An investigation into Government IT procurement is being conducted by the Office of Fair Trading. This is an attempt to identify some of the reasons why government IT supplies is still dominated by a few big suppliers, otherwise known as the oligopoly.
The OFT is asking IT suppliers and procurement executives in government to tell it about their experiences, I wrote an article about this yesterday here.
Despite the government’s best effort the OFT, a QUANGO, clearly thinks more needs to be done to increase competition in the IT supplies to government sector. “Healthy competition in any market drives down costs, drives up efficiency and promotes innovation, while a lack of competition can hinder productivity and, in turn, economic growth,” said the OFT.
The government is already attempting to increase the proportion of supplies coming from SMEs. And it is having some success.
According to the most recent government figures, central government spent 10% of its total budget with SMEs in 2011/12 compared to 6.8% in 2010/11. In a bid to increase this figure, the Government Procurement Service (GPS) recently awarded the contract to develop the Single Supplier Registration platform, which will mean suppliers need only register once to bid for government IT contracts.
The government is determined to give SME suppliers better access to government contracts. It hopes to have 25% of suppliers to government to be from SMEs.
The OFT announcement is not the first time suppliers have been asked to give their views. In 2010 the government created a website where suppliers could tell the government what problems they are having. What difference will it make that the OFT is doing the investigation?
The government has introduced a number of programmes to address the problem, such as a single registration for suppliers. See the articles below.
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