10/28/2010 10:51:00 AM
Govt to slash cost of Vodafone contracts
Massive cuts to the cost of Vodafone’s central Government mobile contracts are on the cards as part of a major Government efficiency drive.
The move follows Sir Philip Green’s efficiency review published last month which singled out Vodafone’s 68 central government contracts, worth almost £21m a year, as an example of how the Government was wasting taxpayers’ money by procuring multiple contracts from a single provider.
The Government’s fixed line contracts also came under scrutiny with Sir Philip calling for an urgent review of fixed line contracts recommending up to 40% cuts.
Most central Government fixed line contracts are with BT and Cable & Wireless. BT has already signed a Memorandum of Understanding (MoU) promising to deliver greater efficiencies following the review.
Vodafone is also expected to issue an MoU in the next few days outlining plans to work with the Government to reduce the cost of its mobile contracts and help find other efficiencies.
Sir Philip’s review heralds major changes to the way the Government procures its telecoms contracts, opening up new opportunities for Vodafone and other mobile operators to compete with BT and Cable & Wireless in offering converged solutions across government departments.
Vodafone said it is ‘already working closely with the coalition to reduce costs across central government through the intelligent use of mobile communications, which can help slash spending on such items as property and travel’.
The operator said the Government ‘could save billions on property costs’ – a key area highlighted by Sir Philip – by equipping civil servants with the right mobile devices and services. It added: ‘The intelligent use of mobile working could save the British taxpayer almost £5bn.’
A BT spokesman said: ‘Given the breadth and diversity of our portfolio and capability, the broader transformation and cost saving agenda in Government presents BT with significant opportunities that could offset any potential reduction in traditional telecommunications spend.’
Sir Philip Green’s findings
• The total annual spend on mobile phones in central Government is £21m.
• There are 105k devices in use and 98% of central Government spend is with one provider.
• This provider (Vodafone) has 68 contracts with Government departments and arms length bodies, typically negotiated by each department separately and not ending at the same date.
• This makes the process very inefficient and again fails to leverage scale.
• Fixed line telecoms is the best example of where the Government fails to leverage its scale.
• Departments purchase telecoms separately from various suppliers.
• An external report estimated total Government spend to be in excess of £2bn per annum. (Source: Kable, UK public sector ICT overview).
• It could be 30-40% cheaper for the Government to buy its own capacity.
• We have requested an urgent review of fixed line telecoms cost.