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TMT legal update: OFT investigates public sector ICT procurement

    • Other
    • Technology
    • Technology, Media and Telecoms - General
    • Technology, Media and Telecoms - Technology

    05-11-2013

    Précis

    On the 15 October, the Office of Fair Trading (OFT) launched a market study into the supply of information and communications technology (ICT) goods and services to the public sector.

    What?

    The market study follows an OFT call for information issued in July where both purchasers and suppliers were requested to provide information in relation to tendering and bidding for ICT contracts in the public sector.

    According to the OFT press release, the study “will focus on the degree of competition between the companies which supply these goods and services, in a sector that is vital for the efficient and cost effective delivery of all public services”. Amongst the OFT’s concerns are: 

    1. the high cost of and obstacles to public sector organisations switching suppliers; 
    2. the high barriers to entry and expansion in the sector, particularly for smaller ICT companies; and 
    3. the large share of contracts that certain businesses appear to have in some areas of the sector.

    The OFT will examine two types of ICT products/services:

    1. Commercial off-the-shelf software: all types of software commercially available to different public sector organisations, which have not been individually tailored to those organisations' needs, for example, management information systems used by organisations such as schools and local authorities. 
    2. Outsourced IT: the contracting of private sector suppliers to build, run and/or maintain public sector IT infrastructure and applications on behalf of public sector organisations.

    Nisha Arora, Senior Director of Services for Infrastructure and Public Markets at the OFT, stated: “Information and communications technology is vital for the efficient and cost effective delivery of today's public services and for many aspects of public service reform. When competition works well, it can help drive down costs, encourage innovation and ultimately ensure that the taxpayer gets the best value for money. We want to look further into this market to understand whether it is really serving its customers' interests.”

    So what?

    ICT plays a crucial role in the delivery of the UK’s public services in vital areas such as education, transport and policing. It is also an integral building block of the UK economy, with the top 20 software and IT services providers earning about £10.4bn a year in revenue from public sector contracts. Therefore, it is no surprise that the OFT has decided to take a closer look at the sector. Possible outcomes of the OFT’s investigation include a market investigation reference, competition law enforcement action or the OFT making recommendations for changes in laws or regulations.

    Any party wishing to submit written views, feedback or evidence to the OFT’s market study team should do so no later than Friday 20 December 2013 .  The OFT expects to complete its market study and publish its findings in March 2014. 

    For more information contact

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