OFT looks into public sector IT contracts

Tuesday 29 October 2013

The Office of Fair Trading (OFT) is now two weeks into a market study of public sector IT procurement, including the outsourcing of projects to contractors and other third parties.

Since the study began on October 15th, OFT has been examining two key aspects of public procurement practices regarding technology goods and services, one of which is the outsourcing of projects to build and manage IT infrastructure and applications to private sector organisations.

After OFT released a call for information on the state of the market, it decided to launch the study in light of specific concerns which it deemed worthy of further investigation. In particular, it says concerns were raised on the subject of the spread of IT contracts: some companies seem to have high proportions of the contracts in different areas of the market, contributors said.

OFT added that fears were voiced of severe barriers that hindered smaller businesses’ access to the market, while there seem to be considerable challenges for public sector procurement bodies when it comes to changing suppliers. But this did not mean the awarding bodies were necessarily blameless - contributors to the call for information claimed to have concerns about some procurement practices.

“Information and communications technology is vital for the efficient and cost effective delivery of today's public services and for many aspects of public service reform,” said Nisha Arora, senior director of services, infrastructure and public markets at OFT.

“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.”

The study will take into account how specific practices relate to the market structure and behaviour of suppliers, OFT explained - and although it will consider recent research and current initiatives to reform public sector procurement, it will not try to duplicate any of the research that is already being done. But if the study leads to a referral to the Competition Commission or new recommendations, its consequences could be significant for contractors looking to reach a position where they can bid for public sector work.

Outsourced IT projects will not be the only focus of the study, which will also look at “off-the-shelf” software which is not bespoke to the organisation’s needs. Management information systems are likely to be among the subjects under review, as are revenue and benefits systems which could be used across a wide range of different bodies from council offices to schools and hospitals.

Between them, OFT says that the two topic areas investigated in the current market study will cover close to half the UK’s total public sector IT spending. Even though this means some areas will not be examined, the regulatory organisation says the two subjects under scrutiny are the ones which best reflect the comments submitted under the call for information. Public sector contracts have long been a valuable source of assignments for IT contractors, but any moves which could lead to the removal of barriers to better opportunities could prove highly beneficial.

By Victoria McDonnell

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