EXCL: Government agreement offers public sector up to 20% discount on AWS hosting

PublicTechnology can reveal the terms of a public sector-wide MoU, under which more than contracts worth more than £300m have already been awarded

Image by Gerd Altmann from Pixabay

The government’s memorandum of understanding with Amazon Web Services – under the terms of which contracts worth more than £300m have already been awarded – offers public-sector customers an 18% “baseline discount” on the vendor’s hosting services, PublicTechnology can reveal.

In addition to this saving, which is available to all public-sector organisations awarding three-year contracts to the cloud firm, a further price reduction of 2% is available when services are paid for upfront and in full. A partial upfront payment of at least 50% confers on the buyer an extra 1% discount.

Citing commercial sensitivity, both the Crown Commercial Service and AWS have not disclosed the terms of the MoU, known as the One Government Value Agreement. Asked earlier this month, neither would put a percentage figure on the savings available, although CCS indicated that it “anticipates commercial benefits well in excess of £50m over the next three years”.

The terms of the agreement – which include a non-disclosure clause that applies to both parties – have been revealed in unredacted documents, seen by PublicTechnology.

The MoU also stipulates that, for AWS’s professional services offerings, a discount of 15% will be applied to each eligible engagement – or ‘statement of work’, in the vendor’s parlance.

Three years
Length of the agreement

Baseline discount on AWS hosting offered by the OGVA

 Value of deals awared under OGVA terms so far across eight contracts with central government entities

Amount of recorded spend so far across the other six such arrangements

Based on standard office hours, stated day rates for AWS professional services consultants available for hire via the G-Cloud framework range from £1,048 to £2,313, depending on their seniority. Evening and Saturday work is billed at time-and-a-half, SaturdVay evenings and Sundays are at double time, while Sunday evenings and overnight shifts throughout the week cost 2.5 and three times higher than normal, respectively.

The MoU further adds that the savings it offers on hosting and consultancy cannot be added to or combined with those offered via any other AWS discount schemes, such as the vendor’s UK Government Deployment Programme, or its UK Volume Commitment Programme.

CCS and AWS both declined to comment for this story.

Cloud competition
The OGVA is one of seven similar arrangements signed with major cloud providers over the past year. These agreements are designed to offer discounts and other benefits to public sector bodies by dint of the suppliers in question, effectively, treating the market as a single customer.

In addition to the 18-20% saving over a three-year term, the OGVA contains a commitment from AWS to create a “digital skills fund”, to be used to support the delivery of cloud-computing training programmes to 6,000 civil servants.

In the six months since its introduction, a number of big-ticket deals have been signed under the terms of the agreement.

These include new 36-month contracts with the Home Office (worth £120m), the Foreign, Commonwealth and Development Office (£2m), the Department for Work and Pensions (£57m), HM Revenue and Customs (£94m), HM Land Registry (£4.5m), the Driver and Vehicle Licensing Agency (£6.74m), the Ministry of Justice (£23.9m), and Companies House (£5m).

The cumulative value of these deals is £313.14m.

Assuming an 18% discount across the board, the full-price cost of these contracts would be £381.9m – meaning cumulative savings so far of £68.7m. Although some level of discount was likely available to most public-sector customers prior to the OGVA.

But the opportunity to achieve significantly bigger savings under the new agreement is surely demonstrated by the fact that many of the recent departmental deals replaced incumbent arrangements with months or years left to run; HMRC’s deal superseded a contact signed with AWS as recently as September 2020 – two months before the MoU was put in place.

Alongside the OGVA, memoranda have also been signed with IBM, Microsoft, Oracle, Google, HPE, and UKCloud. These arrangements collectively represent the results of a CCS programme of work dubbed the One Government Cloud Strategy.

But, in contrast with the deluge of deals that has followed in the wake of the AWS agreement, the other six public sector-wide savings vehicles have been little used so far.

A search of government procurement records reveals that the only identifiable example of a contract awarded under the terms of any of the other MoUs is a one-year £1.2m deal awarded to Oracle by the NHS Business Services Authority.

Six of the seven firms that have signed MoUs also feature on the new £750m Cloud Compute framework. The procurement vehicle, which does not include HPE, is designed to offer public-sector buyers another means through which to buy capacity for high-volume or complex cloud requirements. UK players Fordway, Frontier Technology, and UKFast are also included on the framework, which is designed to sit alongside G-Cloud.

“CCS is launching Cloud Compute to complement G-Cloud, which has shorter call-off terms and a wider pool of suppliers able to offer more diverse services,” CCS said this week. “Cloud Compute focuses on flexible hyperscale compute environments, used for the development of new software applications or where large and complex data sets need to be modelled, for example. Being able to rapidly scale up or down the service offered is crucial, and unavailable through G-Cloud.”

Sam Trendall

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