Following the OFT call for information (CFI) during August 2013, The OFT has launched a 'Market Study' to further investigate the market. The OFT considers that a number of issues were raised from that CFI that the OFT believes deserve further analysis. Most notably, the OFT has said that it is sensitive to concerns being raised that certain businesses appear to have a large share of contracts in some areas of the sector, that there are high barriers to entry and expansion (especially for smaller scale ICT businesses) and that public sector organisations face difficulties and high costs in switching suppliers.
"During the CFI, issues were also raised regarding public sector procurement practices. The market study will examine the extent to which these practices interact with the market structure and suppliers' behaviour. Existing reports and ongoing initiatives to improve public sector procurement will inform the study. The OFT aims to avoid duplicating other recent or ongoing work concerning public sector procurement.
"In particular the OFT will examine two parts of the ICT sector:
- Commercial off-the-shelf software: all types of software commercially available to different organisations, which have not been individually tailored to those organisations' needs. Examples which we may look at include management information and revenues and benefits systems that may be used by a range of public sector organisations, such as schools and local authorities.
- Outsourced IT: the contracting of private sector suppliers to build and/or manage public sector IT infrastructure and applications (software designed for non-technical users). Examples which we may look at include the building, running and maintenance of IT systems and applications for public sector organisations."
The study will focus on the degree of competition between the companies which supply these goods and services, in a sector that is vital for the efficient and cost effective delivery of all public services. It also accounts for a significant proportion of total public sector expenditure, with an estimated £13.8 billion spent in 2011-12.
It is understood that many organisations have received specific and detailed requests for information.
Click here to read the OFT press release.