G-Cloud Digital Marketplace – Negatives As Well As Positives

We reported last week on the THINK Cloud Vendors event. We mentioned some of the undoubted positives around the UK government's G-Cloud Store (Digital Marketplace as it is now called), including the way it encourages smaller suppliers to put themselves forward to win government business. However, some of the G-Cloud cheerleaders would have you believe everything is perfect with the initiative. From a procurement standpoint, that certainly isn’t true.

Let’s start with the biggest issue; that ultimately the G-CloudStore (Digital Marketplace) catalogue of services is just another framework. A grown-up preferred supplier list, if you like. But the problem with frameworks is that they don't offer suppliers any commitment, and we all know you don't get the best deal without commitment.

In fact, G-Cloud has an even bigger drawback compared to many frameworks. Suppliers have to publish their pricing, so anyone who looks at the website can see it. For instance, Inofsys charge £570 per day for Quality Assurance Consulting.

So are suppliers really going to give their best prices? Of course not. My survey of a handful of vendors at the event confirmed this – I asked "do you give your best prices on G-Cloud"? "No" was the unanimous answer. Suppliers at the event were asking questions about why tenders are still coming out where organisations not using G-Cloud. Surely that is the answer - if you have a significant contract, you will get a better deal if you offer committed spend to the market.

But the other interesting point is that the Infosys page – and many others – says, “Please note that pricing depends on your requirements”. So is £570 just the starting point for negotiation? But I’m sorry, negotiation is not allowed under the EU regulations that govern the use of frameworks. How often is that rule broken, I wonder?

Another aspect of the regulations is how you select your supplier from a framework. You have two options. You can either choose the supplier who “won” on the original tender, or you should run a mini-competition between all the firms who can do the work. That could literally be hundreds of firms in the Marketplace.

I was told of one case where an organisation, trying to do things properly, spent 3 person days simply identifying from the list which firms should be considered for a particular contract (the Marketplace search facility is pretty useless). So what is happening in practice we suspect is that many buyers are simply picking whoever they like the look of and avoiding competition altogether.

The presentation last week at the event from Jessica Figueras of research firm Kable was interesting too. 79% of spend on the framework is in Lot 4, Specialist Cloud Services. The top ten suppliers account for over half the total spend, and most of the ten are tiny dynamic SMEs (joke alert) such as IBM and PA Consulting! The firm that tops the list is working on a huge NHS programme – “they should not be using this route for that work”, was the view of one industry insider I spoke to.

Indeed, much of the spend is on consulting services or even contingent labour (temporary staff), and much of that is also in all likelihood a misuse of the Marketplace. Consulting assignments in most cases should be bought on an output or deliverable basis, not just from a day-rate catalogue.

To give Sarah Hurrell of Crown Commercial Service credit, she acknowledged this problem and suggested that CCS were clamping down on this misuse. There are other procurement vehicles better suited to buying consulting in most cases, she said. That might also explain why overall spend through the Marketplace appears to have plateaud this year at around £26 million a month – some of the inappropriate stuff might be getting weeded out. As we said in the last article, CCS seem to have a healthy view that this is just one of a number of procurement routes and is not the panacea.

Finally, one practitioner pointed out to me that the basis of the Marketplace is that you accept the supplier’s terms and conditions. Now that might be fine in many cases, but for a sensitive project? Caveat Emptor, as they say.

As we said earlier, you have to balance these issues with the positives. But overall, it seems very presumptuous to be talking about this being a role model for other countries, and even how it might be used directly by public bodies in other countries. And the “savings” from the Marketplace are unaudited as far as I can see – they are self-declared by users and as such are back of an envelope at best.

But why do so many of the evangelists in the IT community love it so much? If I was a cynic, I might suggest it is because it allows them to buy what they want from (almost) whoever they want, quickly, without having to worry about inconvenient things like competition, negotiation and public procurement regulations.

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Voices (2)

  1. Ronald Duncan:

    It is good for setting a pricing benchmark and buying low value services. e.g. We have an entry level ecommerce site at £ 48 we also have a high end ecommerce site at £ 500k.

    Clearly you should buy the entry level site rather than going through an EU process, I have seen a number of EU tenders for a site we would probably charge out at sub £ 10k where we have ended up putting in significantly larger bids since we did not wish to be discounted as TOO cheap.

    The £ 500k site is appropriate if you wanted it immediately which is quite likely for a website and would miss out on business efficiency/savings/delivery if you had to delay the project for 6-12 months in order to carry out a proper EU tender process.

    The large firms using this as yet another route to charge and the largest volumes going through this route is going to happen with any framework. At least this highlights that this bad practice is occurring and who is abusing the process, and provides a chance of people seeing alternative providers assuming they do not just click on a link provided by the major supplier to their listing.

    A bigger issue with G-cloud is the lack of automation. Our £ 48 site is only available by purchasing off our website by credit card, it is even worse for a £ 2.99 domain name or a 1p hour of compute time where the full end to end procurement process needs to be automated to make these charges affordable. The digital marketplace is still not fit for purpose and is about 10 years out of date in its functionality as a directory of services rather than an end to end digital marketplace.

  2. Dave Mischief:

    The issue I’ve identified is that it appears to be relatively easy to go through the refining questions a number of times until you get to the supplier you want rather than going through the “correct”, as I would describe it, competitive process..

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