The Office of Fair Trading (OFT) has launched a call for information into the procurement of government IT contracts in order to assess whether giant IT suppliers such as HP and Microsoft are shutting smaller vendors out of the market.
The OFT said that it wanted to ensure that competition in the sector was healthy, in order to drive down costs and increase efficiency. The body is also going to be looking to see "whether there are barriers to entry which make it difficult for smaller businesses to compete" in the sector.
Clive Maxwell, the OFT's chief executive, said that it was important to make sure IT suppliers were offering value to taxpayers: "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," he said.
Maxwell says the OFT is open to feedback from all parts of the government IT sector to find out what can be improved: "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," he explained.
The government currently runs a scheme whose aim is to bring smaller IT vendors into government processes. The G-Cloud procurement programme has been operating for over a year, and last month revealed total spending within the scheme as having reached £25m, with an average of 63 percent of spending going to small and medium-sized vendors.
The service had previously been criticised, however, for perennial underuse, with former G-Cloud head Denise McDonagh urging public sector bodies to ‘take a risk' on G-Cloud.
V3 contacted the Cabinet Office - which runs the G-Cloud store and is overseeing a radical overhaul of IT deals in government - for comment on the investigation but they declined to do so.
Phil Dawson, chief executive of Skyscape, which in May signed a £1.5m deal with the Criminal Records Bureau through G-Cloud, said that the investigation was both timely and important for smaller vendors: "For far too long, IT giants and incumbent suppliers have been allowed to reign supreme," he said. "It is precisely this dominance that has created a stagnant public sector market, which is exactly what the G-Cloud programme was established to tackle."
He explained that suppliers need to be kept in line to ensure value for money for taxpayers. "A marketplace dominated by inflexible and expensive suppliers impacts negatively on the service being delivered to the end-user, who in the case of the public sector market, is the general public and ultimately the UK tax-payer," he stated.
Paul Stone, head of competition and regulation and the Charles Russell law firm said that this call for information would be a good chance for smaller vendors to express their viewpoints.
"The OFT's call for information represents a great opportunity for ICT providers to make their voice heard if they are concerned about their ability to win government contracts," he said. "If the OFT identifies concerns, it might make recommendations to government or make a market investigation reference to the Competition Commission.
"The OFT is clearly keen to hear as many viewpoints as possible before deciding which route to take."
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