Public Sector ICT: OFT Shows Interest amid Competition Concerns

The OFT has launched a call for information into supply of Government ICT services

The OFT has launched a call for information into the supply of information and communication technology (ICT) goods and services to the public sector and is calling for suppliers and purchasers to get in touch about their experiences.

ICT plays a crucial role in the delivery of all public services, including schools, hospitals and the police. It is also an important part of the UK economy, with the top 20 software and IT services providers earning about £10.4bn a year in revenue from the public sector.

The OFT is keen to ensure that competition in this sector works well. The OFT is particularly seeking information about:

  • the structure of the sector, for example the number of suppliers and their market share;
  • whether there are barriers to entry which make it difficult for smaller businesses to compete in this sector;
  • whether public sector users face high barriers to switching suppliers, such as costs of transferring and restrictive licence agreements;
  • whether some suppliers seek to limit the interoperability and use of competitor systems with their own.
  • whether outsourcing of ICT service provision results in a high level of dependence on suppliers' expertise, undermining the ability of public bodies to drive value for money over time.

There have been many reviews of the procurement of ICT by the public sector yet few studies have examined whether aspects of the supply side of the market inhibit competition. The OFT's review aims to address this imbalance.

Clive Maxwell, OFT Chief Executive , said:

'This work demonstrates a continued focus by the OFT on markets related to public services. 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.'

More information about the specific issues being considered by the OFT can be found at on the Call for information page. The effective deadline is 18 August 2013.

Comments

Paul Stone, Head of Competition and Regulation at Charles Russell LLP, said:  

'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.  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.'

Laurence Eastham comments:

'Public sector ICT has a reputation for contracts being placed among a very small number of big suppliers, costs ballooning out of control and projects ending with little gained but lessons on how not to run a project. That reputation is misleading – but it is not entirely undeserved. Hopeful signs from the new government about opening up allocation of contracts have not led to much by way of concrete results. I will be astonished if the call for information does not lead to an investigation.'

 

Published: 2013-07-03T13:56:35

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