It’s hard to believe that a cash-strapped government would refuse free data analytics services that could potentially help it save significant taxpayer money and improve its credibility with the public. But that’s just what the British government has done.

First, some background. Not unlike the U.S., Britain is grappling with yearly budget deficits and a growing national debt. Brits gave control of Parliament to the Conservative party last spring and new Prime Minister David Cameron promised significant spending cuts to get deficits under control. And he delivered.

Still, Downing Street has a long way to go to balance its budget, so in late March, U.K.-based Rosslyn Analytics offered to run government spending data through its analytics engine, then let the government slice and dice the data to better understand spending patterns with visualization tools from QlikTech, a U.S.-based business intelligence company.

The government turned down the offer. John Collington, head of Procurement in the Cabinet Office’s Efficiency and Reform Group, told Rosslyn it was unwilling to ask government departments to turn over its data in a standard format and that, instead, the government was planning on building its own data warehouse from which to conduct spend analysis.

Notwithstanding the gimmicky nature of the offer, it’s hard to understand the government’s decision. If the government plans to build its own data warehouse, it’s going to have to ask each department to supply spend data in some type of standardized format anyway. And Collington’s rejection, as far as I can tell, didn’t mention anything about the sensitivity of the data, so that doesn’t appear to be an issue. In fact, a significant amount of government spending data is already publicly available at data.gov.uk.

And I wonder if Collington understands the sheer magnitude of a centralized data warehouse project as he proposes. The government is looking at months and most likely years before a centralized warehouse is up and running. It is going to have to scrub, normalize and integrate huge volumes of data. And it is going to have to spend a lot of taxpayer money to do it.

Had the government accepted the offer, Rosslyn said it could process the data and have it ready for analysis by May 1. Admittedly I don’t know a lot about Rosslyn’s spend analysis technology, but the company claims its RA.Pid platform can extract and process data from all major ERP applications in a matter of hours or days. And it has gotten some good press in the U.K. And QlikTech is highly regarded in the U.S. for its data visualization tools.

So why not let Rosslyn take a crack at it? What does the government have to lose? It can continue its planned data warehouse project in the meantime, and if Rosslyn comes through on its promise then maybe the expensive warehouse project can be scaled back if not outright canceled. Seems like a no-brainer to me.

This is a tough one to understand.  Government agencies – intelligence agencies not withstanding – tend to be late adopters of technology, so it’s possible Collington simply doesn’t understand the benefits of data analytics as applied to spend data. But that’s unlikely. He is committed to a centralized data warehouse project, after all.

I could speculate as to other reasons why the government spurned Rosslyn’s offer, but I’ll leave that to others. In the meantime, to our U.K. readers, be on the lookout for that centralized data warehouse sometime in 2013.