Amazon Internet Providers (AWS) seems set to earn more money on three multi-million pound authorities contracts that went reside on the identical day in December 2023 than it has beforehand amassed by means of its decade-long involvement with the G-Cloud procurement framework.
The general public cloud big signed three 36-month contracts with a number of totally different main authorities departments that every one went reside on 1 December 2023, together with one valued at £350m with HM Income and Customs and one other price £94m with the Division for Work and Pensions (DWP).
The remaining contract is one Pc Weekly beforehand reported on final month, price £450m, that entails the supply of AWS public cloud internet hosting companies to the Dwelling Workplace.
These three contracts had been all organized by way of the federal government’s G-Cloud procurement framework below the phrases of the second iteration of the One Authorities Worth Settlement (OGVA), which entitles public sector our bodies to dedicated spend reductions on AWS companies.
The contracts are collectively valued at £894m, and – based mostly on the federal government’s personal G-Cloud spend knowledge – imply AWS will make more cash on these three contracts alone than it has throughout its 10-plus years of participation in G-Cloud, which has seen it accrue £757.7m in gross sales.
The G-Cloud framework was launched in 2012 to make it simpler for small and medium-sized enterprises to win public sector IT offers, as a part of a package deal of measures the federal government on the time launched to forestall prolonged, high-value IT contracts being awarded to the identical handful of huge tech suppliers.
The very fact all three of those multi-million pound cloud contracts have been awarded by means of G-Cloud will elevate eyebrows, stated Owen Sayers, a senior companion at IT safety consultancy Secon Options, given the go-live dates for the contracts occurred simply days after the federal government’s hyperscale-focused £1.35bn Cloud Compute 2 (CC2) framework went reside.
It is because the primary iteration of the Cloud Compute framework was set as much as counteract the issue of hyperscale cloud suppliers utilizing G-Cloud to immediately award multi-million pound cloud contracts. “£894m of spend on companies that ought to naturally fall below the brand new CC2 Framework [going] by means of G-Cloud is a minimum of eyebrow-raising,” stated Sayers. “And once we then take a look at how comparatively disproportionate that single day’s spend is, based mostly upon historic G-Cloud spend for AWS, it must set alarm bells ringing.”
HMRC, DWP and the Dwelling Workplace are, in line with the federal government’s G-Cloud gross sales knowledge, Amazon’s high three public sector clients by way of spend, and every of those new contracts look like renewals of offers they signed beforehand below the OGVA.
And every of those new offers is considerably bigger in worth than its predecessor. As beforehand detailed by Pc Weekly, the £450m Dwelling Workplace contract was additionally practically 4 instances the worth of the earlier deal it had in place with AWS.
The final OGVA deal HMRC did with AWS was valued at £94m, that means its spend with the general public cloud big will likely be nearly quadruple what it was this time round, whereas the earlier DWP contract was valued at £57m, that means its spend with AWS is ready to nearly double this time round.
HMRC is thought to be within the midst of an ongoing migration of its legacy IT programs both to the general public cloud or the federal government’s Crown Internet hosting colocation facility in assist of its cloud-first stance on new know-how deployments.
Pc Weekly requested a consultant from HMRC for additional particulars about why its spend with AWS is ready to rise so considerably over the subsequent three years, and acquired the next assertion in response.
“Benefiting from hyperscale cloud helps us remodel how we function, enabling us to construct and run extra resilient companies to assist clients,” the HMRC spokesperson stated. “It permits us to simply replace companies and scale up shortly to fulfill peaks in demand. Our new contract helps our cloud-first method and gives vital reductions for us and the taxpayer.”
Cloud spend
Pc Weekly additionally requested DWP to offer an account for its projected uptick in cloud spend, however the division didn’t immediately reply the query.
The division is thought to be within the technique of shifting its frontline workloads from its personal personal datacentre to the general public cloud, and has set itself a aim of getting 70% of its infrastructure operating within the public cloud earlier than the top of the 2023/2024 monetary yr.
Nicky Stewart, former head of ICT within the UK authorities’s Cupboard Workplace, predicts the subsequent few months will see many extra authorities departments renew contracts with AWS that can enable them to learn from the OGVA phrases.
As beforehand revealed by Pc Weekly, the UK competitors watchdog – the Competitors and Markets Authority (CMA) – is within the throes of an anti-trust probe involving AWS, and can also be one of many beneficiaries of the OGVA scheme.
“All of those contracts will likely be attracting a reduction based mostly on dedicated spend – [which] is among the ‘theories of hurt’ that the CMA is at the moment investigating,” she stated.
“It’s past ironic that the present authorities thinks it’s acceptable to lock itself, taxpayers and any incoming authorities into this stage of dedication, notably within the context of the CMA investigation,” stated Stewart.
“That is simply one other indication of how deeply HM authorities is locked into AWS cloud companies – it in all probability had no choice on condition that spending is so excessive and reductions should be preserved at any value, however it’s onerous to see how these contracts are going to work within the longer-term greatest pursuits of presidency and the taxpayer. However it is going to be attention-grabbing to see if the CMA renews its personal OGVA contract with AWS.”