We have now heard from a variety of sources that CSC has won the Ministry of Defence’s Service Personnel & Veteran’s Agency (SPVA) Future contract. The other short-listed suppliers were incumbent HP (in partnership with Xafinity Paymaster), and Capita. We don’t yet have any details of the new deal.
HP signed the original 12-year SPVA contract to deliver personnel services to serving and veteran communities in 1997 (it was then the Armed Forces Personnel Administration Agency - AFPAA). It was due to expire in November 2009. However, the contract was renewed and the current three-year SPVA service delivery contract, which was awarded under competition, expires in November 2012. Services delivered include a variety of personnel administrative services for all three Services, the development and maintenance of associated IS applications and elements of the IS infrastructure as well as a small number of support services. The SPVA Future contract is being put in place to enable the agency to continue to deliver its services.
We have to say we were completely taken aback by this news. We had wrongly assumed that the deal would go to either HP or Capita. Recent evidence would suggest that the incumbent, HP, was in a very strong position based on its recent performance. As recently as February last year SPVA won a US Award at the 2011 ‘Human Capital Management in Defence’ (HCMD) awards for its implementation of the Joint Personnel Administration (JPA) system (see here), introduced to the agency in 2006.
The loss of the contract will be a big blow to HP; we estimate the deal was worth £100m+ a year to the company. Meanwhile, Capita recently had another high profile success within the MoD when it won the Recruiting Partnering Project (RPP) valued at £440m over ten years announced last month (see Capita signs £440m Armed forces recruitment deal); it sees the defence sector as a key growth market for its business.
CSC has some business with the UK MoD (much via its relationship with BAE Systems). It also has a couple of central government deals related to national security such as its £140m/5-year BPO deal with UKVisas (the FCO/Home Office JV), which is due to come to its natural conclusion in 2014 (see UK public sector SITS supplier landscape). But it is not a leading player in either the subsector (defence) or in this type of contract (BPO). Rather its UK public sector business has been dominated by its ill-fated NHS NPfIT LSP contract (see here and work back). It’s not surprising that it has pursued this deal in order to diversify its UK public sector business. Indeed, at the beginning of 2011 it hired a specialist aerospace & defence sales & market development executive, clearly with such opportunities in mind. The question is, just how badly did CSC want this deal? And how much did the MoD (and Cabinet Office) want to be seen to be spreading the spoils?
One positive take-away for any UK public sector IT suppliers that have had problems delivering major UK government contracts: if CSC can win a major deal like this one while still dealing with its NHS woes, there’s hope for all!