Take note: UK Treasury sticking to promise of using SMEs to break up legacy

Profile picture for user ddpreez By Derek du Preez April 17, 2014
Summary:
The government department has begun moving away from its single supplier model with Fujitsu

Treasury
A relatively small but significant announcement trickled out of Whitehall this week. One which marks a clear signal to all government suppliers in the UK that buying habits are changing and promises are being kept. For just over two years now we've been told by ministers and senior civil servants that some of the government's largest outsourcing agreements will be coming to an end between 2015 and 2017, and that during this time departments will not be renewing the agreements with their current outsourcing partners. Instead there will be a transition towards a multi-source model that will heavily rely on a variety of smaller businesses providing services.

The idea being that by having numerous companies supplying a number of services across the department, there will be more competition, more choice, more agility, more innovation and a reduced overall cost. Well, one of these contracts is the HM Treasury's outsourcing deal with Fujitsu, which it signed in 2009. The contract – which covers networks, hosting applications, development, end-user computing – is due to expire in January 2015 and the department has begun to undergo this transition.

In the middle of last year the Treasury released its 'ICT 2015 Programme', which clearly stated the department's plan to make use of SMEs to replace Fujitsu as the incumbent supplier. I don't know what I thought was going to happen, but I've become very sceptical about these government commitments and I half expected the new agreements to be traditional outsourcing arrangements dressed up as something else e.g. outsourcing to X supplier, which promises to use X number of SMEs in its supply chain.

However, I'm pleased to say that the UK Treasury seems to be sticking to its plan – it has just awarded its first contract under the programme to Centerprise, an SME based in the UK town of Basingstoke.

A clear sign

The four year contract to deliver media and wireless ICT services to the Treasury is worth approximately £2.5 million – as I said a relatively small amount, when compared with the estimated £255 million total value of all the contracts to be leased under the Treasury's programme. However, given that this is the first contract to be announced and Centerprise was chosen from over 100 suppliers bidding for the deal, I believe it marks a clear sign that the Treasury is going to continue down this this SME path. Centerprise is 30 years old this year and this is also the first central government contract it has ever won.

Jeremy Nash, Systems Integrators Business Manager at Centerprise, said:

George Osborne

“This is a big win for us. We are an SME employing about 130 people, so to be able to compete for Central Government contracts opens up a whole other level of business for us.”

“We have a great deal of experience working in defence, education and wider public sector markets, so we are delighted to be given this opportunity.”

Centeprise will provide the Treasury with the following:

  • support and maintenance of a wireless infrastructure and associated services
  • support and maintenance of a TV distribution infrastructure and service
  • support and maintenance of unclassified end user devices and associated services
  • cloud-based Video Conferencing Services
  • on-site support services that include an ICT Loan service and a service to ensure meeting rooms are in working order

It has to be said that this could be a clever bit of PR by the Treasury, given that it is small contract in the scheme of things. However, if it is a sign of things to come then it will make a lot of the big vendors feel uneasy about the future of government supply-side opportunities. What is significant about this is that the deal isn't a fringe piece of technology that has been bought to tick an SME box, which I sometimes feel happens with purchases made via tools such as the G-Cloud. This is a central government department – albeit one of the smallest ones, with the smallest spend budget – that has laid out a multi-year strategic plan and is using SMEs to carry out that strategy. This is most certainly not outsourcing as we know it.

Verdict

  • Good news for SMEs in the UK. This is a company that has never worked with central government before and has now won a strategic piece of business with the Treasury. Shows if you've got the right tools at the right price, you can get in there. The bill most certainly would have at least been twice the price from a traditional, large provider.
  • Doesn't have to be bad news for the big vendors. Although this will likely be perceived by many companies as an anti-large vendor agenda, it really isn't. Most government departments are more than happy to still work with the big suppliers as long as they are willing to show that they get what the public sector wants now. Innovation, agility, lower costs – it seems it's just quite difficult to get all these things from a large supplier (well, according to government buyers).
  • In reality this is a wireless and media contract – it isn't a core back-end system. It will be interesting to see if the Treasury manages to do the same with the more critical services being procured under the Core IT Services Tower (worth an estimated £250m).
  • I hope the Treasury is working on its governance, something the public sector has been notoriously bad at in years gone by. This is going to be a difficult programme to manage when compared to dealing with one large supplier.