geographical areas.
  • Proof of concept: customers should consider whether a proof of concept stage should be used to enable bidders to carry out a limited development exercise as part of the procurement.
  • Change and control flexibility: authorities are advised to agree as much as possible pre-contract award and to ensure that a robust change procedure is put in place.
  • Ownership of assets: the guidance sets out the considerations to be borne in mind when deciding whether the authority or the service provider should own the assets or if the authority should lease the assets. Similarly, guidance is given on the ownership and licensing of intellectual property rights.

Where has the guidance come from?

In July 2003 HM Treasury published proposals on PFI projects (“PFI: Meeting the investment challenge”). This indicated that PFI was not a suitable model for IT projects and that new guidance was required to replace previous Treasury guidance: “Standardisation of PFI contracts – IT”.

What do we think?

The guidance is a useful collection of points for consideration, issues and risks. It rarely mandates a particular approach, but rather sets out the relevant points for consideration. In summary, this guidance will be of help to those experienced in IT procurement, since it lists the relevant considerations but does not force a procurement down a particular route. It does not provide answers to all the issues on IT procurements, but it does identify a number of the key issues and sets out sensible discussion of them and possible ways of handling them.

What now?

The set of guidance is incomplete: some new model drafting is expected over the next few months. In addition, OGC intend to consult on the guidance with the aim of producing a second revised edition after 31 May 2004.

In consultations on PFI guidance, the voice of the IT supply and user communities often seemed to be heard only faintly. This should not be the case with the OGC guidance, and we think there could be real benefit in taking part in the consultation exercise. Please let us know if we can help you consider the implications of the guidance and facilitate your responses.

To view the new guidance click here.

Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.