The next PSMA may reshape Ordnance Survey 3


Just the water and me

This advert recruiting for a “Head of Public Sector Mapping & Addressing Agreements Team” reminded me that the current Public Sector Mapping Agreement (PSMA for OS geeks and followers) is coming up for renegotiation with a deadline of end 2017 (presumably the new renegotiated agreement will come into effect on 1st April 2018). This a 2 year contract at a fairly senior level:

We are looking for someone with strong commercials skills and ideally experience of contract management to join the team at a crucial time.

Over the next 12 months we will be renegotiating our large value contracts that enable the whole of the public sector to gain access to vital geo-spatial data from Ordnance Survey. The current agreements are worth over £75m per annum. 

This will be a complex and multi-layered contract negotiation. It is not just on behalf of BEIS, but on behalf of the whole community of public sector users in England and Wales including Government Departments, all Local Authorities, and the emergency services. This will also require close working Scottish Government to ensure that the agreement aligns with their arrangements with Ordnance Survey and allowing cross border use of data.

The post-holder will be required to make judgements on how far to accommodate a wide range of stakeholders’ priorities, some of which may be competing.

This could be a big deal for Ordnance Survey, their users and for the OpenData community. In 2015-16 Ordnance Survey were pretty flat in terms of revenue, full accounts are here and my summary of the last few years (re-organised to take account of changes in reporting) is here, the report says

It was a challenging year for revenue, which resulted in a small overall growth on the prior year, delivered under the Trading Fund − with OS sales to consumers being more buoyant.

Perhaps revenue has started to pick up in 2016-17 but given 5 years of flat revenues (3.4% higher in 2015-16 vs 2011-12) that seems unlikely. PSMA represents just over 50% of OS total revenues, now add in the One Scotland agreement which will be influenced by the PSMA negotiation and the impact is even greater.

OS has taken little, if any, of the pressure of austerity that other parts of the public sector have experienced since 2010. One can imagine a scenario in which BEIS seeks to reduce the cost of the PSMA by 10%, 20% or more over the next 7 year period, that would have a pretty dramatic impact on OS. A 10% reduction in the value of the PSMA would almost halve OS net profit and 20% would reduce them to breakeven, anything more would be unthinkable in terms of the damage it would do. Of course BEIS doesn’t want to break OS, the public sector needs OS data as a core data resource and would struggle to replace OS as a supplier, hence suggestions from me and others that OS should be the custodian of the data rather than the owner which would allow competition to maintain the data. It will take some outstanding negotiation on behalf of OS with their principal share holder and customer to avoid this renegotiation substantially reducing profitability. Perhaps the recent announcement of 70 redundancies at OS is the start of a process to adapt to the probability of lower income from the public sector.

As far as I know there is a separate funding arrangement for OS OpenData

OS Opendata products are funded as a result of a commercial agreement between Central Government and OS, for the licence for OS OpenData and for its on-going maintenance. The Government is committed to ensuring a sustainable business model for OS to maintain their high quality data that is recognised worldwide. (source)

It doesn’t look as if the OpenData license is included in the current negotiations but it could well be up for a renegotiation soon and that is likely to put further pressure on OS finances and activity in the OpenData arena.

What will be the impact if the renegotiation results in significant revenue reduction? I think we may see further slimming down of OS. Where senior management will prioritise economies (including the current round of redundancies) remains to be seen but I imagine that maintaining a focus on data quality and operations will mean sales and marketing to the public sector, education and outreach, research and support for innovation as part of OpenData could all come under pressure.

Life would be easier if non public sector revenues could be accelerated but this has been on the agenda for nearly a decade and the breakthrough has yet to materialise.

That illusive sale (or introduction of external investment) seems to be further away than ever, but then I did point out some of the difficulties to the previous Chancellor of the Exchequer in 2015!


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