Unwrapping government’s £300m Amazon package

Since a public sector-wide agreement with AWS was introduced six months ago, departments have signed deals worth hundreds of millions with the cloud firm. Sam Trendall reports
Jordan Kanouse from Pixabay

By Sam Trendall

28 May 2021

In 2013, the Cabinet Office introduced the “cloud first” policy, which mandates that, during procurement processes, all central government entities must “fully evaluate” the use of public cloud environments before looking at alternatives. Doing so was also “strongly recommended” for the rest of the public sector.

In the eight years since, the public sector has had a variable relationship with cloud computing and, two years ago, it was even announced that cloud first was set to be replaced with “more appropriate guidance” as it had “become apparent that one size does not fit all”.

The longstanding policy was ultimately kept on and, bit by bit, the collective move away from on-site infrastructure has continued.

Perhaps not quite “cloud first”, but “cloud eventually” now seems well within reach.

The One Government Cloud Strategy, put in place last year, aims to provide further fuel for adoption. The strategy, which followed discussions between officials and a range of vendors, aims to foster a more joined-up approach to cloud across government.

As part of the plan, the Crown Commercial Service has signed memoranda of understanding with some of the biggest providers of cloud hosting and software – IBM, Oracle, HPE, Google, Microsoft and UKCloud – that will offer discounts and other benefits for all public sector bodies by, effectively, treating them as a single customer.

Last – but certainly not least – to sign an MoU was Amazon Web Services, which announced in November that it had agreed a three-year arrangement with CCS dubbed the One Government Value Agreement (OGVA).

In addition to the savings offered on the vendor’s services, AWS has also committed to providing cloud computing training to 6,000 civil servants via a “digital skills fund”.

Chris Hayman, the firm’s UK public sector director, says: “We are working with OGVA customers to build customised training programmes that are free of charge for staff and are designed to provide them with cloud expertise and skills including architecting in the cloud, developer and systems operations, security, big data and machine learning.”

In the meantime, those customers have been quick to start taking advantage of the cost savings provided by the agreement.

Since the introduction of the arrangement, AWS has been awarded new three-year contracts with the Home Office (£120m), the Foreign, Commonwealth and Development Office (£2m), the Department for Work and Pensions (£57m), HM Revenue and Customs (£94m), HM Land Registry (£4.5m), the Driver and Vehicle Licensing Agency (£6.74m), the Ministry of Justice (£23.9m), and Companies House (£5m).

In many cases, these replaced incumbent arrangements with months or years left to run; HMRC’s deal superseded a contact signed with AWS as recently as September 2020 – two months before the OGVA was introduced.

The DWP was a launch partner of the public sector-wide commercial arrangement, entering into a new cloud-hosting contract with AWS on 1 December 2020.

This replaced a deal that had been scheduled to run for another eight months.

“The contract is currently not delivering best value for money and DWP looked to find a replacement with improved discounts, which has been developed through Cabinet Office’s OGVA,” the contract award notice says.

The DWP, and the other major departments to have renegotiated their AWS deals, form the second of two tiers of the agreement which, according to AWS, is designed to enable “larger organisations already using the cloud… [to] maximise benefits from their existing cloud environment, with participants benefiting from a new pricing structure”.

The first tier, meanwhile, offers training and guidance to help organisations “at the beginning of their cloud journey”.

Neither government nor AWS has put a figure on the level of discount available via the OGVA, but a CCS spokesperson told CSW that the improved terms would add up to tens of millions of pounds saved over the course of the deal’s lifetime.

“Many existing customers have retested their contracts to check value for money and ended up awarding contracts that include OGVA benefits,” they said. “CCS anticipates commercial benefits well in excess of £50m over the next three years.”

The procurement agency added that, in light of the arrangements put in place with AWS and six of its cloud rivals, similar public-sector wide agreements with major suppliers may follow.

“We do anticipate more MoUs in the future as they deliver commercial benefits to the public sector which would not otherwise have been possible to quantify or achieve,” the spokesperson said.

Small change?

A stated aim of the OGVA is “helping more SMEs to take part in public sector contracts”.

Given that the £300m-plus of deals listed above were all signed directly with AWS, it may not be immediately obvious how this will be achieved.

Hayman says that, over the last decade, more than 150 firms on the G-Cloud framework have “used AWS to help them deliver their own services – worth more £1.3bn – to the government”. More than half of these were SMEs, he adds.

“The OGVA is designed to be ‘channel neutral’, in that customers are able to access its benefits whether they contract directly with AWS or via one of the members of the AWS Partner Network, many of whom are SMEs,” Hayman says. “The choice of whether to contract directly with AWS or via a partner is for our customers to make – experience suggests that when a customer chooses to contract for AWS services via a partner, it’s usually because the partner is bringing additional services or value that AWS doesn’t offer; for example, undertaking bespoke software development work.”

In addition to the potential implications for SMEs, another frequently-aired concern about the rise of AWS is that – with so many of the biggest departments signing major, long-term deals with the company – government is becoming standardised on the vendor’s platform.

Asked about the implications of Amazon’s large and ever-growing footprint, CCS tells CSW it remains committed to promoting choice for public sector customers, with the spokesperson saying that “it’s important to note that there are a number of other cloud MoUs… all of [which were] an outcome of the One Government Cloud Strategy”.

“Contracting authorities have the power to decide who to contract with, and more than 5,000 suppliers were awarded places on G-Cloud 12, with 91% of them SMEs, offering a wide range of choice for potential customers,” they added.

“MoUs standardise pricing for the whole public sector, making sure that customers can get the best deal for their procurement decisions.”

With £300m and counting having been spent in less than six months, it would seem that many in government are happy enough with the deal they are getting. And, when the time comes for others to relet their IT contracts, the cloud may – finally – be the first place they visit.

Sam Trendall is the editor of CSW's sister title PublicTechnology

Read the most recent articles written by Sam Trendall - All change for digital government?

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