NHS software deal tops public sector spending on new IT contracts in 2018

The government spent a total of £1.3bn on 162 new public sector IT contracts with its top ten suppliers last year, and the biggest deal was the NHS’s procurement of Microsoft Windows 10 licences.

In total more than 3,000 new IT and cyber security contracts were signed by UK public sector organisations in 2018.

According to analysis of government procurement data by research firm Tussell, the Ministry of Defence spent the most on new IT contracts – £241m.

NHS England’s £158m deal with Bytes Software Services made the Department of Health the second-biggest-spending public sector organisation, with £162m spend on new contracts. Bytes’ contract also made it the supplier that received the highest-value new contracts across the UK public sector in 2018.

The Department for Environment, Food and Rural Affairs spent £150m on new contracts in 2018, while Transport for London spent £146m and the Central Procurement Directorate spent £141m.

Besides Bytes Software Services, other big winners of new contracts were digital services provider Neueda (£155m), DXC Technology (£150m), Fujitsu (£119m) and IBM (£110m).

A total of 35 new cyber security contracts were awarded during the year, with a value of £117m.

Gus Tugendhat, founder of Tussell, said technology is one of the most important, and highest-value, sectors in government procurement, but he said more work is needed to diversify the field of suppliers.

“The findings paint a picture of a sector still dominated by the big firms, with DXC, Fujitsu and IBM all making the top 10 suppliers,” he said. “With 10 suppliers winning nearly 40% of the total value of contracts awarded in 2018, it seems that the public sector still has a way to go in increasing opportunities for smaller tech firms in its supply chain.” 

According to Tussell, 3,883 IT contracts, worth £4.6bn, are due to expire between January 2019 and December 2022, with almost £1bn worth of central government IT contracts due to expire next year alone.