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G-Cloud suppliers hit out at government IT pricing deal with Huddle

Whitehall procurement chiefs respond to claims preferential pricing deal with Huddle goes against G-Cloud ethos

IT suppliers on the government’s G-Cloud framework have accused Whitehall procurement managers of unfairly favouring cloud collaboration firm Huddle, after striking a preferential pricing deal with the firm.

The deal came into force with the launch of G-Cloud 7 on 23 November 2015, and gives public sector IT buyers the option to purchase Huddle’s software in the form of an enterprise agreement, rather than on the per user, per month basis favoured by many other of the framework’s providers.

Details of the arrangement were first reported by Computer Weekly on 10 November 2015, before Cabinet Office purchasing unit, the Crown Commercial Service (CCS), published a separate announcement about the Huddle deal several days later.

The post has been seized upon by several members of the G-Cloud supplier community, who have privately expressed concerns to Computer Weekly the deal could be misinterpreted by the public sector as though CCS is recommending Huddle as a preferred technology provider.

Computer Weekly understands at least one complaint along these lines has been raised directly with CCS since news of the preferential pricing scheme first emerged.

Concerned suppliers also claim the arrangement could be considered at odds with one of the founding aims of the G-Cloud framework, which is to put IT suppliers of all sizes on an equal footing when it comes to securing government business.

“Does this announcement not undermine the ideals of the G-Cloud? Why are CCS promoting one vendor over all the others,” said John Glover, sales and marketing director at G-Cloud-listed online collaboration software firm Kahootz.

“In the interests of creating a fair and level playing field, do all 1,800-odd G-Cloud suppliers now have to trek to Norwich [CCS HQ] to do similar deals?”

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In a statement to Computer Weekly, Huddle vice-president Tim Deluca-Smith was keen to point out that “a number” of organisations already have similar arrangements in place with CCS.

“Each one is designed to allow easier and more cost-effective procurement of products and services. This is beneficial to the public sector and, ultimately, taxpayers,” he said.

“Through our memorandum of understanding [MoU], we are delighted to demonstrate our commitment to the government’s cloud-first agenda and supporting savings targets.”

Phil Wainewright, chair of the EuroCloud UK trade association, backed Huddle’s view that preferential pricing schemes are nothing new, but said the way this one is being marketed is.

“It’s not the nature of the deal that an issue, it’s the fact it’s being effectively presented by CCS as something special, when it is just another deal you can get through the G-Cloud with a particular pricing model,” he said.

“Suppliers that are just going through G-Cloud are right to complain because it makes it look like there is a special offer on the table for the public sector, when there might be an even better deal to be had in G-Cloud that isn’t being highlighted.”

Enterprise pricing and G-Cloud

As the Huddle preferential pricing model permits users to buy thousands of licences for external and internal users up front on a per annum basis, there is a concern it could lead to public sector organisations paying out for software licences that never get used.

“The problem with these types of deals is that the client must make an ‘all-in’ commitment and pay up front for a service that they may take many months or potentially years to roll out,” Glover explained.

“I am surprised at CCS as it seems their recent endorsement of this deal is actually encouraging public sector organisations to move away from the leaner, more forward-thinking, consumption-based payment models that G-Cloud was set up to offer.”

In a further statement, a Cabinet Office spokesperson said the deal was introduced to cap the amount of money public sector organisations spend with a single supplier.

“CCS is committed to providing the best value for taxpayers. This is done through a range of solutions, including MoUs,” the spokesperson said.

“It does not commit government to buy from Huddle over any other provider. The MoU introduces a price ceiling for each band and ensures that pricing is fair and consistent.”

Jessica Figueras, chief analyst at market watcher Kable, said a price cap makes sense in large-scale deployments of cloud technologies where the per-unit pricing can end up costing departments dear.

“G-Cloud is a great route for agile procurement, but it doesn’t necessarily incentivise suppliers to quote their best prices. Fixed per-unit pricing also tends to become prohibitively expensive at higher volumes, so allowing buyers to cap costs is sensible for the crown,” she said.

“CCS has limited resources, so has to pick and choose which vendors it will strike individual deals with – it achieves the highest savings by focusing on suppliers with the largest footprint.”

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