INTELLECT

19 JUNE 2007

  Q160  Judy Mallaber: I was moving on anyway. Looking forward to any potential future EU enlargement, do you believe that there are lessons that can be learnt by the IT and related sectors from the experience of the enlargement so far?

  Mr Kalisperas: I think that where there are enlargements in the future—and it maybe further east, Turkey or the Ukraine, maybe possibly further east than that—there needs to be an earlier dissemination of the potential benefits of doing business with those countries, an earlier dissemination using the trades associations because they are entities that can facilitate a one to many engagement, in order to provide companies with the information they require and in order to make an informed decision as to whether countries such as Turkey or the Ukraine are the right sort of countries which they would like to locate offshore or would do business with as an export market.

  Q161  Chairman: That draws the first and most substantial section of our evidence today, but my understanding of what I have heard from you is that Intellect sees the countries of Central and Eastern Europe more as an opportunity to enhance UK competitiveness by accessing their skills rather than as a market in their own right at this stage, at least in their development?

  Mr Kalisperas: I think that would be a fair assessment, yes.

  Q162  Chairman: Can we move to procurement, upon which you have kindly agreed to answer questions? A simple question first of all: government procurement is always about value for money, amongst other things, and it must be about delivering effective services, and it should also be about encouraging or assisting innovation, would you agree with that?

  Mr Kalisperas: Theoretically, yes.

  Q163  Chairman: So what is government doing wrong at present that is not encouraging enough innovation in your sector? How is it getting the procurement process wrong?

  Mr Kalisperas: I think in the first instance you have to look at the public sector as the market place. It uses taxpayers' money, it is accountable to Parliament, it is governed by EU competition rules and it is very silo-orientated, so even within government departments there can be multiple silos and each government department, each agency, each unit within an agency tends to procure in a slightly different way. There is not a coordinated, joined-up approach on procurement across the public sector; there is not a coordinated strategy for the dissemination of best practice across the public sector; and there is not an overall attitude to encourage innovative solutions—procurements are based very much on the here and now more than looking five, ten years in advance to see (a) in the businesses of IT where the technology is going, and (b) to look at what are the solutions that could manifest themselves in terms of modernising services.

  Q164  Chairman: I have heard it said by people in your industry—I do not know whether this is Intellect's view—that one of the problems is that government does not go out and say, "Hey, we have a problem, help us solve it," they go out and hire consultants to find the problem, to find the solution and then invite bids against a very tight specification, which means that your companies cannot offer the creative solutions that might be available to that particular problem. Is that fair?

  Mr Kalisperas: That would be a fair assessment. The addition to that is that you then sometimes have Ministers standing up and saying, "We have announced this, we want it delivered by a certain date," and that automatically also curtails any sense of innovation because you are essentially delivering to a fixed timescale because that is the political dynamic currently existing at the moment. So, as I mentioned previously, you are very much procuring for the here and now without looking slightly further ahead, and also with the introduction of those deadlines you do not have adequate time to engage with the market to understand what solutions are out there, both from large multinationals and also from the smaller niche providers. That is the point at which innovation needs to come out. Once a tender is published it is too late—by and large the dye is cast. What needs to happen is a much better, a much earlier engagement between, obviously in our case, the technology industry and the procuring government department in order to understand not just the capability but also the capacity of the technology industry to deliver a solution.

  Q165  Mr Wright: To continue along those lines, what we have to bear in mind of course is that the government, certainly in recent years, has procured an awful lot in terms of innovation, and of course we have always faced severe criticism from the general public. If we take just one example, the patients' electronic records in the NHS, and latterly when we talk about the ID cards. Anything that we do obviously creates a problem for us because the costing comes in and what we budget for increases and there are difficulties and problems, and so we get that criticism. So how do we overcome that argument where you have a government that wants to procure, they want to innovate, they want to invest in new technology, but we always get accused of wasting taxpayers' money and harming users of government outweigh any benefits from promoting innovation?

  Mr Kalisperas: We have done a lot of work with the Identity and Passport Service on this sort of pre-procurement phase, that has been going on for four to five years now in terms of the National Identity Scheme, and there has been a very firm dialogue, I would say, a very honest dialogue between our members and the IPS about what sort of solution can be delivered and how should it be delivered.

  Q166  Mr Wright: That is fine, but what I am saying is how do we go against our critics who say it is a waste of taxpayers' money?

  Mr Kalisperas: I think it is very easy to criticise any IT project. If you take the National Identity Scheme, for example, much of the technology itself is already being used elsewhere and, to be honest, it has already been taken for granted by the general public particularly around the actual card itself in terms of chip and pin—we take that for granted when we use it in the financial services sector. The issue that we come up against is that we do not clearly communicate the benefits to the citizen in terms of any IT project. So financial services did a very good job in terms of introducing chip and pin; they said, basically, "If you use this technology it increases your security and it makes buying goods and services easier for you." Tesco, when they are using loyalty cards, in terms of the management of information they have communicated benefits clearly to the citizen. On the public sector IT projects by and large we have not done that, we have not articulated the benefits to the business community or to the citizen clearly enough, what it means for them—we talk about more general concepts around security, modernising public services, et cetera. Electronic patients' records by and large we take for granted now, that we can go into our local GP and he can look up our records—he no longer has that file of papers two or three inches thick because it is on a computer now. But we take it for granted and we do not articulate those benefits as effectively as we should.

  Q167  Mr Wright: But the patient does not care whether the doctor has a pile of papers or has a computer screen, the patient is concerned about what the doctor tells that person about what is wrong with them, so how do we explain to that patient that it is going to cost billions of pounds for this technology?

  Mr Kalisperas: Essentially if you take the National Programme the figure that is always quoted is the overall figure and when it breaks it down it is actually a smaller amount, but for the patient we have to say that, "Basically this is one step towards providing you with a better service, basically being able to provide you with an end to end service. If you go to see your GP you have to go into a hospital and then you have to have some after care after you leave hospital, with social services," and it should be the case that the technology should be there to enable better end to end tracking of the citizen, better benefits for them in terms of the care they will receive and how they are managed by healthcare professionals in the instance of electronic patient records because EPR should be just one component of a much wider solution, and that is where we are not at. As I said previously, we procure in silos so basically departments will look at what is important for them, and what we do not have is an implementation of the procurement strategy, which looks right across the board and says, "What are we trying to achieve through the procurement of these solutions? How can we best achieve that and how can we use organisations such as ourselves, the IT sector generally to deliver those solutions?" Fundamentally, the IT itself is just one component; there are significant cultural changes that need to take place within the public sector to use the technology, to realise that it is of benefit and it is not there to replace 80,000 civil servants, as we have been accused—it is very much about improving the service to the citizen, but we do not articulate it in those terms.

  Q168  Chairman: Is there not always this tension in public procurement, about which you are expressing frustration, that playing safe is the easy option?

  Mr Kalisperas: Yes.

  Q169  Chairman: And that will always inhibit it because that way you are going to get less criticism in the media, less criticism in Parliament, but you will not get the innovation?

  Mr Kalisperas: Yes, and there is always the fear that for a civil servant they will be up before the Public Accounts Committee or they will be up before any other Select Committee having to explain themselves, and fundamentally it is far easier to name the failed projects than the successful ones. The NAO, at the end of last year we contributed very fully with them, produced the report which listed 25 projects that they considered successful, projects that we have taken for granted, and the media coverage it received was minimal. It is not a surprise, but that is the environment.

  Q170  Chairman: You sound like the Prime Minister last week—the "feral beasts" are at you, are they?

  Mr Kalisperas: No, we accept that there will always be criticism and that is rightly so. If we are engaged with taxpayers' money, utilising taxpayers' money and we are not collectively between ourselves and the public sector delivering the solutions which are expected, then there should be a level of scrutiny, there should be a level of criticism, but that should not hinder the development of innovative solutions and it should not hinder the early debate between ourselves and government over not just procuring for here and now but what is the bigger picture and what role should technology play.

  Q171  Chairman: But your experience of the Immigration and Passport Service is that you are getting that level of early discussion?

  Mr Kalisperas: We run a served called Concept Viability, which provides for an early interaction between government departments and the IT industry.

  Q172  Chairman: So there are examples of good practice in government which need to be more widely shared?

  Mr Kalisperas: Yes.

  Q173  Mr Weir: How well does the government use public procurement to promote energy efficiency and sustainability?

  Mr Kalisperas: At the moment it is an emerging issue. I do not think the issue on energy and efficiency has been done as well as it could have been addressed. I think more needs to be done there. Fundamental to that again is the dissemination of best practice and of coordinated approach. The issue on sustainability is essentially twofold, it is not just about ensuring solutions have a longer life span, it is also about making sure that solutions are effectively future proof, so you do have one eye on the future, and I think that is an area for further development from within the public sector.

  Q174  Mrs Curtis-Thomas: On your website you comment about the best practice guidelines published by the OGC in 2004 and you said that they "do not accurately reflect the best interests of customers and ultimately those of the industry". Do you think that the OGC has done anything to address these deficits and, if not, what are the problems that remain?

  Mr Kalisperas: I think the OGC has made significant strides in the right direction. Last year we published our best practice guidelines for contracting, which sought to highlight the industry perspectives on how to contract for successful outcomes. There is always going to be a tension. There is the contracting model which seeks to provide very stringent terms on the supplier and I think there is a general recognition that that is not the way to go; nor is it in the taxpayers' interests to develop contracting outcomes which overtly favour the supplier. I think we have to contract somewhere in the middle, where there is a balance between rewarding the supplier for the risks that they take and also recognising the responsibilities that the public sector has for utilising taxpayers' money. Ultimately there should be—and it is something that OGC have done—some standard Terms and Conditions which should act as a guide for specific government departments.

  Q175  Mrs Curtis-Thomas: So would you say that the OGC is making progress in the light of your criticism or industry criticism and amending their practices iteratively to reflect the circumstances as they arise?

  Mr Kalisperas: Yes, I would say that I have been in Intellect for seven years and in that time we have always had an open and very honest dialogue with OGC.

  Q176  Mrs Curtis-Thomas: So they are moving forward then?

  Mr Kalisperas: Yes, definitely.

  Q177  Mrs Curtis-Thomas: In which case do you think you could change the comments on your website to reflect that?

  Mr Kalisperas: Our website is currently being updated, so yes.

  Q178  Chairman: Overall, public procurement by government, marks out of ten? I know it is a curate's egg, good and bad in parts, but an exam answer is good and bad in part—you always get a mark in the end. Overall, out of ten, how well does government do at procurement?

  Mr Kalisperas: Six and a half with could do better.

  Chairman: That is really helpful.

  Mr Wright: That is not the answer the Chairman wanted, by the way!

  Q179  Chairman: Given the political constraints and media constraints, what is the best score they could hope for—eight, nine?

  Mr Kalisperas: I think it will be a path of steady improvement, but just probably as a closing comment one of the things I would say is that we generally take a far more cautious interpretation of the EU competition laws than a lot of our European counterparts and that has caused much creativity, so if there was a slightly more liberal interpretation of those rules—and I think a couple of years ago the Wood Review, from the Engineering Employers' Federation, to which we gave input, was very accurate, and it is a complaint we hear a lot from our members that other countries do much more in terms of assisting companies. If there were more liberal interpretation of the directives the mark would be higher.