The Radiocommunications Agency’s Joint Venture With CMG – NAO Full Report

Summary

In 1994 the Radiocommunications Agency was unable to meet its requirement for IT services from in-house resources and was heavily reliant on expensive contractors. The Agency was keen to achieve financial savings by bringing this reliance to an end. After considering various options the Agency decided a partnership with a private sector company would give it access to a wider range of skills and resources than it had in-house, be available when needed and at a lower cost than their existing arrangements. The partner, through its understanding of the Agency’s systems and operations, would be in a strong position to sell the Agency’s systems and the Agency’s expertise.
This NAO Full Report draws attention to the main lessons learned by the Agency which may be of benefit to other public sector bodies contemplating entering into partnerships: the need for clear objectives at the outset of the process; trying to maintain a competitive bidding process or, in the absence of this, ensuring adequate benchmarks exist to measure value for money; considering the implications of linking projects (in this case the provision of IT services and the commercial exploitation of the Agency’s skills base) where one element is unproven; recognising the importance of aspects such as the alignment of business interests, trust-based relationships and effective collaboration but also building in contractual protections; and having a formal process for deciding on the percentage stake to take in a joint venture company.

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