Big tech's grip loosens on UK.gov IT spend
Victory for SMBs? Not quite, Reg research reveals
UK government IT spending is still dominated by a few big suppliers – but they are losing some of their grip, according to publicly released data and Freedom of Information responses covering five of the biggest-spending organisations.
Last year, the Cabinet Office said the three biggest IT suppliers across central government were HP with £1.2bn, Capgemini with £861m, and BT with £561m. Our data for the 2015-16 financial year comes up with the same top three, although in a slightly different order.
Conservative ministers have been trying to diversify IT spending since entering government in 2010, and although it has taken a while, it is starting to happen. According to its annual spending reports, in 2012-13 the Ministry of Defence paid HP £799m, but by 2015-16 this had dropped to £606m. Another MoD analysis shows HP's share of its direct procurement expenditure falling from 3.3 per cent in 2012-13 – a level it reached in 2008/09 and pretty much held until 2012-13 – to 2.5 per cent in 2015-16.
The main beneficiaries of this diversification appear to be other big suppliers. BT received £356m from the MoD in 2015-16, up from £253m three years ago, and CSC got £71m, up from £20m. Other big IT suppliers include Fujitsu with £73m, reseller Software Box with £61m, Sopra Steria with £48m, CGI with £42m, and IBM with £38m.
It's a similar story at HM Revenue and Customs, which is loosening its dependence on its giant Capgemini-led Aspire deal, which started in 2004 and will end this year. HMRC's FoI response listed Aspire as its biggest supplier with £503m of spending in 2015-16, but this is down nearly a third on £735m in 2012-13, when we last asked for the data.
Most of that money seems to have gone to another big supplier – Fujitsu, a junior partner to Capgemini in Aspire. It received £205m in its own right in 2015-16 despite not being listed among HMRC's top 100 suppliers in 2012-13. Aspire and Fujitsu together account for 87 per cent of HMRC's £819m IT and communications spending, with other significant suppliers including KCom Group (£27.5m), Trustmarque Solutions (£7.5m) and recruiter Mercator IT Solutions (£5m). The figures also show some use of cloud computing, with UKCloud getting £2.9m.
The Department for Work and Pensions failed to respond to an FoI request, despite having provided similar data in previous years, so we fell back on the department's monthly transactions published at Data.gov.uk. These are likely to underestimate spending, as they are only meant to covers transactions above £25,000 (although in reality some smaller transactions are listed), and some spending may go through different company names. That said, the 2015-16 monthly data still showed the DWP spending £382m with HP and £111m with BT, which have long been the department's top two IT suppliers.
Central NHS IT in England is now run by NHS Digital, known until last year as the Health and Social Care Information Centre. However, its FoI response didn't show much budgetary evidence of this. It spent £5.7m with IT infrastructure provider Softcat, £2.1m with Computacenter, £1.3m with BT, and £945m with CSC.
BT and CSC used to enjoy nine-digit annual fees from the NHS's National Programme for IT. Actually, they still do – just about. The Department of Health's monthly spending data, which covers all the department's organisations, recorded 2015-16 payments to BT of £186m and CSC of £113m.
Descriptions in the data show that most of this is for National Programme for IT legacy work, with virtually all of CSC's payments linked to its North, Midlands and East local service provider role. Meanwhile, £74m of BT's payments were linked to the National Programme's N3 data network, £69m to its local service provider work in London and £31m to its equivalent in the south of England.
For a project the government has been dismantling since 2010, the National Programme is amazingly resilient, but the amounts are falling. The equivalent monthly data for 2012-13 showed BT receiving £533m, including £114m for N3, £83m for London and £51m for the south, while CSC received £253m.
Unlike the other big spending departments, the Home Office's FoI response shows it already spreads its £744m IT and communications budget across a number of suppliers. Motorola was the largest in 2015-16, receiving £236m; in December 2015, the company bought Airwave Solutions, the current provider of the emergency services' mobile system. This will not be the case for much longer, as Airwave was rejected as a bidder for the Emergency Services Network contract, which is taking over blue-light communications from this year.
Fujitsu is the Home Office's second-largest IT supplier at £84.2m, with many other companies getting a look-in, including IBM (£50.4m), Tata Consultancy Services (£48.4m), Sopra Steria (£42.9m), CSC (£38m), Atos (£36.4m), BT (£17m), Oracle (£15.5m), Capgemini (£12.9m), HP (£11.7m), and UKCloud (£2.9m).
The Home Office's monthly spending data reveal a couple of less conventional IT suppliers, with the Government Communication Bureau receiving £1.7m for IT and telecoms managed services for the Office of Security and Counter-Terrorism. This looks like MI6, which uses "Government Communications Bureau" as a cover name, not least because GCHQ is also listed as having received £170,000 for providing the same type of service to both the Office of Security and Counter-Terrorism and the UK Border Force.
They may be IT suppliers to the Home Office, but beyond a brief set of consolidated accounts the security and intelligence agencies do not release financial data and are exempt from FoI. So the following totals do not include GCHQ, almost certainly one of the biggest IT spenders in the UK public sector. They also ignore VAT, which spending data generally but not invariably excludes.
All that said, based on what data we have, the largest supplier in 2015-16 was HP on £999m, followed by BT on £670m and Aspire on £503m. Things do not change quickly in government IT: the 2012-13 research and similar work for the Guardian covering 2009-10 found the same three suppliers in the same order.
Even with the caveat that the 2015-16 totals do not include a formal list from the DWP, the amounts going to the largest companies do seem to be falling. In 2009-10 HP earned £1.63bn, BT £1.03bn and Aspire £765m, while in 2012-13 HP made £1.34bn, BT £970m and Aspire £737m. The big government suppliers are gradually getting smaller. ®