Reseller to direct: Top tips for technology suppliers to the UK public sector

Moving from a reseller arrangement to a direct contractual arrangement between a technology supplier and a UK public sector buyer can have many benefits for both parties including cost savings for the buyer by not paying a reseller margin and further sales opportunities via future renewals for the supplier. The increased ability for the technology supplier to build its own relationship with the UK public sector customer and the potential for the customer to have greater control over the services it is procuring, means that it can be a very appealing option to procure services directly from a technology vendor and move away from an existing reseller arrangement.

Aside from the UK procurement law considerations for public sector buyers which technology suppliers need to be aware of (for our Bidder’s Guide to the Procurement Act 2023, please click here), there are several other key areas that technology suppliers may want to consider when switching from a reseller arrangement to a direct contract with a UK public sector buyer. These include:

1. Form of contract terms

Whilst technology suppliers often contract using their own standard terms, a direct contract with a UK public sector customer is likely to require the use of UK public sector contract terms (e.g. the Crown Commercial Services (CCS) technology frameworks such as G-Cloud, Cloud Compute or Back-Office Software (BOS) or the Model Services Contract).

Tip: Technology suppliers should fully review the relevant UK public sector contract terms as early as possible for any bid submission (and, particularly in the case of framework submissions, where there is likely to be a greater volume of transactions for the supplier to manage) to ensure that the supplier understands the basis on which it is being asked to contract and what supplier terms (if any) it is seeking to include in a UK public sector contract. Technology suppliers should consider whether a more bespoke set of supplier terms should be drafted rather than seeking to include its own standard form terms directly into the relevant contract which is likely to create drafting issues (e.g. conflicting defined terms or order of precedence issues). The greater the supplier’s desire to scale-up its volume of UK public sector deals, the greater the requirement is likely to be for a ‘ready-made’ set of supplier terms that have already been internally approved by the supplier and so can be rolled out much more quickly as part of a competitive tendering procedure or direct award.

2. Access to UK public sector data

There are a number of additional requirements that may be required as a result of dealing directly with UK public sector data such as the requirement for certain services to have Cyber Essentials Plus accreditation. This can be a key change for technology vendors who are unlikely to have such accreditations in place if UK public sector deals were previously handled via resellers.

Tip: Technology suppliers should ensure that the relevant accreditations and standards are in place well in advance of bidding and contracting for UK public sector work.

Technology suppliers are often used to imposing unilateral rights of suspension of services in the event of potential security threats. Given the critical (as well as potentially nationally significant) nature of services that may be provided by UK public sector buyers, public sector buyers want to understand what the threshold is to trigger the supplier’s suspension rights and/or what access to its data it may have during such a suspension event.

Tip: Technology suppliers should consider what amendments may be required to its rights of suspension in its standard terms to reflect the nature of UK public sector requirements.

UK public sector buyers may want their data to only be hosted in an environment with enhanced security restrictions (e.g. UK Government cloud environment rather than public cloud). The public sector buyer may impose specific restrictions in respect of who within the supplier’s business can access the buyer’s data (e.g. security cleared and UK based personnel only).

Tip: Technology suppliers should understand the requirements for access to the relevant UK public sector data to ensure that it can contractually commit to the buyer’s requirements from day 1.

3. Pricing and renewals

As scrutiny increases in respect of UK Government spend on digital procurement (for our recent article on this, please click here), UK public sector buyers are likely to be considering how best to factor renewal options (as required) into UK public sector technology contracts. Technology suppliers who have previously only dealt with the UK public sector on an indirect basis via resellers may not be as familiar with the contractual treatment of renewals when entering into a direct contract with the UK public sector buyer.

Tip: Technology suppliers should consider how renewal options should be priced (taking into account any particular pricing requirements e.g. maximum prices that can be charged in accordance with CCS framework submissions) and appropriately incorporated into the relevant contract terms. Terminology may also need to be updated to align with UK public sector contract terms (e.g. renewal to be treated as an optional extension right which the UK public sector buyer has sole discretion to exercise).

If you are a technology supplier looking for support with UK public sector technology contracts, please contact Hannah Barton, Martin Cook or another member of our Commercial & Technology team.