OFT To Investigate Public Sector ICT Procurement

The Office of Fair Trading (OFT), has launched a study into ICT procurement by the public sector to determine the “degree of competition” between dominant providers, and decide whether the government is providing value for money for the tax player. It will also evaluate the role of SMBs in the existing procurement system.

Fair competition is essential for public sector ICT contracts – in the past two years, the government  hasspent around £13.8 billion on technology goods and services.

“’When competition works well, it can help drive down costs, encourage innovation and ultimately ensure that the taxpayer gets the best value for money. We want to look further into this market to understand whether it is really serving its customers’ interests,” said Nisha Arora, senior director of Services, Infrastructure and Public Markets at the OFT.

Fairer trading

In July 2013, OFT issued a “Call for Information”, which aimed to understand which IT products were used by the public sector, and who was responsible for supplying them.

The findings highlighted a number of problems, with large individual corporations often winning the majority of contracts in certain sectors, SMBs finding it hard to join the government IT procurement schemes, and government departments having difficulties in switching providers.

The OFT thinks these issues require further analysis. It says that the existing reports and ongoing initiatives to improve public sector procurement will inform the new study.

“The logical explanation for seeing the same names again and again is that these players are the only ones that have the infrastructure, skillsets and financial clout to work with the large public sector departments. It is simply a market reality,” explained Iain Tomkinson, director at ASM Technologies.

“The issue is that the public sector procurement process is too long-winded, bureaucratic and expensive for the smaller, yet often more innovative firms to compete in on their own. The procurement process and associated financial investment is simply too much of a barrier to entry for them. That is why most public sector business still goes to the larger players.”

The OFT study will look at the two particular market sectors, which together form around half of all public spending on information and communications technologies in the UK – commercial software and outsourced IT.

Examples of things under scrutiny will include software systems used by local authorities to manage information and revenues, and companies which build and maintain these systems.

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