Government IT and Software Procurement
12:30 pm

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

IT procurement within Government is thought to be an unmitigated disaster, but that is not true. There is good and bad procurement in Government, just as there is in the private sector, and mistakes made in the private sector are sometimes similar to those made in the public sector. Nevertheless, Governments have wasted a lot of money on IT over the years, with a number large of projects being overspent or overrun, and from time to time stuff has been bought that is not fit for purpose.

A consensus is now emerging about what good procurement is, which is supported by the Office of Government Commerce among others. The view is that good procurement should be competitive and should result in an effective partnership; software should be adjusted to the needs of the users—those who, at the end of the day, have to operate it—and it should be capable of being updated and adjusted economically.

Four things ought to be avoided. The first is a lock-in, an indefinite commitment to a single proprietary solution—endless licensing renewal that the Government simply cannot get out of. Secondly, there must obviously be interoperability; its absence will always be a problem, because it limits the growth and integration of whatever software has been bought, as well as one's choice of supplier. Thirdly, it is preferable to have access to the source code, so that if necessary people can understand what they have. Finally, it is extraordinarily helpful to have a good skills base on the client side, so that people know what they are dealing with.

On that basis, one would expect the Government to have made use of the growing British open-source software industry, which is by and large highly successful, although there are exceptions. It is successful in a number of operations known to all, such as eBay, Amazon, banks and stock exchanges and so on. However, apropos of such technology, we have a rather peculiar position. There is a lot of tokenism and talk about what benefits it may have, and there are policies aplenty, and I do not think that anyone would argue with the policies per se. However, there is relatively little pick-up of and involvement with open source by the Government compared to the private sector and other EU Governments. That is somewhat peculiar, because it is alleged that substantial savings can be made through the wider application of open-source and non-proprietary software. Mr. Osborne made something of that some time ago, and I agreed with him—indeed, I might have thought it before him—when he said on behalf of the Conservative party that a 5 per cent. reduction in the Government IT bill could be arranged if only open source were seriously considered.

The alternative, which applies across many Departments, is the tendency to have memorandums of understanding with big companies, often foreign and usually American. There is a close association between that side of the industry and the Government—an association that is personal, consultative and advisory. The House will be aware that the former Prime Minister launched the Labour business manifesto at Microsoft. Hon. Members will also be aware that, on the International Business Advisory Council formed by the current Prime Minister, there sits the owner and founder of Microsoft. However, that is not the only problem. Tendering processes and thresholds for the submission of tenders applied by the Government actually exclude many companies—not only open-source companies but many smaller companies and small and medium-sized enterprises. For example, one thinks of the British Educational Communication and Technology Agency agreement for educational software.

The crucial and damning aspect of the Government's treatment of certain sectors of the industry is that many of the applications chosen by Departments are locked into and tilted towards well-known proprietary solutions. I shall give some examples. The Driving Standards Agency driving theory CD-ROM can be used only on Windows computers. The Revenue website has limited functionality for the Firefox web browser, the most popular alternative to Internet Explorer and one that some would argue is more secure. The Department for Work and Pensions online benefits system can be accessed only by those who have a Windows computer. Those who have Unix or Linux computers or who use Mac computers should simply not bother. Technically, the Government gateway is owned by Microsoft, and there is a certain amount of co-advertising of products between the Government's chosen solutions and the providers of those solutions that, at times, is close to being product placement.

I believe that things are worse than that, however. We accept that, like many industries, the software industry is a free market, and that the free market has various desirable outcomes and can bestow great benefits. However, free markets do not prevent monopolies. Worse still, they do not prevent the misuse of monopoly or quasi-monopoly power. They do not prevent predatory pricing or the stifling of real competition; nor do they provide absolute protection for consumers, so that they can have long-standing alternative choices. That is why the Government regulate, as do other bodies throughout the world. The United States has its anti-trust laws, and the European Union has its competition regulations. The Minister will be aware that the US Department of Justice and the attorney generals of 20 states sued Microsoft in order that they became what I might call a more open partner in the free economy. Classically, the Court of First Instance in the EU fined Microsoft for non-competitive or anti-competitive behaviour.

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Andrew Miller (Ellesmere Port and Neston, Labour)

The hon. Gentleman makes an interesting case, which I am following in detail. Would it not help in the quest for openness if the British Standards Institution were to follow the lead in other parts of the world and make open source XML one of the standards to be applied throughout the world? It would mean that people working outside the Microsoft sphere could have access to the code, and it would help the world in future-proofing big projects such as the British Library archives.

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

The hon. Gentleman is far more expert in this field than I am. He will be aware of the debate on XML and of what standards should be used for office applications and the like.

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

I agree. The hon. Gentleman makes a fair point, and the more we converge around open standards, the fewer arguments—arguments of the sort that I am involved in now—there will be.

In fact, Microsoft is not the only villain of the piece. The BBC was forced to withdraw its net learning project—at least in part, the BBC is a Government agency—because it was judged by the EU to be anti-competitive. The point is that the Government have a huge impact in the market as purchaser. They can use that power partially or fairly. They have the capacity to distort the market, and they can render it less open and less competitive. It seems to me that the Government are, in part, in breach of EU regulations. A prima facie case can be made that here we have illegal state aid—a similar case to that made with regard to the BBC iPlayer. The public sector is the biggest procurer in the UK. If the public sector skews the market to favour certain companies and if the Government distort the market by their actions as a prime purchaser, it is not the same as a private company doing so; in a sense a private company is free to do so. The Government are spending public money, and in doing so, it is difficult to see how they are not also breaching state aid rules and providing illegal state aid. If someone cannot access benefits online without using a Windows-based computer, as is currently the case, I do not see how the Government can be doing anything other than involving themselves in illegal state aid. They simply do not need to do that as it would be technically possible to access the system some other way.

Personally, I put up with the fact that inside the Palace of Westminster I can no longer use an Apple Mac computer to surf the internet, which the Parliamentary Information and Communications Technology department has said is because of security, although it has never actually explained how. Why should benefit clients have to purchase Windows Vista, which costs a few hundred pounds, when technically, if the Government allowed them, those clients could do the same thing for free on an operating system such as Linux? Why are the Government making people do that?

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Andrew Miller (Ellesmere Port and Neston, Labour)

Just to put the record straight, the decision to take Apple Macs out of the service supported by PICT was a decision of Members; indeed, the old Information Committee, on which I served for nine years, took that decision.

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

I exonerate the Government on that point and turn my accusation against the members of that Committee. I made my representations and will continue to do so. This issue is as clear a case of illegal state aid as, for example, the BBC iPlayer—a case that will go to the EU—and Jam, the internet resource. Other organisations, such as BECTA, also have cases pending in the EU court. Why are schools advised on upgrades to Windows, but not on upgrades to OS X, for example, which is used by a couple of schools near me?

I have every respect for Microsoft's technology and enterprise and for its founder. However, during the court case against Microsoft, Judge Jackson in the US Department of Justice said—I would not have put it in such a way, as he said things that are quite damning—that Microsoft's executives had

"proved time and time again to be inaccurate, misleading, evasive, and transparently false...Microsoft is a company with an institutional disdain for both the truth and for rules of law that lesser entities must respect. It is also a company whose senior management is not averse to offering specious testimony to support spurious defenses to claims of its wrongdoing."

I think that that is harsh. I might choose to believe Microsoft when it tells me that the Office suite and other products provided for the NHS Connecting for Health programme are thoroughly interoperable and replaceable if they are not cost competitive—it has told me as much. I would like to believe the Government when they tell me that they have an efficient deal with Microsoft in relation to Connecting to Health, but I am less than happy that the details of the deal are subject to a confidentiality clause. Microsoft executives tell me that they have changed and that interoperability is the name of the game. Apple, Oracle and some of the other bigger firms are scarcely blameless, but my key point is that the institutional bias of the Government for this particular firm seems to be an open and shut case of illegal state aid.

I choose to have a Windows computer at home and in my office. I am obliged by the Government—until I get my P45—to use a Windows computer if I want to apply online for benefits. If the problem did not concern software and I was forced to buy a Vauxhall car to use the roads, it would be a simply intolerable situation. The fact that this issue concerns a new industry makes the point less obvious, but none the less equally damning.

Fundamentally this debate is about neither Microsoft nor open source; it is about eradicating the suspicion and certainly the prospect—indeed, I believe it is the reality—of illegal state aid being given to any software enterprise through the use of public resources.

12:44 pm
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Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)

I congratulate Dr. Pugh on securing the debate and thank him for raising the issue. In general, Government IT and software procurement are important matters. He is right to say that, through their decisions on procurement, the Government can have some influence on the way in which the market develops. However, the Government must also provide software that is relevant to the computers that most people in the UK have and, as he admitted, Microsoft Windows is one of the dominant operating systems.

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

That is the type of canard that comes up every time—that we must use a particular supplier because everybody uses it. If the Government are obliging people to use a supplier, that becomes a self-fulfilling prophesy, as I am sure the Minister will acknowledge.

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Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)

I caution the hon. Gentleman to allow me to develop the theme of my speech before he leaps up hyperventilating and continues talking about the great Microsoft dominance. The Government are neutral about the types of software systems that they wish to be used. I accept that the Government spend taxpayer's money and need to get the best possible value and effective procurement.

The hon. Gentleman is right that there are examples where new technology has made a real difference and transformed the way in which Government services are made available to citizens. On health, 37 million prescriptions have been transmitted electronically; nearly 350 million images—X-rays and scans—have been digitally stored; and more than 5 million hospital appointments have been booked online through Choose and Book, which gives patients more choice and improves value for money. As part of our overall strategy for transformational Government, it is extremely important that new ways of delivering services are robust, available to all and of benefit to citizens.

I know that the hon. Gentleman does not want lock-in and wants to get rid of proprietary dominance in software procurement, and he is right that we need to avoid the risks of lock-in with particular suppliers—whether that is Microsoft or anyone else. For that very reason, I am keen to explore the benefits of open source software solutions. There can sometimes be a danger of lock-in with some proprietary providers, and we must avoid developing an over-reliance on individual suppliers. The Government, via the Office of Government Commerce, work hard to avoid that by using open standards to ensure that different suppliers' software can be used interchangeably. However, I agree that open source software, which philosophically speaking everyone in this room would be in favour of, can be another option. I agree that open source software and different operating system platforms can help to ensure the healthy competition that we want in the software market. Competition policy is another of my ministerial responsibilities, so I am anxious to see that flourish in the procurement market.

We have been considering open source software for a number of years and both the Office of Government Commerce and the British Educational Communication and Technology Agency, which the hon. Gentleman mentioned, have published reports on open source software in the past few years. We set out the Government's policy on such software in 2004. Government policy makes it clear that, as a procurement agency, we do not favour either open source or proprietary providers. The best provider in each case, based on ability to meet our requirements and the value for money that can be provided, is our aim in government, and that is what the OGC strives to make available as an approach for all Departments and local authorities that seek to procure.

The Government want to see a level playing field for all suppliers, so that each individual procurement can be judged in a decision on its merits. That is effectively what happens. Since setting out that policy, we have made increasing use of open source software, which is now playing a key role in the delivery of some of our most high-profile IT projects. Our key online portal, Directgov, successfully uses open source products, so its 6.5 million users every month already benefit from the Government's use of open source, whether they realise that it is open source or not. A significant part of the Driver and Vehicle Licensing Agency's electronic vehicle licensing system, which provides a more convenient service at lower cost to the taxpayer than before, is delivered through open source components. In the past year, more than 75,000 people have used it to buy a driving licence.

As well as procuring open source software, the Government have supported it. We backed the Open Source Academy, for example, which brought together local authorities to encourage and support the adoption of open source technology. Some of them, like Bristol city council, have embraced open source solutions. The Government are even providing open source solutions to the public. The National Archive has released its file format identification system, which is called DROID, based on an open source licence, and that has been downloaded 1,600 times in the past year. We are using open source software, and we realise that there can be benefits from doing so.

I personally like the philosophy of open source, the idea of users collaborating and working together to improve the product, and the fact that open source software can encourage competition in the market, which I want to see and am committed to. It is for the Government to get the best software and IT possible for each procurement, so that we can give people the best service and the best value. If open source software can help to achieve that, I want to see the Government use more of it. We have shown that we are willing to encourage that, but we will only do it where open source options can provide the quality, reliability and security that we need and if they can offer the best value for money. That is in the nature, as the hon. Gentleman must appreciate, of procurement.

It is often suggested that open source solutions offer better value because they are cheaper to buy. In fact, the total cost of ownership is considered in procurement, and it is not always the case that the open source solutions are the cheapest. Although they are free of licence charges, because they can involve high levels of support and training costs, they sometimes do not provide the best value for money. External studies have not shown a consistent cost advantage to open source solutions over proprietary solutions. It is often bandied about when such issues are debated that proprietary solutions are necessarily more expensive than open source solutions, but we have yet to prove that. Some of the figures of potential Government savings from the wholesale adoption of open source that are being bandied about are not taking into account the extra support costs over the lifetime of the project.

Some open source projects cannot meet our needs for quality or security, and we are not prepared to compromise on those. Sometimes—I particularly wanted to get this message out today—we are just not offered open source solutions, although the Government are looking for them because we want the level playing field that we have tried to establish to be effective in practice as well as in principle. When the Cabinet Office and the Office for National Statistics wanted to procure desktop and other infrastructure earlier this year, for example, the specification was deliberately designed to permit open source as well as proprietary solutions. None of the 10 initial solutions that we received based their designs around a full or largely open source approach, although we have since worked with the successful supplier to ensure that open source options are available where that is cost effective. We are trying to shape this debate, but when contracts are put out to tender we are reliant on what comes back as an offer from the industry. If the industry is not offering us open source options, the hon. Gentleman cannot blame the Government for not taking them up. I want open source options in as many cases as possible that can compete on good value for money.

Today, I want to challenge the open source industry. We will not favour open source because, while it can be the best option and can offer the best value, it will not always. However, as I have said, we offer a level playing field, and I want to make that a reality. We will procure the solution that can offer the best value for money and that can best meet our requirements: high quality, reliability, security and more specific criteria in each case as the contracts are designed. If that solution is open source, we will use open source.

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John Pugh (Shadow Minister, Health; Southport, Liberal Democrat)

I am grateful for what the Minister is saying; it is a useful background and encouraging to hear in some respects. The point that I was making, which she has not dealt with, was not about whether some of the tenders are open and above board and give everybody a chance to bid, but about what is being tendered for—in this case, it involved the DWP website. When that produces a product and solution that favours the further use of a company's products, that is quite different from the company's winning the original tender. Microsoft might not have had any part in designing the DWP website; I am simply suggesting that the DWP website, in so far as it influences and provokes other consumers, because they have to get a Windows computer—

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David Taylor (North West Leicestershire, Labour)

Order. Interventions should be brief.

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Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)

I understand the nature of ongoing contractual relationships. All that I can say is that because we do not want lock-in or citizens to be left with sub-optimal solutions, it is up to the people contracting to ensure that that does not happen. I think that we are far more sophisticated about that than we used to be. Our absolute insistence on open standards makes it far less likely that we will end up in a situation like the one the hon. Gentleman attempted to describe in his intervention.

I go back to my challenge to open source providers to work with IT services firms, so that they can integrate open source into the solutions they supply when they contract with the Government. That is already happening in many cases, and we are using open source—I have given examples of that—but I would like it to happen more. On our side, John Suffolk, the Government's chief information officer, will work with the industry and with departmental CIOs to help ensure that our open source policy is innovatively applied throughout the supply chain and in the future.

I thank the hon. Gentleman for his contribution to today's debate, for securing the debate and for his interest in the subject. I think that we share the same goal of ensuring that we have the best possible and healthiest mix of competition and innovation in the UK Government's procurement of IT software in an increasingly sophisticated environment, to ensure that services to citizens are modernised in the way that I have described. I hope that I have explained that we are committed to exploring the ways in which open source software can help us to achieve that and to using such software where it is appropriate to do so. We are committed to offering a level playing field, and we will make case-by-case decisions about which of the solutions presented to us in any procurement win. I want to challenge open source software providers to show us what they have to offer and what they can do, so that we can ensure a far greater mix of solutions, far greater competition and more innovation in the way in which we procure software, to give citizens modernised access to Government services.