The Crown Commercial Service’s (CCS) decision to increase its cloud hosting spend with Amazon Web Services (AWS) mid-contract by 89% is under scrutiny from procurement professionals.
The government’s procurement arm is overseeing the migration of workloads from the Government Digital Service’s now defunct Gov.uk platform-as-a-service (PaaS) offering to the AWS cloud.
This piece of work is covered by a £1.3m, 36-month contract CCS arranged with the public cloud giant in February 2023 through the G-Cloud 13 framework.
It has since emerged that CCS issued a Change Control Notice (CCN) that confirms the contract value increased by 89% to £2.5m in May 2024, despite deal value increases of that size not being strictly permitted under procurement rules.
“Following the migration…to AWS, there is a need to increase the contract value of the CCS Hosting contract to date for the increased costs incurred for these migrated services,” the CCN notice stated.
Under the terms of Regulation 72 of the Public Contracts Regulations 2015 (PCR15), contracts “may be modified without a new procurement procedure…provided that any increase in price does not exceed 50% of the value of the original contract”.
On this basis, CCS is now being called on to explain why this contract was not retendered or subject to further competition, once it realised the original AWS contract would not cover the total cost of the work involved.
“The contract was awarded under G-Cloud 13, and is obviously governed by PCR15. There’s no argument with that,” said one public sector IT procurement expert, who spoke to Computer Weekly on condition of anonymity.
“But the CCS has not provided a plausible explanation for the uplift in contract value following the CCN, which clearly puts it in the threshold that requires further competition.”
Public procurement adviser Martin Medforth told Computer Weekly that Regulation 72 of PCR15 does permit public sector IT buyers to increase the original value of their contracts by more than 50% – just not all in one go.
“Regulation 72 is a funny one, in that it can be applied multiple times,” he said. “So, you can apply the 50% and then, if [the buyer] realises they still have a bit of work to do, they can apply the 50% again.”
It is not clear from the CCN notice if CCS did exercise its right to increase the size of its AWS deal multiple times, or if the 89% increase was pushed through regardless.
Computer Weekly contacted CCS to query the change in deal size and what its response would be to claims the contract change is misaligned with the contents of PCR15.
In response to the request, a CCS spokesperson stated: “Crown Commercial Service follows procurement legislation, under the Public Contracts Regulations 2015, which ensures that all government contracts are awarded fairly and transparently. This contract was awarded using the G-Cloud 13 framework agreement.”
Nicky Stewart, senior adviser to the Open Cloud Coalition (OCC), which champions competition within the public cloud market, told Computer Weekly that it is important that high-profile, public sector organisations such as CCS demonstrate good practice when procuring cloud services.
“The OCC fully supports open and transparent procurement principles when it comes to cloud,” said Stewart. “This includes making legitimate opportunity available to all, including challenger cloud providers, and we hope that high-profile buying authorities such as the CCS will show leadership in this respect.”
Questioning the original deal size
The fact the deal size has required such a sizeable uplift after 15 months or so of work suggests CCS underestimated how much the migration would cost, continued Medforth. “Had I personally done this deal, I would have probably let this for ‘up to £5m’, to be on the safe side,” he said.
That is a sentiment shared by Owen Sayers, an enterprise architect with more than 20 years’ experience in delivering national policing systems, who told Computer Weekly that questions need to be asked about how CCS got its “sums so wrong” in the first instance where this contract is concerned.
“Having to almost double a £1.3m, three-year contract just over a third of the way into its lifecycle suggests that the original due diligence and understanding of the requirement was somewhat lacking,” he said.
Computer Weekly also contacted AWS for comment on this story, but the company declined.