IT professionals contracting as Umbrella Company Employees may well support moves by the Office of Fair Trading to scrutinise government IT contracts after it raised concerns that a small number of big suppliers continue to dominate the field and that smaller vendors face unduly high “barriers to entry and expansion”. For a number of public sector bodies, these include exceptionally rigorous certification requirements and high-level security protocols.
Whitehall’s chief procurement officer, Bill Crothers, told the Financial Times in July that an “unhealthy” oligopoly existed in the public sector vis-a-vis IT contracts, wherein 70-80% of government business goes to fewer than ten big IT firms, believed to include Oracle, Fujitsu and Capgemini.
The government has taken some significant steps to help small- to medium-sized enterprises to secure IT contracts, including setting an increased target of 25% of all outsourced contracts to go to smaller competitors. It has also split different kinds of IT work into separate 'towers' so that huge projects such as systems development and operations are no longer simply outsourced to big single suppliers. The length and intricacy of the tender process has also been simplified in order to level the playing field a little further in the direction of smaller suppliers.
Until recently, the Cabinet Office says, the distribution of outsourced IT business was moving in the right direction, with an average of 57% going to SMEs; however, over the last few months the pendulum has swung back to favour larger suppliers: since June, the share taken by SMEs has shrunk to 38%.
The results of the OFT probe are expected in March 2014.