The OFT is due to publish later in October a summary of its findings, and any proposed next steps, from its call for information in relation to the supply of public sector ICT services. The OFT's request for information was issued in July and noted the crucial role ICT plays in the delivery of public Services. The OFT, in particular, seems concerned about the difficulties and risks public authorities encounter when attempting to retender or switch providers. In particular, the OFT requests information relating to the high barriers to switching suppliers, whether suppliers seek to limit the interoperability and use of competitor systems and whether public authorities become dependent on suppliers' expertise.
The OFT is considering the supply of ICT goods and services (including hardware, software and network services) to the public sector, with a particular focus on central government, local government, education, police, health and defence.
The OFT, in contrast to previous reviews which focused on procurement practice, is primarily focusing on whether there are supply-side issues which inhibit competition. In particular, the OFT appears to be concerned by the high market share of a small number of large systems integrators. The OFT's questionnaire suggests that it is particularly concerned that there may be high barriers to entry, high costs of switching suppliers and whether some suppliers actively seek to limit the interoperability and use of competitor systems with their own systems.
The OFT will, however, also consider whether elements of procurement, interacting with the market, also causes difficulty. For example, the OFT asks whether joint procurement and lack of standardised pre-qualification questionnaires may be artificially creating barriers to entry.
If the OFT receives information pointing to problems in the market it may launch a market study into specific aspect(s) of the market, initiate competition enforcement proceedings, or seek voluntary action from the industry and/or public sector buyers.
As such, in combination with recent high-profile criticism of large government IT projects such as the £12bn Universal Credit Scheme, the £16bn that the public sector spends on ICT each year seems certain to come under increasing scrutiny.
For further information, please see the OFT Website.