AWS secures £894m in cloud spend throughout three contracts with UK authorities on identical day

Amazon Internet Companies’ maintain on the UK public sector continues to tighten, following the revelation that on a single day in late 2023 it clinched contracts price £894m with three central authorities departments

Caroline Donnelly,
Senior Editor, UK

Printed: 12 Jan 2024 12:45

Amazon Web Services (AWS) looks set to make more money on three multi-million pound authorities contracts that went stay 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 stay 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 involves the provision of AWS public cloud hosting services to the Home Office.

These three contracts have been all organized through the federal government’s G-Cloud procurement framework underneath the phrases of the second iteration of the One Government Value Agreement (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 earn more money 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 bundle of measures the federal government on the time launched to forestall prolonged, high-value IT contracts being awarded to the identical handful of massive 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, mentioned Owen Sayers, a senior accomplice 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 stay.

It’s 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 straight award multi-million pound cloud contracts. “£894m of spend on companies that ought to naturally fall underneath the brand new CC2 Framework [going] by means of G-Cloud is at the very least eyebrow-raising,” mentioned Sayers. “And after 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 Residence Workplace are, in response to the federal government’s G-Cloud gross sales knowledge, Amazon’s prime three public sector clients when it comes to spend, and every of those new contracts look like renewals of offers they signed beforehand underneath the OGVA.

And every of those new offers is considerably bigger in worth than its predecessor. As beforehand detailed by Pc Weekly, the £450m Residence 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, which means its spend with the general public cloud big might be virtually quadruple what it was this time round, whereas the earlier DWP contract was valued at £57m, which means its spend with AWS is about to virtually double this time round.

HMRC is understood to be within the midst of an ongoing migration of its legacy IT methods both to the general public cloud or the federal government’s Crown Internet hosting colocation facility in help of its cloud-first stance on new expertise deployments.

Pc Weekly requested a consultant from HMRC for additional particulars about why its spend with AWS is about to rise so considerably over the subsequent three years, and acquired the next assertion in response.

“Profiting from hyperscale cloud helps us remodel how we function, enabling us to construct and run extra resilient companies to help clients,” the HMRC spokesperson mentioned. “It permits us to simply replace companies and scale up shortly to satisfy peaks in demand. Our new contract helps our cloud-first method and gives important reductions for us and the taxpayer.”

Cloud spend

Pc Weekly additionally requested DWP to present an account for its projected uptick in cloud spend, however the division didn’t straight reply the query.

The division is understood 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 purpose of getting 70% of its infrastructure working within the public cloud earlier than the tip of the 2023/2024 monetary 12 months.

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 permit them to profit 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 be one of many beneficiaries of the OGVA scheme.

“All of those contracts might be attracting a reduction based mostly on dedicated spend – [which] is among the ‘theories of hurt’ that the CMA is at present investigating,” she mentioned.

“It’s past ironic that the present authorities thinks it’s applicable to lock itself, taxpayers and any incoming authorities into this stage of dedication, significantly within the context of the CMA investigation,” mentioned Stewart.

“That is simply one other indication of how deeply HM authorities is locked into AWS cloud companies – it in all probability had no possibility on condition that spending is so excessive and reductions have to be preserved at any price, however it’s onerous to see how these contracts are going to work within the longer-term finest pursuits of presidency and the taxpayer. However will probably be attention-grabbing to see if the CMA renews its personal OGVA contract with AWS.”