NHS Education for Scotland defends ‘decade-long’ public cloud deal with AWS

by Emma

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An NHS Scotland training body has hit back at accusations that a decade-long cloud deal signed with Amazon Web Services (AWS) over 12 months ago is anti-innovation, anti-competitive and puts the organisation at high-risk of lock-in.

The £15m contract was awarded to AWS by NHS Education for Scotland (NES) in April 2020, but the contract award notice was only made public in early May 2021. Since then the details of the deal have been the subject of much critique within the government IT supplier community, Computer Weekly has learned.

Several members of the IT supplier community expressed their misgivings about the deal, on condition of anonymity, to Computer Weekly with much of the criticism they shared focusing on the “extraordinary” length of the contract.

As stated in the original tender, the contract is set to run for 120 months and gives NES the option to extend it by a further two or five years should it need to.

According to the complainants Computer Weekly has spoken to, the contracts terms are “anti-competitive” and “completely out of step” with how public sector cloud contracts are expected to be conducted.

“We now have a monopoly that has locked in a public sector organisation for 10 years and locked out the competition for 10 years, including the UK tech market and SMEs,” one supplier told Computer Weekly.  

The UK government’s various cloud procurement frameworks limit the length of contracts to a maximum of five years on the basis that shorter contract terms make it easier for public sector buyers to upgrade their technology stacks as needed, while fostering a competitive environment for suppliers – particularly SMEs – to operate in.

Against this context, Rob Anderson, principal analyst for central government at research firm GlobalData, said he understands why the deal length is raising eyebrows.

“Ten years with a possible five-year extension is ridiculously long for a cloud contract because the [technology] environment is changing so quickly,” he told Computer Weekly.

“When the UK government’s G-Cloud procurement framework was set up in 2012, the maximum contract term was two years. And even though the tech has matured, the contract terms now are still now only three to five years on the Cloud Compute Framework the government announced recently.”  

In a statement to Computer Weekly, an NES spokesperson played down the contract’s length. “It is not necessarily for 10 years: there are break points during that period if required.”

According to sources who participated in the procurement process, the contract with AWS initially runs for five years, but there is an option to extend it by a further five years without needing to re-tender the deal.  

Even with these terms in place, the nature of what NES will be using AWS for means it is liable to find it difficult to migrate to a different hosting provider should it need to later down the line, claimed one supplier, which could stifle the organisation’s ability to innovate in future.

“Any savings made by changing the hosting provider, for example, would be massively negated by the costs of rewriting the applications [hosted on top of it]. So are the NES break clauses meaningful? I think not,” they added.

In response to claims the deal is anti-innovation, the NES spokesperson said the platform does allow for other suppliers to build functionality on top of the underlying AWS infrastructure, which will foster innovation and provide a way in for other parties later down the line.

“The potential for innovation is less about which cloud provider is being used, and more about what can be built on top of the platform. We look forward to exploring this with other suppliers in the future,” the spokesperson added.

Plotting out the route to procurement

AWS is known to have commenced work on the project in April 2020, but suppliers have queried why it took until 12 May 2021 for Amazon to be publicly named as NES’s chosen cloud provider.

“It is normal practice for there to be a delay between awarding a contract and publishing the details, while we work out the details of how the contract and services will be structured,” the NES statement added. “The increased time on this occasion was a feature of the unprecedented pressure that all NHS services have been under.”

The NES also favoured a “competitive procedure with negotiation” procurement mechanism for this contract, which has also been called into question by suppliers given that it is considered to be an “onerous and complex” method of procuring services that can prove off-putting to SMEs.

“It is a procedure that is usually reserved for outsourcing-style arrangements,” another supplier added.

The contract award notice confirms that two unnamed suppliers were also in the running for the contract alongside AWS, but none of the bids the tender garnered were submitted by SMEs.

According to the Scottish government’s Procurement Journey website, the competitive procedure with negotiation procurement mechanism is designed so public sector organisations can clarify the submissions they have received with the bidders once they have received a “fully-formed initial tender”.

“You should use this procedure if you are unable to define how to meet your needs technically and/or you cannot specify the legal or financial requirements of your contract,” the website added, before citing that it can be used for “complex purchases” involving “major information and communication technology tools”.

In its statement to Computer Weekly, the NES spokesperson said the use of this procurement mechanism is commonplace across NHS Scotland.

“This is a common approach across NHS Scotland, following Scottish government guidelines, aimed at seeking the right provider at best value for money,” the statement added.

“This contract was awarded in April 2020 following public contract guidelines and seeking best value for taxpayers’ money.”

AWS said it has no comment to make at this time.

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