EURIM Shared Network Services Procurement Subgroup

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This subgroup was tasked to assemble material on experience with the procurement of shared network service with a review to reporting in time to aid the review and reform of central procurement processes that was expected to follow the Cabinet Office moratorium. The target audience has changed with the devolution of responsibility for delivery and the need to reconcile the agendas of different parts of government, central and local. The final report will also be part of the inputs to the “More for Less” Policy study.
 

1 Introduction

1.1 Why are shared network services important ?

The use of shared network services by all parts of the public sector (including both central and local government) and their delivery partners (including the voluntary sector and “big society”), is central to delivering the agendas of the coalition government. It is also the key to enabling “market forces” to embed robust, world-class broadband across the infrastructure of most of the “final third” http://finalthirdfirst.wordpress.com/ and thus deliver the Race 2010 http://raceonline2012.org/ Manifesto for a Networked Nation http://raceonline2012.org/manifesto.

1.2 What is the problem?

The recent study by the Audit Commission and the National Audit Office into collaborative procurement indicates that significant savings could be made from rationalising the fragmented and duplicated activities of nearly fifty public buying organisations in the UK. OGC has since issued a guide to buying through Framework Agreements but the recent Public Administration Select Committee report on Government IT identified duplicated and confused guidance leading to defensive procurement processes as a major problem.

Intellect has identified over a hundred such agreements relating to ICT products. Almost all were produced since the issue of the OGC guidance on framework agreements.

Most entail overhead charges to the organisers of between .6% and 6.0%, (more if there are chains of subcontracting). Few cover more than three or four suppliers. A handful account for most of the business placed. Even fewer appear to have been used for shared network services where a wide variety of customised contracts, including permutations of the standard clauses in “model” contracts, are used.

1.3 Why is the procurement problem important?

Over 50 network procurements appear active at any given time. These range from national exercises like the PSN, and upgrades/extensions to JANET and the NENs through County and Unitary Authority plans for regional networks to NHS trust procurements and local communities broadband proposals. Despite the moratorium another 80 or so are in the pipeline as well as new and competing funds, frameworks and initiatives e.g. for PSN, Community Broadband and Rural Broadband.

Most procurements and frameworks have been cancelled, but often after those who took them seriously have spent many thousands or millions (in the case of some central government projects) in wasted tendering and bid costs. This overhead is said to be one of the reasons why prices are between 10% and 30% (depending on whose guesstimates are used) higher in the UK than the rest of the EU.

Meanwhile cheap capital is said to be on offer from pension funds for contract-based network investments (with risk akin to a leasing deal) which build on existing infrastructures and share the cost of new build.  Such capital is rarely available for the types of "risk" investment envisaged in most government framework proposals.  These are commonly attractive only to those for whom they provide additional revenue for existing plans.

1.4 How can this subgroup help?

• By rapidly identifying and publicising those already available frameworks and procurement models which can be used to bring forward investment, which will deliver rapid savings and benefits at the same time as reducing costs.

• By helping set priorities and objectives for the overall review of public sector procurement processes and the accompanying guidance that are needed.

2 Subgroup Objectives

This subgroup is tasked to identify which existing frameworks and procurement models represent current good practice so that they can be used and replicated, pending the production of new guidance.  It has also been asked to look at why the UK appears to spend more to achieve less than many other parts of the EU.

Strategy

To bring together leading suppliers and customers to identify the frameworks currently in use, to check them against good practice and to publicise those which can be re-used with confidence that they meet current mandatory requirements (e.g. state aid rules).

Work Programme for 2011

Complete report and make recommendations for follow up.

Target participants 

Those willing not only to share their experience, whether as bidders or buyers, including of what happened afterwards.

Those with “authority” as policy makers, performance auditors and regulators so that they can work together with customers and suppliers to help encourage better practice in future.

Benefits to participants   

To be able to use the material as soon as available to shorten the time for bringing forward new projects which will help meet the cost reduction targets of the current government.

A fair and open, but also rapid and efficient, public sector procurement regime which helps deliver more for less, including more benefit to the citizen and more profit to the shareholder at lower cost to taxpayers.

Forthcoming Meetings

Recent Meetings

Date	Description	Papers
27 Oct 10	Subgroup Meeting
07 Sep 10	Review Meeting	Summary Report Presentation
27 Jul 10	First Subgroup planning meeting	Draft Summary Report Questions & Answers to address

Group Outputs

Date	Description
Aug 11	The Procurement of Shared Network Services  (Draft for Discussion Only)

Other Relevant Documents and Links

Relevant Reports (including analyses of benefits)

Audit Commission and the National Audit Office Review into collaborative procurement www.nao.org.uk/publications/0910/collaborative_procurement.aspx

Regional Broadband Consortia: Bring Value to English Schools

South West Grid for Learning: Bringing Value to Schools in the South West

London Grid for Learning http://portal2.lgfl.org.uk/SiteCollectionDocuments/LGfL/Wandsworth%20 Value%20For%20Money%20Report.pdf

East of England Broadband Network: Best Value Report

Northern Grid for Learning: Efficiencies, Savings and Value for Money - Annual Report

The National Education Network Flyer

Education Today Press Cutting

Ownership and Business Models Framework Agreements and Buying Organisations

List of UK Public Sector Framework Agreements in relation to the ICT Sector

Framework Database

JANET Framework Agreement

JANET Telecomms Framework www.ja.net/services/frameworks/telecomms-framework.html

Adit North Framework Agreement www.aditnorth.org.uk/adit-north-brochures

Adit North Procurement Framework www.aditnorth.org.uk/news/adit-north-procurement-framework-10532

BT Excess Construction Charges www.bt.com/pricing/current/Excess_Construction_boo/1319_d0e1.htm# 1319-d0e1

The Milton Keynes Tariff Brochure

Framework Agreements

Procurement Guidance

Broadband UK Framework (OJEU) http://ted.europa.eu/udl?uri=TED:NOTICE:202671-2011:TEXT:EN:HTML

Public Service Network presentation www.cabinetoffice.gov.uk/sites/default/files/resources/north-east-psn-workshop.pdf

Public Service Network OJEU notice www.publictenders.net/tender/114856

PSN Guidance material www.buyingsolutions.gov.uk/categories/ICT/psn

Government Procurement Service case studies www.buyingsolutions.gov.uk/categories/ICT/psn/interested/casestudies/

EU guidelines on State Aid http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:235:0007:0025:EN:PDF

EU adjudications as to what is, or is not, permissible http://ec.europa.eu/competition/sectors/telecommunications/ broadband_decisions.pdf

Dutch Guidance for Municipalities, Provinces and Housing Associations www.wooster.org.uk/docs/ontrackwithbroadband_1.pdf

OGC Guide to buying through Framework Agreements www.ogc.gov.uk/policy_and_standards_framework_a_guide_to_buying _through_framework_agreements.asp

September Guidelines

Manchester Papers

Co-ordinating and Standards Exercises

DTI: Broadband Aggregation Programme

Co-ordinating exercises: INCA (Independent Networks Co-operative Association), JON (Joint Open Network Exchange) and COTS (Common Operational and Technical Standards – for next generation access) JON Exchange: The changing world of broadband JON Exchange: Fungible & Liquid JON Exchange: Perspective on a European wholesale market

Network Case Studies

List of Main Networks

PSN Progress Report to Local Government CIOs

Communications Consumer Panel: Local Initiatives on Next Generation Access in the UK: Update October 2009

Dutch Schools Case Study

Connectivity for the masses

Case Study: Pathfinder South