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AWS secures £894m in cloud spend across three contracts with UK government on same day

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AWS secures £894m in cloud spend across three contracts with UK government on same day

Amazon Web Services’ hang on the UK public sector continues to tighten up, following the discovery that on a single day in late 2023 it clinched agreements worth ₤ 894m with 3 main federal government departments

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Released: 12 Jan 2024 12:45

Amazon Web Services(AWS) looks set to make more cash on 3 multi-million pound federal government agreements that went live on the exact same day in December 2023 than it has actually formerly collected through its decade-long participation with the G-Cloud procurement structure.

The general public cloud giant signed 3 36-month agreements with numerous various significant federal government departments that all went live on 1 December 2023, consisting of one valued at ₤ 350m with HM Revenue and Customs and another worth ₤ 94m with the Department for Work and Pensions (DWP).

The staying agreement is one Computer Weekly formerly reported on last month, worth ₤ 450m, that includes the arrangement of AWS public cloud hosting services to the Home Office

These 3 agreements were all organized by means of the federal government’s G-Cloud procurement structure under the regards to the 2nd version of the One Government Value Agreement (OGVA), which entitles public sector bodies to dedicated invest discount rates on AWS services.

The agreements are jointly valued at ₤ 894m, and– based upon the federal government’s own G-Cloud invest information– imply AWS will make more cash on these 3 agreements alone than it has throughout its 10-plus years of involvement in G-Cloud, which has actually seen it accumulate ₤ 757.7 m in sales.

The G-Cloud structure was presented in 2012 to make it simpler for little and medium-sized business to win public sector IT deals, as part of a plan of procedures the federal government at the time presented to avoid prolonged, high-value IT agreements being granted to the very same handful of huge tech providers.

The truth all 3 of these multi-million pound cloud agreements have actually been granted through G-Cloud will raise eyebrows, stated Owen Sayers, a senior partner at IT security consultancy Secon Solutions, offered the go-live dates for the agreements took place simply days after the federal government’s hyperscale-focused ₤ 1.35 bn Cloud Compute 2 (CC2) structure went live.

This is due to the fact that the very first model of the Cloud Compute structure was established to combat the issue of hyperscale cloud companies utilizing G-Cloud to straight award multi-million pound cloud agreements. “₤ 894m of invest in services that must naturally fall under the brand-new CC2 Framework [going] through G-Cloud is at least eyebrow-raising,” stated Sayers. “And when we then take a look at how reasonably out of proportion that single day’s invest is, based upon historical G-Cloud invest for AWS, it should set alarm bells sounding.”

HMRC, DWP and the Home Office are, according to the federal government’s G-Cloud sales information, Amazon’s leading 3 public sector clients in regards to invest, and each of these brand-new agreements seem renewals of offers they signed formerly under the OGVA.

And each of these brand-new offers is substantially bigger in worth than its predecessor. As formerly detailed by Computer Weekly, the ₤ 450m Home Office agreement was likewise almost 4 times the worth of the previous offer it had in location with AWS.

The last OGVA offer HMRC finished with AWS was valued at ₤ 94m, suggesting its invest with the general public cloud giant will be nearly quadruple what it was this time around, while the previous DWP agreement was valued at ₤ 57m, implying its invest with AWS is set to nearly double this time around.

HMRC is understood to be in the middle of a continuous migration of its tradition IT systems either to the general public cloud or the federal government’s Crown Hosting colocation center in assistance of its cloud-first position on brand-new innovation implementations.

Computer system Weekly asked an agent from HMRC for additional information about why its invest with AWS is set to increase so substantially over the next 3 years, and got the following declaration in reaction.

“Taking benefit of hyperscale cloud is assisting us change how we run, allowing us to develop and run more durable services to support consumers,” the HMRC representative stated. “It enables us to quickly upgrade services and scale up rapidly to satisfy peaks in need. Our brand-new agreement supports our cloud-first method and offers considerable discount rates for us and the taxpayer.”

Cloud invest

Computer system Weekly likewise asked DWP to provide a represent its forecasted uptick in cloud invest, however the department did not straight respond to the concern.

The department is understood to be in the procedure of moving its frontline work from its own personal datacentre to the general public cloud, and has actually set itself an objective of having 70% of its facilities running in the general public cloud before completion of the 2023/2024 fiscal year.

Nicky Stewart, previous head of ICT in the UK federal government’s Cabinet Office, forecasts the next couple of months will see much more federal government departments restore agreements with AWS that will permit them to gain from the OGVA terms.

As formerly exposed by Computer Weekly, the UK competitors guard dog– the Competition and Markets Authority (CMA)– remains in the throes of an anti-trust probe including AWS, and is likewise among the recipients of the OGVA plan.

“All of these agreements will be drawing in a discount rate based upon dedicated invest– [which] is among the ‘theories of damage’ that the CMA is presently examining,” she stated.

“It’s beyond paradoxical that the present federal government believes it’s suitable to lock itself, taxpayers and any inbound federal government into this level of dedication, especially in the context of the CMA examination,” stated Stewart.

“This is simply another sign of how deeply HM federal government is locked into AWS cloud services– it most likely had actually no alternative considered that costs is so high and discount rates should be maintained at any expense, however it is difficult to see how these agreements are going to operate in the longer-term benefits of federal government and the taxpayer. It will be intriguing to see if the CMA restores its own OGVA agreement with AWS.”

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