Suppliers oligopoly

From OpenEGov

Government IT contracts are given to an oligopoly of entrenched suppliers. Like all oligopolies, there is a Snow White and 7 dwarves. The Snow White is EDS (around 80% of the around 1% of GDP which goes on government IT projects).

Margetts, Dunleavy et al have shown (and explained why) this setup is responsible for the worst performance in government IT projects of the 7 countries they surveyed, and that the degree of oligopoly is directly correlated with the failure rate.

The most successful of the countries they describe is the Netherlands. This is how the Dutch system works:

 Agencies and government departments split contracts up into what are by international   
 standards very small packages of work - single contracts exceeding $1 million are relatively 
 rare events. Each agency likes to develop and keep up relations with a plurality of 
 suppliers and a conscious effort is made to ensure that this diversity does not reduce
 over time ... Agencies also have large in-house capabilities so they also have the option
 of carrying out contracts in house if competitive bids cannot be found. Large projects
 are always envisaged from the outset as multi-contractor and designed so that the agency
 maintains options for tenderers.

It's surely not a coincidence that:

• Holland has a thriving free software industry well represented in government work
• This description closely relates to the experience of Camden council in developing Aplaws, as described by Alasdair Mangham.

References:

The Advent of a Digital State and Government-business relations, S. Bastow, P.Dunleavy, H.Margetts, J.Tinkler (2000)

Government IT Performance and the Power of the IT Industry, P.Dunleavy, H.Margetts, S. Bastow, J. Tinkler