AWS offers Hackney Council ‘minimum 22%’ discount on cloud services through OGVA 2.0
Amazon Web Services has renewed its cloud deal with Hackney Council, with the local authority receiving a minimum discount of 22% in exchange for agreeing to grow its AWS cloud footprint by 8% each year
Hackney Council has committed to growing its annual usage of Amazon Web Services’ (AWS) cloud platform by 8% a year over the next three years to secure a “minimum 22%” discount on the public cloud giant’s services, Computer Weekly understands.
The local authority’s latest cloud hosting deal with AWS went live on 1 November 2024, after Hackney Council secured permission from the Cabinet Procurement and Insourcing Committee (CPIC) to re-sign the public cloud giant to host its core cloud services for another 36 months. The contract award notice for the deal confirms it has a maximum value of £3m.
Computer Weekly has received a copy of a 15-page document, created in July 2024, which details the reasons why the CPIC should recommend green-lighting a council proposal to award the three-year contract to AWS with a total value of £2.95m.
As detailed in the document, the council has been an AWS user since 2019, but use of its technology has accelerated at a “faster pace than was anticipated” in the wake of the ransomware attack Hackney Council suffered in October 2020.
“The cyber attack of 2020 demonstrated the importance of [moving to the cloud] as the services that had already migrated to the cloud were protected from the attack,” the document stated.
“Our investments in recovery [from the ransomware attack] have brought forward migration to the cloud… [with] almost all of the council’s systems now provided through the cloud.”
The council’s “accelerated transition to the cloud” has seen the value of its cloud contracts increase from just over £1m to approximately £2.85m, which included “one-off costs related to data recovery work” as a direct result of the 2020 cyber attack.
However, as detailed in the document, the council has been working to streamline its cloud estate by decommissioning services that are no longer being used, and ensuring the resources that remain in use are “right-sized”.
The document continued: “We have seen our cloud usage stabilise over the past year and are continuing to actively look for opportunities to cut the costs of running the estate, including reducing consumption-based usage costs and paying for known product usage in advance to secure discounts.”
On this point, the document states the council is set to benefit from the committed spend discount scheme the UK government has in place with AWS, known as the One Government Value Agreement (OGVA) 2.0, through this proposed deal.
“[This] gives the council access to discounted pricing subject to agreeing to contractual commitment value based on our spend over the previous 12-month period,” the document stated.
“This value has been calculated and the annual commitment for the contract will be £909,800 in the first year, £982,600 in the second and £1,061,100 in the third … the total contract value over the three-year term will be £2,953,500.”
Additionally, the OGVA 2.0 agreement will also allow the council to “further offset the value of the contract” with a minimum of 22% discount on AWS’s standard pricing model, which should bring the estimated “actual spend” for the three-year contract down to £2.3m.
“These costs and savings figures are based on our current projected spend and growth as required by the One Government Value Agreement stipulations,” the document stated.
“As part of the agreement we will be committed to an annual usage growth of 8% but we will in turn benefit from a minimum of 22% savings year-on-year on the standard pricing model for the resources we use.”
Computer Weekly asked Hackney Council to confirm if it was benefiting from the discount terms set out in the document now the contract has gone live, but a spokesperson for the local authority said: “The council is not in a position to confirm the terms of the agreement.”
Computer Weekly also contacted AWS to clarify if the 22% minimum discount and 8% usage commitment outlined in the document are typical of the discounts available to public sector buyers through OGVA 2.0. AWS, however, declined to comment.
The OGVA 2.0 agreement was quietly launched by AWS in December 2023, with government procurement chiefs at the Crown Commercial Service (CCS) claiming the agreement will deliver sizeable financial benefits to public sector IT buyers through the discounts it offers.
However, no details about the exact level of discount users will benefit from have previously been made public, as contract award notices for OGVA G-Cloud deals are typically heavily redacted.
On this point, details about an 18% baseline discount offered through the first iteration of the OGVA agreement only emerged after an unredacted contract award notice was published in error on the government’s Contract Finder website.
Incidentally, preferential pricing schemes like OGVA are one of several areas the UK Competition and Markets Authority is looking into as part of its ongoing antitrust investigation focused on the UK cloud infrastructure market as it seeks to determine if the use of committed spend discounts could be harming the sector’s competitiveness.
Read more about committed spend discounts in the cloud
- The UK government has renewed an agreement that will ensure public sector IT buyers can still procure AWS services at discounted prices for another three years, despite anti-competitive concerns.
- The CMA finds that IT buyers do not see the anti-competitive impact that discounts can have on the UK cloud market, despite acknowledging that preferential pricing can dictate their choice of cloud provider.
Originally published at ECT News
