Government pushing key IT suppliers for cost-cutting deals

The government is aiming to secure new deals with major IT providers to allow all departments to licence software at the same price to drive down public sector IT costs.

In an interview with V3, government chief operating officer Stephen Kelly said he was currently talking to around 20 companies as part of his effort to secure improved procurement deals for departments.

Kelly was appointed to his current role in government three months ago. Beforehand he was the crown commercial representative, a position that saw him negotiate three new licensing contracts with IT suppliers SAP, Oracle and Microsoft.

These contracts were essentially buying frameworks to allow all government departments to license software at the same price, thereby driving down public sector IT costs by an estimated £225m or more, by the end of 2015.

The frameworks compare favourably to the usual government approach, where different parts of government buy software from IT vendors on different terms and at different discounts.

"I'm talking to around 20 companies at the moment about following suit. They're the government's core suppliers," said Kelly.

Kelly wouldn't be drawn on the specific companies involved in the discussions but it's likely to include firms such as Accenture, BT, Fujitsu and IBM.

The move comes as part of an overall push in government to drive savings and Kelly said, even without the deals he's worked on, the government is on track to deliver £8bn of savings across government by the summer.

Cabinet Office minister Francis Maude first revealed the sum in November last year and said the savings come from efficiency and procurement improvements, as well as more financial controls across all departments.

Kelly said the government's IT leadership team remained on-target to announce this saving.

Kelly also spoke to V3 about his aim to reduce the length of time it takes departments to secure procurement deals with suppliers.

He said that this would help the government's programme of trying to encourage more small and medium businesses (SMBs) into the public sector market.

"Lots of procurement time lines have already been reduced by 40 percent, so complex procurements take around 150 days, but our aim now is to bring it down to 120 days. This should have a positive impact on SMBs," said Kelly.

The Cabinet Office, as part of its ICT Futures commitments, encourages the public sector to use SMB IT suppliers rather than the large IT suppliers it has always traditionally turned to.

The aim is to encourage more competition in the government procurement market, while cutting costs in public sector spending, and ensuring taxpayers' money is spent with UK firms too.

"The government currently spends around £45bn per annum on goods and services. We can reduce this figure. Working with SMBs and companies that use SMBs is a good strategic policy. In the last two and a half years, significant progress has been made on this agenda."

In the interview Kelly further revealed the government's datacentre consolidation plans, as well as his ideas on how to make government digital services more social.