–Ian Makgill, Founder Spend Network
Just before Christmas, DXC (formerly Hewlett Packard) was awarded a contract for £430,000 by the Business Services Organisation for on going support of EPES system, the rationale for the contract award was as follows:
Without EPES the monthly annual payments to the independent contractors of some GBP 700 million per annum cannot be made and all EPES associated BSO Business Services and prescription fraud prevention activities will cease.
So far so good, I wouldn’t want the government not to pay contractors and I don’t think anyone would want anti-fraud activities to grind to a halt.
The problem here is that there was only one bidder and DXC could, by and large, name their price. Why was this service not open to competition?
Following a competitive procurement process a contract was signed with Hewlett-Packard now DXC on 28 July 2006. DXC retains the intellectual property rights of the entire EPES solution.
Despite the government specifying the system, despite paying hundreds of thousands to have it built, despite all the time spent operating and using the system, every element of the IP relating to that system belongs to the contractor.
That means that no one other than DXC can ever work on that system, no one else can improve it, no one else can develop a new module for the system and every upgrade must come from DXC.
It is a tiny monopoly all of its own.
It is time, for the governments around the world to do away with this sort of practice.
Sure, buy software where there is a fair market and reasonable competition to deliver an equivalent service. Governments shouldn’t be building their own email clients for instance, but in the current market if a provider of email software started trying to price gouge, the government can just move to another supplier.
The same principle doesn’t apply if you need bespoke software to be written, in that scenario, you need to either build it yourself or buy in the services to build the software, but that should mean buying not just the functionality but the ability to replicate that functionality in the future.
When it comes to “build or buy” the one place you should never be is paying to build and then not owning the outcome.
If you’re going to pay to build, do it with an open license, then anyone can build on it, anyone can improve on it and suppliers don’t end up with monopolies over delivery.
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