Government IT contracts to be scrutinised by UK competition watchdog

How squeezed are small biz outfits who seek public sector deals?

Britain's competition regulator plans to investigate whether too few suppliers command an unhealthy share of the government IT market.

The Office of Fair Trading is seeking views from technology providers and purchasers working in the public sector to find out if it's tough for small businesses to bid for government contracts.

It noted that the top 20 software and IT services suppliers reeled in combined annual sales above £10bn. The OFT wants to look specifically at how the sector is structured by examining the number of providers and their slice of the market.

Additionally, the watchdog wants to know if public sector outfits "face high barriers to switching suppliers" relating to lock-in licence agreements and other potential contractual restrictions.

The OFT might also probe claims that have at least be made in the recent past about interoperability between IT systems being limited to make it harder for public sector workers from using rival services.

Finally, the competition regulator is calling on information about whether outsourcing IT leads to a higher level of dependence on a providers' "expertise". All of which is likely to be seen as bad value for money.

OFT chief Clive Maxwell said:

Information and communication technology is a crucial part of any modern economy and is key to improving productivity in public services as well as businesses. 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.

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.

BT, Capita and Fujitsu are among the biggest IT suppliers to the country's public sector.

Cabinet Office minister Francis Maude promised in 2011 to "end the oligopoly of big business supplying government IT by breaking down contracts into smaller, more flexible projects. This will open up the market to SMEs and new providers."

But in July this year, the National Audit Office questioned his department's weighty IT savings claims and revealed it was still clueless about how many small biz suppliers were actually winning public sector contracts.

The spending watchdog said it couldn't account for nearly £340m in savings that had been claimed by the Cabinet Office, either. Fancy that! ®

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