G-Cloud may not comply with EU law

But analysts say the problems can be overcome

Government IT Procurement problems are being looked investigated

The government expects to save 30 per cent from its IT budget by implementing the G-Cloud, according to Andy Tait, the deputy director of the G-Cloud project.

In a speech to the Socitm 2010 conference held earlier this week in Brighton, Tait said that “some public sector organisations have saved up to 65 percent by using the cloud.”

G-Cloud, the government’s own version of cloud computing, plans to consolidate datacentres across the public and voluntary sectors. Ambitious in scope, it aims to save government £3.2bn of its annual £16bn IT budget. The project was launched by the last government, but has not yet been approved under the new government’s spending review.

But is it realistic? Too often, government IT projects have promised a great deal and then failed to deliver. G-Cloud has already run into two problems.

One is that the government is already locked into long-term contracts with suppliers, which will have to run their course because it would be too expensive to terminate them early.

The other problem is that G-Cloud, as it stands, may not comply with EU procurement law, which requires purchasers to submit a tender to the Official Journal of the European Union.

But departments and councils using the G-Cloud will be able to purchase apps directly from the App Store for Government (ASG) without having to abide by traditional procurement processes. One price would be agreed for all government bodies, including central departments and small agencies, so they could all use the applications without going through further procurement processes.

“There is no question that there are challenges with procurement law here, that is why we have Office of Government Commerce embedded into the project as the specialist in this area,” Tait told the conference.

Georgina O’Toole, research director at analyst TechMarketView, said that the problems were not insurmountable, however, but that the move to G-Cloud would take time.

“It’s not just one big bang to the cloud," she said. "It’s a journey that the government has to take and it’s a journey that will probably take 10 years, if not more.”

O’Toole said she thought that the predicted savings of £3.2bn a year were feasible. “We’ve worked out that even the announcements we’ve seen to date about the abolition of contracts would, over the next two years, wipe £1.3bn off the public sector IT software and services market. We’ve also seen the abolition of many quangos, which will also see savings in IT spend,” she said.

She was more sceptical about the government’s related plans to purchase 25 per cent of its IT from SMEs. “If the government is trying to centralise more infrastructure procurement, it is pushing that into the hands of fewer larger, rather than smaller, suppliers," said O’Toole.

"It might be possible at the application level, because the introduction of the application store will make the smaller companies more visible to departments and agencies and show what their software can do at potentially far cheaper prices rather than constantly having to work through the large system integrators.”

Sarah Burnett, senior analyst at Ovum, said the government needed to make sure that small businesses were no longer disadvantaged in the procurement process.

“The thing that stops small companies selling more to the public sector is a long-winded procurement cycle that costs money and often requires a large number of criteria to be satisfied," She said. "You have to protect the public from smaller suppliers not being financially stable enough, but there are things that can be done to reduce the overheads of bidding for a public sector contract.”