In defence of the G-Cloud management charge increase

UKCloud's Nicky Stewart insists newly increased G-Cloud fees are still lower than on other frameworks

On Monday 13 February, the Digital Marketplace blogged about the key changes for G-Cloud 9.

The changes have been eagerly anticipated, and subject to quite a lot of speculation. Some of the changes are significant: three lots rather than four; granular service categorisation; a preference for online narrative rather than service descriptions, and so on. But the change that caused the ripples was the announcement that the G-Cloud management charge would increase to 0.75 per cent from 0.5 per cent for G-Cloud 9.

Some have seen this uplift in the management charge as an attack on SMEs, or a G-Cloud "tax"; others fail to see the need for it at all, given that G-Cloud is essentially a self-regulated market. Others still suggest that the increase in the management charge will simply encourage G-Cloud suppliers to under-report their earnings under G-Cloud (a note to suppliers tempted to go down this latter route - the Crown Commercial Service (CCS) can and does audit its suppliers, and failure to report framework related revenue is a major contractual breach!).

While no supplier is going to want to see their G-Cloud margins eroded, it is worth remembering that the management charge applies to all CCS frameworks, and even at 0.75 per cent, this is lower than many of CCS's other framework agreements. The management charge is certainly not a tax. CCS is a trading fund, and is principally funded through charges to its suppliers and buyers.

A recent NAO report was critical of CCS's failure to achieve its ambitious efficiency targets, and suggested that CCS had met some buyer resistance to using the services (there is no mandate for central government buyers to use CCS agreements). CCS announced in its 2015/16 annual report that it would stop charging buyers, and instead recover the balance from its suppliers.

We can't accuse CCS of sneaking this uplift through the back door, nor should we take it as an attack on SMEs. This uplift will be across the board, for all agreements and all suppliers, presumably as and when agreements are renewed.

As we go into G-Cloud 9 we should look at the positives: anything that increases buyer footfall within CCS agreements is in all our interests. CCS has also confirmed that the uplift will only apply to G-Cloud 9 orders, and not across all live G-Cloud orders (which it would have been perfectly within its rights to do). Furthermore, perhaps CCS will even use a little of the extra revenue to fix or replace the hopelessly outdated Management Information System Online (MISO) system through which we struggle to report our G-Cloud revenues.

No CCS framework agreement is ever going to be perfect, but some will be better than others, depending on your perspective. And it's perspective that's the challenge. CCS framework agreements have many stakeholders, and must deliver many outcomes.

Take the stakeholders. Firstly, there is a buying community whose needs are as diverse as the buyers themselves. Monolithic central government departments are very different from local authorities or even primary schools. Secondly is the CCS itself, which must deliver efficiencies, lever aggregation opportunities, enact and formulate government policies, and improve government's commercial capabilities. Finally, there are the CCS suppliers who want viable markets and frictionless routes into these markets.

That's quite a tall order to deliver, and the CCS agreements are key to delivering these outcomes. Arguably, the G-Cloud framework agreement ticks many, but not all, of the outcome boxes.

Nicky Stewart is commercial director at UKCloud