The UK government’s G-Cloud procurement framework: Everything you need to know

Why was G-Cloud created?

Lord Francis Maude, the Cabinet Office minister who oversaw the roll-out of the original G-Cloud in February 2012, hailed the concept as making it “quicker, easier, cheaper and more transparent” for public sector IT buyers to procure cloud services.

The first iteration of the framework featured 1,700 pre-approved cloud-based services from 257 suppliers, many of which were SMEs, that were made available to public sector IT buyers through an online portal called CloudStore.

The pricing and contract terms for each of these services were publicly available for public sector buyers to view and compare to ensure – regardless of who the buyer was – all CloudStore users would be charged the same when buying the same services.

What was the point of G-Cloud?

The original G-Cloud brought a level of transparency that was previously unheard of within public sector procurement, where it was not uncommon for suppliers to charge wildly different sums of money to different public sector entities for the same services.

It was also intended to help break the stranglehold that the “big tech” companies and systems integrators had on government IT, which often saw lengthy and expensive contracts awarded time and again to the same handful of companies.

The CloudStore did this by allowing SMEs to showcase their cloud wares alongside the enterprise providers, meaning these smaller players got more exposure to public sector IT buyers than previously possible, and by capping contracts at 12-months in length.

During the first couple of iterations of G-Cloud, a recurring observation from market watchers was about how few of the US cloud giants participated in the framework, despite the initiative being geared towards opening up public sector IT procurement to SMEs.

Against that backdrop, probably one of the biggest differences between the G-Cloud of then and now is that the framework’s biggest supplier – in terms of sales – is AWS.

How did the public sector respond to the launch of G-Cloud?

There were some initial qualms about whether IT buyers would embrace the framework and its associated CloudStore, given how much of a departure it was from the more traditional ways in which public sector procurements were conducted.

There were also some early-day delays that prevented suppliers from getting the accreditations they needed to sell services that would be used to process more sensitive forms of government data during the first iteration of the framework, as well as usability concerns about the platform.

These could charitably be described as teething problems, but there was a lot of pressure on G-Cloud to do well, with the government initially targeting that 50% of all new IT spend would be funnelled through the CloudStore by 2015.

Incidentally, the first iteration of the framework cost £4.93m to setup and 30 services were bought through it. According to the government’s own Digital Marketplace data, a total of £10m in IT spend was generated by the first iteration of G-Cloud, with nearly half of this spend (49.14%) going to SMEs.

How did the government support the launch of G-Cloud?

As previously mentioned, there were some concerns about low levels of buyer engagement in the early days of G-Cloud because it represented such a departure from how IT procurement was traditionally done by public sector organisations.

A May 2013 annual report by the Major Projects Authority aired concerns about the framework’s overarching ambition to “fundamentally change central government ICT buying behaviours” while working with “limited resources”.

The report also confirmed that a business case was being drafted to “release funds and headcount” to support the growth of G-Cloud. At the time, G-Cloud was being run as a standalone, cross-government initiative.

The following month, it was announced that responsibility for overseeing the running of G-Cloud would be shifting to the Government Digital Service (GDS), where it was confirmed the team looking after the initiative would be double the size.   

How did the government support it from a policy perspective?

Just over a year after G-Cloud launched, in May 2013, the UK government introduced a cloud-first mandate for central government, which stated that “when procuring new or existing services, public sector organisations should consider and fully evaluate potential cloud solutions first.”

While central governments were mandated to follow this advice, it was “strongly recommended” to the rest of the public sector that they abide by these principles when procuring new and existing IT services.

“Many government departments already use G-Cloud, but IT costs are still too high,” said Maude, at the time of the government’s cloud-first launch. “One way we can reduce them is to accelerate the adoption of cloud across the public sector to maximise its benefits.”

Has the UK government’s cloud-first policy changed over time?

In early 2017, the government issued a revision of its cloud-first strategy, which stated that “public sector organisations should default to public cloud-first”.

In June 2023, the UK government published further guidance about how public sector organisations should approach cloud purchases, which included nine additional principles that aligned with its overall public cloud-first push.

What happened to the CloudStore?

Having effectively served as the online shopfront for G-Cloud for several years, the CloudStore name and setup was retired in November 2014 and replaced with the Digital Marketplace.

Billed at the time of its launch as a “new single place for the public sector to access and buy IT commodities”, the swapping out of CloudStore for the Digital Marketplace was justified as simplifying the process of IT procurement for public sector organisations.

While the Digital Marketplace originally housed just the G-Cloud framework, it is now home to the Digital Outcome and Specialists framework, as well as the Crown Hosting Data Centres framework, which provides public sector buyers with a means of procuring colocation capacity.   

What proportion of SMEs are winning deals through the G-Cloud framework today?

The UK government supplies an online dashboard, known as the Digital Marketplace sales portal, where the amount of business put through G-Cloud can be tracked.

According to this, the percentage of SMEs securing business through G-Cloud has now dropped to below 40%, with the bulk of deals (56.8%) transacted through G-Cloud now going to larger suppliers.

The number of deals awarded through the framework to SMEs has notably decreased since US tech giants Microsoft and AWS opened their first UK datacentres in 2016.

The number of deals awarded through the framework to SMEs has notably decreased since US tech giants Microsoft and AWS opened their first UK datacentres in 2016

So much so, Amazon Web Services is now the “SME-friendly” framework’s biggest beneficiary. It remains unclear exactly how much money it has made through the agreement to date, as spending data for G-Cloud 13 appears to be missing from the Digital Marketplace portal.

As reported by Computer Weekly in January 2024, the Digital Marketplace sales portal confirms AWS has accrued around £758m in sales over the course of its decade-long participation in the framework.

However, it also known that AWS secured three contracts – totalling £894m – with three separate government departments through G-Cloud in December 2023, which dwarfs the amount of money it has made to date through the framework.

The fact that AWS dominates the framework is a major (and long-running) source of consternation for the G-Cloud supplier community, given the agreement was specifically created to help more home-grown SMEs win government IT deals.

With AWS now dominating G-Cloud, what happened to the SMEs the framework was set up to support?

Several firms that were held up as examples of the types of companies that G-Cloud was set up specifically to give a leg up to have since fallen by the wayside.

The most high-profile example is the now-defunct public sector-focused sovereign cloud infrastructure provider UKCloud, which – until 2017 – was the third biggest provider of cloud services to the public sector, based on the government’s own G-Cloud spending data.

The firm had seen the amount of spend it secured through G-Cloud rise quarter by quarter until it hit a peak of £8.1m in the first quarter of 2016/17, before falling to £552,000 in the second quarter of 2022/23.

Incidentally, AWS and Microsoft both announced plans in early 2016 to open their own UK-based datacentre regions later that year.

UKCloud’s 2017 financial report showed that the firm posted a profit of £4.4m during its G-Cloud peak, with company accounts describing an organisation with confidence that it was well placed to continue picking up public sector clients and contracts with the same zeal as it had in previous years.

But the following year, UKCloud reported a downturn in profit, revenue and customer usage, with its 2018 accounts attributing this to increased competition from the US cloud giants.

For the 2018/19 financial year, the firm posted a loss of £2.5m before falling deeper into the red to the tune of £17.9m during the 12 months to March 2020, according to its 2019/20 accounts, which also confirmed that it needed a £30m investment to continue trading.

In October 2022, the company was hit with a winding order and went out of business.

Another firm that initially did well on the back of G-Cloud was UK-based collaboration platform provider Huddle, with its technology pitched as a “Microsoft SharePoint killer”.

According to analyst estimates, the company picked up around £500,000 of the £4m of cloud deals secured through G-Cloud in 2013, but in April 2017, Computer Weekly revealed the company had until the end of the month to secure an additional $5m in funding or find a buyer if it stood any chance of meeting its financial obligations for the coming 12 months.

Several months later, details emerged that Huddle had been acquired by a San Francisco-based private equity firm called Turn/River Capital.

The company is listed as a provider on the most recent iteration of the framework, G-Cloud 13, but the Digital Marketplace data shows the amount it is making through the framework has steadily decreased from a peak of £1.7m in the 2014-2015 financial year to £448,5000 in the 2022-2023 financial year.

What’s going on with G-Cloud today?

While the length of time between each G-Cloud framework has markedly lengthened over the years, the focus on making iterative changes and improvements from one procurement round to the next does continue. Although it is fair to say the results can sometimes be mixed.

The Crown Commercial Service (CCS), which is the government procurement agency tasked with taking care of G-Cloud today, has come under fire on several fronts during the procurement cycle for G-Cloud 14.

As reported by Computer Weekly, there have been complaints about CCS’s (now aborted) plans to hike the amount of insurance participants in the framework’s first three Lots will need by £20m, and the fact that having rowed back this decision, it is standing firm on keeping the same elevated insurance requirements for the fourth and final Lot.

Concerns have also been raised about the state of some of the preparatory documents CCS has published to help suppliers prepare for the onset of G-Cloud 14, after a data protection document emerged that was riddled with typos and formatting errors.

There have been other issues with previous iterations as well, with G-Cloud 13 going live while lacking functionality that allowed suppliers to view each other’s listings, despite a founding principle of G-Cloud being how transparent it is.