UK government quietly renews public sector preferential pricing agreement with AWS

The Crown Commercial Service (CCS) has quietly renewed the preferential pricing agreement with Amazon Web Services (AWS) that allows public sector IT buyers to buy its public cloud services at discounted prices, despite anti-competitive concerns being raised about such schemes.

Known as the One Government Value Agreement (OGVA), the scheme allows public sector IT buyers to access committed spend discounts on AWS products and services, with the first iteration of the three-year Memorandum of Understanding (MoU) offering users baseline discounts of up to 18%.

This time around there are no details yet on the size of discounts on offer to the public sector, but CCS confirmed in a statement to Computer Weekly that OGVA 2.0 looks set to bring even bigger financial benefits to users of the scheme.

“CCS anticipates commercial benefits and upskilling for public sector customers in OGVA 2.0 well in excess of those delivered under OGVA over the next 3 years through this MoU,” a CCS spokesperson said.

According to data shared with Computer Weekly by public sector IT market watcher Tussell, at least 15 public sector bodies made use of the first iteration of the OGVA agreement since its commencement in October 2020, with the total value of contracts arranged under it amounting to £317.2m.

The largest of these contracts is valued at £120m and involved the provision of public cloud hosting services by AWS to the Home Office, and is set to expire on 11 December 2023.

The next iteration of the Home Office contract has already been arranged via the G-Cloud procurement framework and is set to cost £450m over three years. It is also, as confirmed by CCS, the first contract to be issued under OGVA 2.0 terms.

CCS previously told Computer Weekly it was looking to renew the OGVA agreement ahead of its expiration in October 2023.

According to CCS, the scheme works by allowing the entire public sector to be treated as one customer and, therefore, benefit from discounts on aggregated spend.

“The new agreement between AWS and CCS includes a new discount structure which makes lower prices available to all public sector bodies directly through AWS’s or via licensed solution providers, regardless of their size or size of order – meaning a local hospital can access discounts previously reserved for large government departments,” the spokesperson added.

The MoU is one of a series of pricing agreements CCS has setup in recent years with public cloud providers, with each one being announced by the government’s procurement arm with much fanfare.

This time around, public sector market watchers have noted with interest that the launch of AWS OGVA was not publicly announced in the form of a press release, while the first iteration was the subject of separate announcements by AWS and CCS, respectively.

Nicky Stewart, former head of ICT in the UK government’s Cabinet Office, told Computer Weekly the lack of publicity over the launch of OGVA 2.0 could be linked to the ongoing anti-trust investigation the UK Competition and Markets Authority (CMA) is overseeing into AWS and Microsoft.

This is because preferential pricing schemes like OGVA are one of several areas the CMA has already publicly confirmed will be covered by its investigation, as it seeks to determine if the use of committed spend discounts could be harming the competitiveness of the UK cloud market.

Computer Weekly recently reported on concerns that had been raised about whether or not schemes such as the OGVA should be subject to renewal while the CMA’s investigation plays out.

“The quiet renewal of the OGVA suggests an intention to deflect any correlation with the ongoing CMA investigation,” said Stewart.

“More transparency is needed to test government's bargaining power, its stewardship of taxpayer’s money and its plans to release the AWS stranglehold on the public sector cloud hosting market.”