Government u-turn on private finance for IT

Daily Newsletters

Sign up to ZDNet UK's daily newsletter.

NEWS
The government has scrapped the use of controversial Private Finance Initiative deals for public sector IT contracts following a catalogue of costly high-profile projects. A report by the Treasury, PFI: meeting the investment challenge, concluded that while PFI was working in many sectors, it was not delivering value for money in IT contracts. One of the objectives of using the PFI model in IT was to introduce third-party finance into IT projects to transfer more risk to the vendor. However, botched PFI projects such as the £698m cancelled Pathway project to develop benefits payment smartcards and the £134m overspend on the Libra system for the courts have led to a major government policy rethink. The report said: "Many aspects central to IT procurement do not fit well with the central requirements of PFI." These include the fast pace of change in the technology sector and the fact IT costs are generally not an upfront capital sum but ongoing running costs, according to the report. Most traditional PFI projects are also based on fixed scope and outcome such as a hospital or school but the tendency for requirements to change significantly during the course of IT projects has caused problems. The report said: "The close links between IT infrastructure and organisational operational needs, combined with the rapid pace of technological change, frequently make it difficult to codify long-term IT requirements into an effective contract, especially over the time periods PFI agreements typically cover. Generally the service requirement in an IT contract is likely to change frequently during the course of a contract." Within the report a study of responses from 11 operational public sector PFI IT contracts found only a fifth of projects had delivered most of the benefits defined at the outset. The Treasury now recommends that conventional methods of procurement should be used for negotiating IT contracts and said it will be down to individual departments to decide whether to proceed on a PFI basis with contracts currently under negotiation. IT industry trade body Intellect has welcomed the government's u-turn, saying it will lead to more successful public sector IT contracts. Nick Kalisperas, senior programme manager for Intellect, told ZDNet UK's sister site silicon.com: "Our members have expressed disquiet about it in the past. PFI only works when there are clearly defined outcomes. With IT projects the technology and the requirements of the project change very regularly and very quickly within a long-term arrangement." He said Intellect will be talking to the Treasury and the Office of Government Commerce through the Senior IT Forum to develop new advice on IT procurement for government departments.
For a round-up of the latest tech business coverage, see the Business News Section. Let the editors know what you think in the Mailroom.

Talkback

This post has been removed by a moderator.

Post your comment

In order to post a comment you need to be registered and logged in.

You can also log in with Facebook. Log in or create your ZDNet UK account below

  • Login

Will not be displayed with your comment

By signing up for this service, you indicate that you agree to our Terms and Conditions and have read and understood our Privacy Policy. Questions about membership? Find the answers in the Community FAQ

Get ZDNet UK's daily newsletter

Enter your email address to sign up

ZDNet UK Live

tinycg

Don't forget to check out apps like GoodReader or SlideShark either, they're indispensible for people on the go in presentation situations. Best...

1 hour ago by tinycg on Four top iPad apps for people on the move
TerryRK

Well it seems there is something a number of us agree on. Why is the Ubuntu Unity launcher so ugly? I thought perhaps it was something to do with...

6 hours ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint
Freebies202

Duplicate comments are not made intentionally. Its very good to know that now you are keeping check on this problem because sometimes a commenter...

15 hours ago by Freebies202 on Microsoft fixes blog comments, speeds up blogs with open source
kevinmchapman

"the very significant number of users" and "many (most) of us" - you have no evidence for these statements. It is a fact that most users are saying...

23 hours ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint
Marg Menzies Harrison

Another grammar faux pas is the improper use of "you". When sitting down down in a restaurant, for example, I get cringe when the waitress...

1 day ago by Marg Menzies Harrison via Facebook on 10 flagrant grammar mistakes that make you look stupid
zdnetukuser

And NOW, folks, for Canonical's next trick... Kubuntu is late. Here's a pencil. Draw your own conclusions. cf.:...

1 day ago by zdnetukuser on Linux Minterface
Moley

@kevinmchapman. The discussion here reflects the very significant number of users who really do like the traditional menu system and who wish to...

1 day ago by Moley on A tale of two distros: Ubuntu and Linux Mint
kevinmchapman

Er, no... It is an efficient means of finding the application/file/setting you need in one place. The icons are a simply a fallback for when you...

1 day ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint
TerryRK

Isn't the provision of a text based search an admission by the developers that the mass of icons approach does not work? I don't need to use a...

1 day ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint
kevinmchapman

"Unity and GNOME 3 both abandon the old text-based cascading menus in favour of a graphical icon-driven system." Point truly missed. Both use a...

1 day ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint
TerryRK

whs001 - Thank you, I'm glad you liked the article. I absolutely agree with you on your first point. I should perhaps have made it clearer that...

1 day ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint
Dennis Nilsson

If we allow corporate interest to dictate the way our government circumvents due process against foreign entities then we should accept the same...

1 day ago by Dennis Nilsson via Facebook on ACTA stumbles in Germany
GHar123

I totally dislike pirating of works, I fear that artists will be deterred from creating works if they think that they are going to get ripped off....

1 day ago by GHar123 on ACTA stumbles in Germany
JCB33

How dare film makers, artists or anybody that invests in creativity stop us pirating their works for free. I want to be able to walk into my local...

2 days ago by JCB33 on ACTA stumbles in Germany
Moley

@GrueMaster. I prefer horses for courses rather than one size fits all. I, and I suspect most other computer users, do not really wish to have...

2 days ago by Moley on A tale of two distros: Ubuntu and Linux Mint
greycynic

The product that scares me every time I have to use it is the Office 2007 version of Excel. The first bug that I found was applying the median...

2 days ago by greycynic on Ten flawed products that derail productivity
GrueMaster

Nice review and very informative. One thing I'd like to add (in reply to whs001's 1st question), the main reason to have the same interface from...

2 days ago by GrueMaster on A tale of two distros: Ubuntu and Linux Mint
Frederick Wrigley

I'be been using Mint 12 since the RC came out, and I am far more happy with the Cinnamon, the Mate, and, yes (with extensions), theGnome 3...

2 days ago by Frederick Wrigley via Facebook on A tale of two distros: Ubuntu and Linux Mint
bdantas

Excellent article. One small correction, though--although a fresh installation of Linux Mint 12 will, indeed, provide the user with a version of...

2 days ago by bdantas on A tale of two distros: Ubuntu and Linux Mint
Alan Ralph

In related news, the ISPs club together to get the members of the Home Affairs Select Committee (ya goofed on that part, ZDNet UK) copies of "The...

2 days ago by Alan Ralph via Facebook on MPs urge ISPs to take down terrorist material