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Suppliers criticise G-Cloud contract terms

Suppliers criticise G-Cloud contract terms

Firms say sontract lengths are too short and make it difficult for costs to be recovered

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Suppliers have criticised the length of contracts under the government's G-Cloud programme, which has put some off bidding to have their services included on the CloudStore.

Online portal CloudStore, which launched last week, presents more than 1,700 cloud services offered by 257 suppliers to the public sector. More than half of the suppliers listed are SMEs.

To encourage competition, the government has said that contracts for services available through CloudStore should last for no longer than one year. This first framework is for six months with a three-month extension option, while call-off contracts, where a customer buys a service, can be for up to 12 months.

However, some suppliers said that this requirement is one of the reasons why they declined to bid for G-Cloud work.

In a letter published on the Public Technology website, Martin Thompson, public sector divisional manager of UK technology company Proact UK, said that a short-term contract term would lead to public sector organisations paying a premium.

"In reality re-negotiating contracts such as this every six months is far too onerous for all parties involved and will result in increased costs. A longer term contract would also attract much more favourable rates. Surely cost savings have to be a priority for the public sector?" Thompson wrote.

Simon Freeman, managing director of SME Software-as-a-Service (SaaS) provider Alerts Online, also decided not to bid for G-Cloud work because the contract duration was too short.

"We understood the original intention was to avoid long lock-ins and fixing prices for too long. But while that principle is sound, the contracts did not focus on ease of getting out (which could have been accomplished by a framework maximum exit notice of say one month) but put an upper limit on duration of 12 months," he said.

The contract length issues arise because public sector organisations take a long time to decide on the solution they want, Freeman said, and the costs of engagement can be hard to recover in a short period.

He added: "The SaaS often does not stand alone and the costs of integration and testing can be non-trivial when engaging existing incumbent suppliers of departments. These costs are hard to recover for us in 12 months. The costs of integration and testing and the time taken to do this means that by the time the department goes live, it will need to start planning to come off and migrate to another supplier."

However, Chris Chant, director of the G-Cloud programme, said that the government wanted to discourage long-term contracts, and help public sector organisations avoid vendor lock-in. He also denied that the cost of re-negotiating contracts would be a major issue.

He said: "We believe that the IT industry is changing so fast that committing to a price point for longer than a year is not likely to result in best value being achieved. Experience from the public cloud and the responses we have received to this first G-Cloud framework are that compelling price points are being offered on 'short'-term commitments.

"In relation to the cost and effort of re-negotiating call-off contracts often, we don't think this will be a major issue. The buying process should be quick and easy (select from catalogue) and shouldn't need negotiation. The customer will likely continue with a supplier if a better, cheaper service isn't available on the catalogue."

He added that the second version of the G-Cloud framework will minimise the amount of rework that suppliers will need to do to bid for the next framework.

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