Public sector suppliers face difficult few months

Public sector suppliers are entering a difficult period of increased scrutiny, according to Ovum analyst Jessica Hawkins.

The coalition government...

Public sector suppliers are entering a difficult period of increased scrutiny, according to Ovum analyst Jessica Hawkins.

The coalition government has already cancelled one high-profile contract - Raytheon on the e-Borders project - and has made it clear it is willing to cancel more.

Several signs have arisen recently pointing to an uncertain future for the FiReControl project, which was introduced by the Labour government in 2004 to amalgamate fire control rooms into nine regional centres.

And government CIO John Suffolk has set out in detail the process central government chief information officers are being asked to go through to ascertain which projects should stay.

"With this climate of increased scrutiny of every IT contract and a need for every amount to be spent in the most efficient and productive way, the pressure is on more than ever for suppliers to deliver," Hawkins said.

The difficulty for suppliers is compounded by the freeze on all IT spending above £1m that is currently in place, although Suffolk said exceptions are possible for smaller companies whose existence might depend on a particular contract.

Raytheon's contract was cancelled last month, three years into a 10-year contract and despite £188m having already been spent on their work.

Hawkins said she expects the project will still continue, because security-related investments are a priority. IBM is a likely winner of the role of prime contractor after Raytheon's exit, she predicted.

"This is likely to be the first of many steps the new government takes in a bid to shake up the status quo and push both the supplier market and the agencies and departments themselves to cut margins and drive out crucial efficiencies," she said.

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