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Office of Fair Trading to scrutinise Government IT outsourcing

The public sector spends about 1 percent of GDP with large IT outsourcing companies

The Office of Fair Trading has launched a shock investigation into the supply of ICT goods and services to the public sector and is calling for suppliers and purchasers to get in touch and share their experiences.

It is keen to establish whether competition in the sector works well, with particular focus on whether there are barriers to entry for smaller businesses (SMEs), whether public sector users face high barriers to switching suppliers and whether some suppliers seek to limit the interoperability and use of competitor systems with their own.

Computerworld UK understands that those involved in technology and procurement reform within central government were unaware of the investigation being launched.

"Given the vital role that this technology plays in the delivery of public services and the cost to the taxpayer, the OFT believes it is important to explore whether there are any restrictions on competition," said Clive Maxwell, OFT Chief Executive.

"We want to hear both from industry suppliers and public sector users about how competition in this market works, any problems that they have experienced, and how it could be made to work better."

Since the coalition government came to power, there has been a strong focus within central government on breaking down the 'oligopoly' of suppliers that dominate public sector IT procurement spend. There has been particular emphasis on easing access for SMEs to do business with the public sector in a bid to drive down costs.

One of the most recent reforms saw the government commit to creating fewer frameworks going forward and cancelled three major frameworks in the process, after it concluded that they led to significant waste for the public sector and hindered SMEs, due to expensive and complicated procurement processes.

It has also launched the G-Cloud, which is effectively an online store for commodity cloud products, and allows anyone in the public sector to transparently search for products from a large number of vendors - the majority of which are SMEs.

There have been examples where traditional outsourcing vendors have quoted government tens of millions of pounds for a hosting project, and central government departments have been able to use the G-Cloud to reduce this figure to hundreds of thousands of pounds.

Government CTO, Liam Maxwell, was speaking today at a Huawei sponsored CIO forum for The Economist, where he explained why government needs to reform its outsourcing strategy.

"Some of you may know that the British government has spent 15 years spending large amounts of money, in fact about 1 percent of GDP, with an outsourcing community [the oligopoly]. So most of the IT we do and the ownership of our systems, ownership of that information, rests not with us but with outsiders. We have no access to it and that's fundamentally a massive problem to the government," he said.

"Part of the reforms we are bringing into technology in government is to move the ability to access information and the ability to work with the technology back into government. The ability to deal with the information directly."

He added: "The majority of major contracts we are locked into finish by 2014/2015 and so there is an enormous amount of change going on about how we do things differently. We are not going to replace, we are going to base our services around user need and in many cases that means not doing the same thing again."


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