It is too early to ascertain whether the inclusion of the exploitation of the Agency's expertise aligns interests

3.6 The Agency's objective of strengthening the partnership bonds through the creation of a mutually beneficial business was considered by the Agency and their advisors to be a novel development in the relationship between the public and private sectors. The Agency were aware that, because of the untested status of this type of partnership, potential suppliers of IT services would be nervous about the approach.

3.7 The only bidder prepared to enter into partnership on terms approaching those originally proposed by the Agency was CMG. To gauge their commitment to the exploitation of the Agency's expertise we have compared, in Figure 9, CMG's contractual obligations to market this business with their actual performance. In the case of every obligation we found that CMG had exceeded their minimum contractual commitments. Moreover, CMG have not just met their obligations passively but have been a very active and willing participant in establishing Radio Spectrum International as a leading company in the field of providing spectrum management solutions.

3.8 CMG's active role in the exploitation of the Agency's expertise is encouraging. The Agency have told us that CMG's secondees to Radio Spectrum International, who deliver IT services to the Agency, have acquired an understanding of the business of spectrum management to a level sufficient for them to communicate with the Agency's users of the IT services. In addition Radio Spectrum International have gained enough understanding of the business to compile bids for international consultancy projects and to provide advice, using Agency expertise as appropriate, to overseas spectrum managers. In the supply of these services the Agency have not yet observed Radio Spectrum International taking the lead in proposing IT solutions to spectrum management problems. Both the Agency and CMG attribute this observation to the small size of the spectrum management market and the fact that the Agency's systems, designed for spectrum management within the UK, have not proved readily exportable.

3.9 The value of Radio Spectrum International depends upon their provision of IT services to the Agency and not with the international business, which is yet to make a profit. Even so, CMG told us that they have been sufficiently encouraged by the enquiries that Radio Spectrum International have received and the four contracts that they have won to want to continue to help exploit the Agency's expertise.

9	A comparison of CMG’s contractual obligations regarding marketing the Agency’s expertise and their actual performance

	Contractual Commitments	Actual Performance
	Overcome skills deficit through sub-contracts with the Smith Group and National Economic Research Associates	Sub-contracts signed 8 June 1998, the same day that the partnership was established. From 8 June 1998 until 8 November 1999 CMG appointed a Smith Group employee as Radio Spectrum International’s director of international marketing. Since the departure of this director the post has remained vacant. CMG have encouraged Radio Spectrum International to team up with other firms with expertise in spectrum management.
	Spend £100,000 marketing Radio Spectrum International during their first two years of operation	In CMG’s contract with the Smith Group, the two parties agreed to divide the obligation 50/50. Expenditure on marketing Radio Spectrum International was reported monthly to the Agency until the end of March 1999 by which time CMG had spent £50,000 and the Smith Group £83,000. CMG told us that they have continued funding Radio Spectrum International’s marketing.
	Funding bids for international spectrum management work during Radio Spectrum International’s first two years	CMG funded £157,000 of sales work.
	Source: The Agency and Radio Spectrum International