The Procurement of Information Technology

Thursday, August 30th, 2012



Brian Farrington Limited (BFL) have been involved in many IT procurements of varying value and with varying degrees of corporate risk attached to them. There are frequently challenges for IT and Procurement specialists. Not the least of these challenges is the purchase of technology that neither IT nor Procurement has previously dealt with. BFL have created > 120 Metrics of Excellence that can be applied to assess the robustness of IT procurement practices. BFL have also created Risk Evaluation Metrics to assess the robustness of risk mitigation strategies for IT purchases. We are constantly researching IT procurements to benefit from developments that occur in the Courts where situations have become so extreme and entrenched that recourse to the courts became necessary. This is a costly activity, time consuming and unlikely to enhance the reputation of the parties involved.

Extracts from a recent audit report

We show below in bullet point form extracts from a recent audit report. You may wish to use it to benefit from the general points and relate then to your organisation. The bullet points abbreviate the auditor’s findings.

  • Paid $1,850,000 to provide a software system which was never provided
  • There was no formal request for proposals and no competitive process
  • Because of a lack of detail to support any of the services, could not determine if the services were actually provided (including labour costs that were ‘just estimates’)
  • Neither the purchasing department nor IT departments were able to locate any information
  • Contracts lacked detail in describing the services to be performed
  • Contracts were missing completely
  • The RFP and contract were significantly different
  • All five contracts contained vague language that did not clearly describe the deliverables
  • The contracts lacked performance measures, schedules, and monitoring plans to ensure work was being performed and scheduled
  • Invoices lacked sufficient detail to determine the services being provided
  • An original contract for £5,500,000 amended to $46,791,468 without ever modifying the original contract’s scope or deliverables
  • Formal written contracts only being signed when work was well underway, near completion, or completed
  • It was difficult to determine the IT vendors  because of a large network of non-documented subcontractors
  • We (the auditors) found it difficult at times to find the actual subcontractors performing work
  • Some of the contracts we (the auditors) requested were either missing from the contract tracking system or were missing from legal department records (the custodian of records)
  • 77% contract amendments demonstrated a significant change in scope or contractual amount without justification
  • A contract for $230,000 which allowed for five one-year contract extensions ran from Aug 1998 to June 2009, was amended 12 times to a total value of $37,672,845
  • Procurement systems lack proper security, segregation of duties and maintenance

Management response to the audit report

As with everything there are two sides to every story. In making the Management Response they point out that the audit is incomplete and wonder why a draft report was issued. They make many other points, some of which are included below:

  •       At the outset of its investigation (the auditors) failed to specify a particular subject focus or designate a beginning and ending point of time for the scope of its services
  •       The City has conducted its own internal evaluations of procurement and contracting policies and practices and made many improvements over the past few years
  •       The draft report states that procurement and documentation maintenance is decentralised, which is correct and as it should be
  •       The audit confuses contract procurement and contract management
  •       The contractor determines the means by which to perform contract obligations and is responsible for the results. The City does not manage or take responsibility for subcontractors


Whenever a searchlight is placed on IT procurement the emotions start running. The ideal position is a well-informed IT procurement team supporting IT colleagues with a common purpose. An independent review of current practices should be considered. Please contact us to discuss the BFL approach. We welcome contact with you.