Government asks suppliers to cut prices

The government is asking its 19 largest suppliers, which includes IT outsourcers, to cut the price of their services to the public sector.

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The government is asking its 19 largest suppliers, which includes IT outsourcers, to cut the price of their services to the public sector.

At a conference organised by think-tank Reform yesterday, Frances Maude, the minister for the Cabinet Office, said he would be holding a meeting with suppliers today to renegotiate with them “everything they do for the government” in a bid to cut government spend and the UK deficit.

The Office of Government Commerce (OGC) confirmed that the following companies would be attending the meeting: HP, BT, IBM , Capgemini, Fujitsu, Capita, IBM, Telereal Trillium, Atos Origin, CSC, Logica, Steria, Oracle, Siemens IS, C&W, Microsoft, Accenture, Serco, G4S and Vodafone.

Although the minister is only meeting with 19 suppliers today, a spokesperson for the OGC said: "This represents the first phase of a programme for key suppliers with portfolios across several departments. It is intended that all significant suppliers, not just the invited companies, will be engaged with during the programme."

As well as discussing short-term price cuts, the government will also discuss how to make long-term savings with suppliers.

According to the Financial Times, Maude told the conference: “We will say we want to have something off your margins; we will expect you to tell us how we can pay you less, sometimes for doing less."

Fujitsu and BT confirmed to ComputerworldUK that they will be attending the meeting, with BT saying that a senior executive from BT would be there to “respectfully listen to what the minister has to say.”

Georgina O’Toole, analyst at TechMarketView, said that the meeting “won’t come as any surprise” to the suppliers involved as Maude’s intention has already been previously announced.

In May, the coalition government pledged to cut £3 billion from annual spending on IT programmes, consultancy and property, with more details expected to be announced in this autumn’s Spending Review.

To this end, the Ministry of Defence has recently cancelled a contract tender for IT consultancy services worth £141 million.

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