Open Contract

Open Contract

Published on Friday, June 11th 2010. Edited by Rat Outzipape. tag

Cameron's Strategy of Open Government
I completely agree with David Cameron's strategy of opening up data including salaries in the Civil Service.
There is something about this that the Prime Minister cannot say, so I will say it on his behalf.
This policy is designed to tackle any hint of corruption.
This means there have been many hints of corruption and malpractice in dealings between the Civil Service and its suppliers. This also means that a Civil Service that once had an unequalled international reputation for propriety can no longer be fully trusted. That shoddy and sometimes shady business practice has gained the currency of acceptability in the corridors of power.
No moment of reflection is required to see how appalling this really is.
The Weapon of Open Data
Open data could prove the most powerful weapon ever unleashed in this arena because it naturally leads to requests for open contracts and open scrutiny of existing contracts, many of which now become non-legal due to breach.
The Integrity of the Incumbents
Beware of those to whom these contracts are let as they fight to the last for their revenue streams.
They will also fight to refute any impugning of their integrity.
On this last they are the most vulnerable.
They are vulnerable because, of all accusations, people do not like to be told that they are doing something wrong in a moral or reputational sense.
The Example of the Gulf Oil Spill
The BP Gulf of Mexico oil spill is an example of resistance to impugning a reputation made personal.
There is too much detail to describe the whole range of these distressing circumstances but just looking at the pressure President Obama is bringing to bear on the BP and the unfortunate comments of its Chief Executive, Tony Hayward is illustration enough.
The point is the way that responsibility is being redefined in the context of an environmental catastrophe.
Quite correctly, Obama is not letting responsibility be defined by business and legal rules, that is who owned the rig, for instance.
For the Whitehouse it is all BP's responsibility.
The Parallel with Government Supplier Contractual Relationships
In the dealings between government and its suppliers things are slightly more nuanced.
However the parallel that can be drawn is the environmental catastrophe as a metaphor for the excessive amount being spent, and therefore wasted, on IT with all of the very dire consequences of this (a sort of pollution in itself).
And, while there is no single entity like BP who is responsible, there is the collective arrangements between government and its suppliers where the responsible parties have not been able to take control of the forming and execution of the contracts they have entered into.
That is the moment of 'corruption', the moment that an undertaking is given by both sides that both sides know will not be adhered to and will always lead to a quiet life for the client and a 'get out of jail' (no real onerous penalties) for the contractor.
Benefits to the Government Contractual Party
While it is straight forward to see what benefit might be in this arrangement for the contractor it is more difficult to see the benefits for government.
Is my notion of corruption in this context too attenuated?
First of all I should say that I have come across pill sweeteners. The promise of board appointments on retirement, for instance.
I have also come across figure mangling, costs being lost or hidden and KPIs being redefined from their original contractual intent under the knowing eye of the most senior Civil Servant responsible for the contract.
But I don't think any of this, common though it maybe, is really the heart of what I would call corruption.
It may seem like these are the issues that must be pointed out and sorted out but they are a distraction from the real issue. That lies in the reluctance or inability of the customer to keep in view value for money.
The customer has immediately been compromised by the nature of the way in which contracts are written and awarded.
The Illusion of Tax Payer Benefit
My idea of corruption and what the benefit is for government is this: government enter into the illusion that while they are spending several times more than what a project should cost, extracted from them by dint of supplier lock-in, somehow this extra spend, so elaborately justified by the supplier, is value for money.
The corruption is the play of forces between very poorly written contracts that become impossible to be fulfilled in their specifics to the customer satisfaction, the monopoly to whom the contracts are offered and the exaggerated and often spurious benefits offered by suppliers that government accept as a substitute for the full contractual satisfaction.
The Open Contract Business Proposition
All of this sort of malpractice will become easy to detect, the first step to rooting this out, with what I am calling open contracts.
Much has been said about open source and open source in relation to government supply.
I no longer think that open source is the issue.
It is a weak business model to propose to take work already done and repackage it on the basis that only the repackaging will have to be paid, which is often what the open source proposition sounds like.
The strong business model is that there are optimum sized teams (in numbers and by value) to deal with the complex operation of 'repackaging' i.e. integration, which entails intimate knowledge of the possibilities of the proposed solution and the customer requirements.
The entire value is in how customer requirements are translated into a solution.
The Increased Market Share To SMEs
To understand the real value proposition we have to step back and look at the larger picture briefly. Total IT spending is £14 billion/year.
As I don't know I shall invent some further figures.
Half of this is software related and half of that could be fulfilled for a tenth of the cost (I believe this last figure).
This means available savings in software procurement run at about £3 billion/year.
Vince Cable has also said that 25% of all ICT procurement should be through SMBs, I take this to mean by value, although the statement I read was not clear. This is a tricky but important detail as SMBs should be bidding in at much lower cost for equivalent function points and bidding for much smaller contracts.
This should mean, if played fair, that even where the government does the most obvious thing to cut costs in ICT by simply cutting budgets (10%-20%?), the volume of work into SMBs is set to rise radically.
The first responsibility of SMBs here, then, is to ensure this is played fair.
The Attitude of Centralised Control
From the above we can see that the very large IT project spend has an appeal that rests in cultural attitudes to cost and control that include a belief in its effectiveness in providing value for money by various measures: meeting KPIs by the supplier and keeping management costs down in the customer.
This positive perception is compounded by a reluctance to have these perceptions challenged by a decentralised model.
The decentralised model fundamentally challenges the ethics of centralised control, and that rankles the most above all for administrators schooled and experienced in the centralised model so actively promoted by the last administration and the Troy administration preceding it.
It is far better to have this issue out in the open well acknowledged than to avoid it.
The Decentralised Model of Control
The decentralised model relies on forces inherent in the overall business process to ensure cost, quality and control as much as the specific monitoring of many contracts.
These are the forces of the market.
There is another way of explaining this.
It is a misunderstanding that large commissioning specifically in the field of software development is any less time consuming than managing several contracts with different suppliers.
It is just that here techniques would have to be adjusted. This is a difficult area as the natural response, and one that government is trying in some areas, is to introduce a technical provisioning layer in the form of another contractor. Unfortunately this will lead to the same problems that already exists where that contractor then becomes the large supplier.
Five Broad Principals of Integration
There are five broad principals that can be extracted from the integration of small projects that are entirely lost in large projects.
1. The First Law of Modularisation.
This should be established as a practice in the initial contract. If any dimension of the contract is anticipated to burst through a predefined ceiling it should be subject to competitive rebid. Each identifiable module must be built in such a way that it can be utilised painlessly by another module.
2. Customer requirements can be throttled back.
The most powerful incentive to this is the low bid placed by the supplier. By mutual understanding every contract should have an element of work on requirements thinning.
3. Software is never complete and there is a long tail which is first improvement then moving into maintenance.
Each of these issues must be dealt with very strictly. The First Law must be applied. More over there is a relationship between these three phases and the rate at which money is spent in any one period. Wise provision will curtail front loading thus increasing quality and expected life while decreasing cost over the initial period.
4. Components must be interoperable.
Processes of interoperability can be highlighted, captured and themselves become modules comprised of components. There is no longer any mystery about this art. It just needs to be applied consistently. No longer the £100 k price tag for changing a URL on a server! Or £10 million price tag on software when evaluated on function points should cost no more than £1 million, but is justified because it 'reuses or integrates' with an existing system!
Spreading costs more evenly as in 3., an approach that is only viable with small interoperable modules.
5. Processes must reflect the reality of software development.
As with 4. it must be recognised that there are orthogonal processes entailed by but not immediately apparent in a problem domain. These are primarily the unavailability of the needed or the expected, whether this be a URL or data. Modern applications dealing with LOD in a RESTful manner can ease this situation.
But it is crucial to understand the necessity of systematically identifying these processes.
It is this core knowledge that needs to be extracted from the few privileged suppliers for anything like a level playing field and fair chance of success.
The Open Contract
The Open Contract is a concept designed to facilitate the five points mentioned.
It extends to the divulgence of source code, what previously will be covered by Crown Copyright will now be made available under OS terms.
This is one of the most astonishing and forward looking commitments made by David Cameron, and yet there has been very little comment about it.
It behoves SME interested in open source to take this point up vigorously.
To release code as open source also implies a whole management process to bring this about dovetailing closely with the concept of Open Contract.
Here, it must be borne in mind the discipline that open source imposes on code repositories for any benefit to be derived from them that is far greater than that typical of code management in government projects. From the above, taking point 5., in particular, pressure must be mounted on Whitehall to divulge what has previously been treated with commercial confidentiality: contracts with suppliers.
To achieve this some compromise may have to be reached.
There is no doubt that existing contracts hold a wealth of detail as well as making commitments that, on scrutiny, may not have been fulfilled.
It is the possibility of the latter that may provide the leverage necessary for the former to be revealed sufficiently for SMEs to begin to formulate their own strategies in this market.
And then, with the Open Contract process in place, it remains a level playing field for all concerned. We know the Open Contract will prevent such practices as sweeteners whereby a price is bid low to gain a foothold and, preferably, lock in, on behalf of a supplier.
However, the issue remains of whether competitive advantage would be lost to the putative supplier making it unattractive for them to enter into the bidding process at all.
These are open issues.
For instance on what basis would such bids be assessed?
It is clear that the technical skills of one supplier will not necessarily be equivalent to an other. Success will surely be a function of the aptness of the proposed solution combined with the possibility of technical success within time and cost constraints.
How this is measured will prove crucial to the functioning of these innovations.
Finally
As more variety of technical solutions are being encouraged, each with the absolute constraint of interoperability in their context with other solutions, expect a flowering of diversity and innovation.

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