Driving cross agency digital agenda through spend controls...
Expenditure controls ('spend controls') over digital investment by all government agencies, can be an effective way to direct and guide individual agencies towards 'all of government' digital objectives. These objectives can be whatever is the priority for the government at the time - for both short and long terms. They could include investment efficiency, standardizing digital platforms across agencies, mitigating risks, or modernising digital services.
The UK Government is an example of a jurisdiction that has developed and implemented a digital 'spend control' policy for a number of years and hence provides a helpful reference.
The UK Digital and Technology Spend Control Policy
The UK Government 'digital and technology spend control policy' was designed to ensure efficient and effective government spending on digital and technology projects. Managed by the Central Digital and Data Office (CDDO) of the UK, the policy, now at version 6, aims to improve service quality, eliminate duplicate spending, and align activities with the government's digital strategy.
Key components of the policy
Objectives of spend control
Strategic alignment: Ensuring activities align with the government's digital strategy.
Adherence to digital standards: Ensuring services are better and cheaper to run.
Elimination of duplication: Reducing redundant digital spending across government.
Support for High-Risk activities: Assisting in the success of novel and complex projects.
Digital investment pipeline
To support the policy, government organisations need to maintain a forward-looking pipeline of planned digital and technology spending. This pipeline will inform the central function of the emerging risks and opportunities across government. The pipeline is subject to internal assurance functions that review agencies compliance with digital and technology standards, assessing risks and alignment with objectives.
The spend approval process
All government entities subject to the spend policy need to follow the requirements as below:
Thresholds for spend approval
Public facing services: Approval required for any spending over £100,000.
Other digital, data, and technology products and services: Approval required for any spending over £1,000,000.
Key spend approval points
Approvals are needed at various stages, including:
Strategic Outline Case (SOC) or Programme Business Case (PBC)
Outline Business Case (OBC)
Full Business Case (FBC)
Key procurement stages
Agile delivery phases (discovery, alpha, beta)
Non-agile project milestones
Digital and technology standards for assurance
Assurers will evaluate proposals based on:
Value for Money
Risk and Importance Rating
Technology Code of Practice
Alignment with Digital Strategy
How agencies need to seek approval
Government organisations submit cases through the "get approval to spend" service, providing necessary details for risk and assurance ratings. The CDDO or internal assurance functions will then review and provide an approval decision.
Risk and importance rating
Cases are rated as high, medium, or low risk and importance, influencing the level of CDDO involvement in the assurance process.
High Risk: Requires CDDO consultation.
Medium Risk: Requires CDDO involvement unless greater autonomy is granted.
Low Risk: Internal governance suffices, no CDDO involvement needed.
Assurance rating
Based on the risk and importance rating, cases are assigned an assurance rating:
Assure: Meets digital standards, no concerns.
Monitor: Challenges present, further action needed.
Control: Novel or contentious cases, further assurance required.
High risk or control cases
High or medium-risk cases are reviewed by an assurance board involving a CDDO adviser. Control cases undergo detailed assurance against strategic commitments and standards.
Outcomes of spend requests
Approved: Proceed with spend.
Approved with Conditions: Conditions must be met before proceeding.
Rejected: The case needs re-submission with additional details or adjustments.
Ministerial cases and process
Significant risk or high expenditure cases may require Cabinet Office ministerial approval, managed by the CDDO adviser.
Setting Up a Digital Assurance Function
Government organizations are required to establish an assurance function as per the digital functional standard. This includes creating a digital and technology spend controls pipeline, setting up a spend controls assurance board, managing internal and external approval routes, and collaborating with the CDDO.
Questions with the 'spend control' approach
The utility of a spend controls approach is closely linked to the nature of the overall governance model exercised by the central government function undertaking the controls.
Top-down versus diffuse leadership across government
There are two primary governance models exercised for spend controls:
Top-Down Model: Employed by the UK Government Digital Service (GDS) and Australia Digital Transformation Agency (DTA), this model mandates whole-of-government reforms. Although theoretically effective, it often faces resistance from departments.
Diffuse leadership approach: This approach, which is adopted by other countries, is argued may be more effective in the long run by reducing departmental resistance. More research is required to compare the successes and setbacks of each model.
Achieving cost controls and accountability
Achieving cost-savings is crucial for spend control policies to overcome resistance from single agencies, private sector IT firms and new administrations. Cost control is also an essential underpinning to sustain the overall 'all of government' direction and this needs to be more compelling than competitive delivery models.
It is important for spend controls to find the balance between exerting adequate control over agency spend and still allow innovation and accountability. This can be achieved by adopting an agile, user-centric model whilst maintaining hierarchical accountability.
Conclusion
The digital and technology spend control policy can ensure that government digital spending is efficient, effective, and aligned with strategic objectives. By following established processes and seeking necessary approvals, government organizations can ensure their projects meet required standards and deliver expected outcomes.
Wider governance structures and processes will clearly have a bearing upon the success of spend controls and further work may be required to ensure the policy fits within this context.
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