Public sector hosting provider has suspended itself from frameworks after being placed in compulsory liquidation

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The government claims that its contingency plans will ensure public services are not disrupted as a result of the insolvency of a major public sector supplier of cloud services.

Farnborough-based UKCloud – and its parent company, Virtual Infrastructure Group – were placed into compulsory liquidation this week. 

The firm was one of a handful of cloud providers that, in 2020,  each signed three-year memoranda of understanding agreements with the government that are designed to offer customers across the public sector discounts on hosting services. In addition to this arrangement, UKCloud also featured on several major frameworks, including Cloud Compute and Technology Services 3.

Records on the government’s Contracts Finder website show that, in the last two years, the firm has won deals with customers including the Ministry of Defence, Met Office, the Government Digital Service, and the Cabinet Office.

It is understood, that having been placed into receivership, UKCloud has suspended itself from all frameworks and will not compete for any new public sector business during the liquidation process.

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A spokesperson for the government said that many of the firm’s existing customers have already switched to another provider and that measures are in place to ensure that those that are yet to do so should encounter any difficulties in their delivery of citizen services.

“We regularly monitor the health of key suppliers and we have contingency plans in place to ensure the continuity of public services,” the spokesperson said. ““The vast majority of departments which used UKCloud have already moved onto alternative systems. Those who remain on UKCloud will find alternative arrangements as soon as possible, while continuing to operate. We do not expect disruption to everyday public services.”

A notice on GOV.UK reveals that Gareth Jonathan Allen is the official court-appointed liquidator for UKCloud and Virtual Infrastructure Group, with Joanne Robinson and Alan Hudson of Ernst & Young serving as special managers of the two companies during the liquidation.

“The official receiver will wind down the affairs of Virtual Infrastructure Group Limited and UKCloud Limited in an orderly manner in accordance with his statutory duties,” the notice said. “The official receiver also has a duty to investigate the cause of the companies’ insolvency and the conduct of current and former directors.”

Two dedicated email address have been created so customers and suppliers can send queries to the special managers.

Employees are advised that they will be apply to use an online process operated by the Insolvency Service to apply for redundancy payments or any other money owed.

Those that are owed money by the insolvent firms can register as an official creditor by filing out a proof-of-debt form and emailing it to the Insolvency Service.

The insolvency of the hosting provider comes shortly after it was announced that Ofcom was launching an investigation whichaims to discover whether the ongoing dominance of the cloud market’s three major players  – Google, Microsoft and Amazon Web Servicee – is “working well for consumers and businesses”. Between them, the trio account for more £4 in every £5 spent on public-cloud services in the UK, with AWS accounting for 41% of the market, ahead of Microsoft on 25% and Google on 16%.

In an interview with PublicTechnology in 2020, UKCloud chief executive Simon Hansford said that, whichever option they went for, he felt it was important for public sector customers to be offered meaningful choice.

“In most departments we believe there should be a mix of providers,” he said. “We all have different strengths and some weaknesses, too. We believe there are three major reasons why people are going to use us: choice; sovereignty; and expert advice.”

Hansford also stressed the benefit of public bodies being able to work with a cloud provider that was founded and entirely run from this country.

“We think it is not only about paying our taxes but creating jobs, wealth and capability in the UK,” he says. “We have over 20 students working in the business – undergraduates working their industrial year – and we also have 10 apprentices. We have over 350 partners, who range from the big SIs to one-man bands and small ISVs that are writing applications to support government. We use the partner programme to promote social value and promote British businesses.”