The Ministry of Justice (MoJ) recently let what looks to be a major procurement for business process services (BPS) covering compliance and enforcement activities at HM Courts and Tribunal Service (HMCTS), which could be worth up to £675m. MoJ is looking to work with a single supplier, or a consortium, to run the show for five years, with an option to extend up to nine years.
The OJEU issued at the end of last month (see here), shows HMCTS looking for a supplier for contact centre services, obtaining and processing payments, accounting and financial management, pro-active debt management and tracing, identity verification, issuing and managing warrants, and managing the process for court appeals.
Dealing with fines has become a time consuming and costly part of HMCTS’ business - today around 66% of all offenders are now issued with a fine of some sort. Last March, there were some £593m in outstanding fines dating back several years, and this could be c£2bn today. A freedom of information request also shows that a similar number are were also written off (see here).
This procurement detail looks like the service provider will need to use its existing capability and resources to support delivery. HMCTS said the supplier must have sufficient capital funding to deliver any assets as part of their bid, and these would not appear on the MoJ's balance sheet. This could mean using private finance, with much of the risk being borne by the supplier. We wouldn’t be surprised to see another ‘payment by results’ (PBR) contract in which the supplier only gets paid if it meets agreed targets - in this case it could be % of cost savings versus today and significantly improved collection of fines. PBR is one of our key predictions for the UK BPS market in 2012 (see here)
We don't think this deal will be for everybody. It will require significant existing BPS resources in these capability areas identified, and a supplier prepared to bear the level of risk and upfront cost involved. This could whittle the list of contenders down considerably. As a complex, first generation vertical Government BPS deal, this looks right up Capita’s street. Rival Serco, which has been scaling up considerably in these areas via acquisition, and which operates a PBR deal at the DWP (see Work Programme highlights payment by results challenges) will also likely show interest.