Logica latest IT supplier to rewrite government agreements

Simple statement from supplier masks scale of change in the public sector

Logica is the latest supplier to sign Memorandum of Understanding

IT services provider Logica has become the latest public sector supplier to sign an updated Memorandum of Understanding (MOU) which commits it to work with the government on its cost-cutting programme.

The agreement, details of which have not been disclosed, is indicative of the sea change that is under way in public sector IT procurement.

Logica, which has contracts with 55 government departments and agencies, would now focus on working with its public sector partners to find ways for technology “to help bring better services to the citizen while saving money in the process,” said Craig Boundy, chief executive of Logica’s UK group, in a statement.

But that simple statement masks the scale of change under way in the public sector.

The government met with about 19 IT suppliers in early summer, looking to create a new understanding on how technology could help meet some of the government’s cost-cutting targets as well as reinvigorate the IT procurement process, which has been heavily criticised for failing to deliver efficiency savings under the previous government.

Earlier this month, Ovum analyst Sarah Burnett wrote that the government’s lack of enthusiasm for offshoring and cloud computing limited the options for IT services companies to work with it in finding innovative ways to cut costs through the use of technology.

“[However] that still leaves a number of options open to suppliers, such as risk-reward contracts and onshore outsourcing. We could also see a wave of private finance programmes that combine IT services with business process outsourcing on large and shared services,” she said.

Whichever strategies are adopted, “there will be huge downward pressure on prices and fees for supply of goods,” she added.

For its part, Logica said that the savings agreed in the MOU had been anticipated in its most recent forecast and therefore its predictions would not be affected.

Atos Origin and Capgemini have both recently signed similar MOUs.