11 While the Department's active management of the risks associated with the commissioning of new work and the effective operation of the partnership by skilled staff increase the likelihood of securing value for money, they do not guarantee it. For example, the incentives in the contract to improve efficiency may be insufficient to keep pace with the market. External perspectives can provide assurance about the comparative value offered by EDS.
12 The Department has used benchmarking to compare aspects of the contract with performance elsewhere. Difficulties were encountered, and were to be expected, in making the comparisons, and the results contain significant caveats. Nevertheless the Department concluded that, overall, the parts of the contract studied were competitive with the market. The chief area of concern was a low, but improving, level of software development productivity.
13 The contract allows existing services provided by EDS to be market tested if there is evidence, for example from benchmarking, that the service provided is uncompetitive. Before the Department can proceed to a full market test, EDS is entitled to match or better any indicative price. So far, no existing service has been market tested and one new requirement, the provision of an Internet capability, has been subject to open competition and let to another organisation. Market testing, therefore, has provided little direct evidence of the comparative value offered by EDS.
14 In view of this, recommendations to the Department on making external comparisons focus on benchmarking and include:
■ increasing the use of external expertise to help address difficulties in obtaining useable comparative information from other information technology providers; and
■ extending the use of benchmarking to other services provided under the partnership with EDS.