CCS U-turns on G-Cloud 14 insurance requirements after supplier backlash

The government’s procurement agency, the Crown Commercial Service (CCS), has made a U-turn on plans for a £20m increase in the insurance cover required for suppliers in its flagship cloud computing framework.

In a document published today (7 March) to update information provided in response to questions from prospective bidders for the G-Cloud 14 framework, CCS said that supplier feedback had forced a review of the levels of liability insurance mandated for suppliers.

When CCS last month invited bids for the agreement – which covers supply of cloud services to the public sector – it said that participating suppliers must take out separate professional indemnity and public liability insurance of at least £10m each, plus a further £5m in employers’ liability insurance.

The previous version of the framework, G-Cloud 13, only required participating suppliers to have up to £5m in employers’ liability insurance.

G-Cloud is intended to open up the government cloud market to smaller supplier, but many such firms complained that the heightened requirements made participating in G-Cloud 14 too expensive, as the amount of cover required was far higher than they have previously needed.

After Computer Weekly revealed suppliers’ concerns, CCS rowed back and said it would review the insurance requirements. In response to a post on X, formerly Twitter, highlighting the Computer Weekly story, small business minister Kevin Hollinrake wrote: “Been told by the Cabinet Office that the matter is in hand and a statement will follow shortly.”

The new update from CCS says that suppliers will now only need £1m of cover for each of public liability and professional indemnity insurance, along with £5m for employers' liability.

However, the changes only apply to three of the four Lots on the framework for which suppliers can bid. Lot 4, which covers the support, security and migration services needed to carry out larger-scale transitional cloud projects, still mandates £25m insurance cover.

Suppliers have questioned the value of Lot 4, after CCS revealed that the previous G-Cloud 13 agreement only had £25,000 of spend put through Lot 4 since it went live in March 2023.

Chris Farthing, chief executive at procurement consultancy Advice Cloud, said that CCS seems to want to exclude smaller suppliers from Lot 4 by keeping the insurance high. “Is this going to be a trend for the larger frameworks?” he said in a post on LinkedIn.

CCS previously told Computer Weekly the insurance changes were necessary to bring G-Cloud into line with the contents of the Public Sector Contract, which is the standard template the organisation uses when drawing up framework agreements.

However, the Public Sector Contract does, as stated on its website, allow CCS to “customise documents for individual procurements”, which suggests the organisation could have made the insurance requirements more weighted in the favour of small to medium-sized suppliers if it wished.

When the original increase in insurance cover was announced, several suppliers anonymously expressed their concerns to Computer Weekly.

“Does CCS understand the difficulties and costs associated with professional indemnity insurance to the sum of £10m, and how this might put off or impact smaller providers?” asked one.

Another said: “The £10m limit is way above anything we have ever seen in any tenders, including a large critical national infrastructure proposal we drafted last year. It would be hugely expensive to increase our current £2.5m limit to £10m just to join the framework.”

Data from public sector contract analyst Tussell shows the average G-Cloud 13 contract was valued at £951,149 – an indication of its success in attracting smaller suppliers.