Over-reliance of a small number of big IT firms has resulted in successive governments wasting a huge amount of public money of IT procurement, according to a report by a committee of MPs.

The report, titled "A Recipe For Rip-Offs": Time For A New Approach, found that IT projects at government level often result in late, over budget systems that are not fit for purpose.

It also found that the government does not have an acceptable level of knowledge of its own IT systems, as, "the outsourcing of the government’s IT service means that many civil service staff, along with their knowledge, skills, networks and infrastructure has been transferred to suppliers," the report said.

The most damning aspect of the report suggested that successive governments have wasted vast sums of public money by being over-reliant on a small group of IT suppliers. According to the report some government departments spend an average of £3,500 on a single desktop PC, a situation described as "ridiculous" given the current cuts being made to tackle the fiscal deficit.

"We found that government is currently over-reliant on a small ‘oligopoly’ of large suppliers, which some witnesses referred to as a ‘cartel’," the report said. "Whether or not this constitutes a cartel in legal terms, current arrangements have led to a perverse situation in which governments have wasted an obscene amount of public money. Benchmarking studies have demonstrated that government pays substantially more for IT when compared to commercial rates."

The report also said: "Despite a number of successful initiatives, government’s overall record in developing and implementing new IT systems is appalling. The lack of IT skills in government and over-reliance on contracting out is a fundamental problem which has been described as a ‘recipe for rip-offs’.

The report outlines four key steps Whitehall can take to tackle these issues:

  • Improving its own information: The report claims the government’s knowledge about its own IT is woefully inadequate, meaning it has failed to benchmark the price it pays for IT goods and services. Collecting the data centrally would allow the government to get better prices from the market.
  • Publishing more information: Releasing more information about how much IT costs and how its systems are run would ensure transparency and maintain trust, the report said.
  • Widening the supplier base: Engaging with innovative SMBs when it comes to procurement will increase the supplier base. The government should also look to reduce the size of its contracts and greatly simplify the procurement process.
  • Working in an agile manner: The slow pace of implementation means that often IT systems are out of date by the time they are up and running. "The Government needs to move towards the use of agile and iterative development methods which enable IT programmes to adapt to changes," the report suggests.

"We have already made significant improvements to the management of IT projects including introducing new ICT controls, increasing transparency, and creating robust governance arrangements. We hope these will go some way to address the problems of the past the committee have rightly highlighted," a Cabinet Office spokesman said to the BBC.