UK government adds seven-year limit to IT supplier contracts

Cabinet Office seeks to limit vendor lock-in amid value for money concerns

The UK government has launched guidelines that specify IT services contracts should be no longer than seven years, marking yet another move to shake-off lengthy contracts with major suppliers.

The guidelines come courtesy of the Cabinet Office, with its Exiting Major IT Contracts: Guidance for Departments noting that single vendor contracts used to run between five and 10 years, effectively creating vendor lock-in.

"Independent analysis has highlighted a number of concerns and issues relating to these contracts, noting that they no longer represent value for money and that their structures constrain the relevant organisations from modernising technical environments," the report said, outlining measures to move away from constricting IT structures.

"For contracts for commodity IT this will be up to 2 years and between 3-7 for service agreements depending on level of supplier investment required, size of contract and market dynamics."

Cutting down on the use of long-term IT contracts has been a goal of the government, notably the Government Digital Service (GDS), which has been championing the missive since 2011.

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Under former minister Francis Maude's leadership of the Cabinet Office, GDS aimed to cut down on large contracts with major technology providers such as Fujitsu, which has maintained a good relationship with the government and has been a enjoying lengthy contracts with government for some time. GDS preferred to develop some systems in-house, and divide up largewr contracts between smaller suppliers.

But despite these efforts, many departments and government organisations have stuck with big contracts and large suppliers due to struggling to find smaller businesses able to cater to their IT demands. GDS's influence has waned since Maude left in 2015, though has around 100 million a year to deliver a Government Transformation Strategy until 2020.

The idea behind shorter IT contracts is to provide government departments with more flexibility when procuring technology products and services as part of a long-term IT overhaul, as well as giving smaller IT companies the scope to compete with larger firms. 

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