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Capita has finally signed off its protracted BPS deals at Barnet Council, following closure of a judicial review and appeal process, which ruled in favour of the council’s outsourcing plans on 2 August (see the local news report here).
There are two contracts being awarded to Capita for the so-called ‘Easycouncil’ programme – a name that seems wholly ironic now. The first is for Barnet’s new support and customer service organisation (NSCSO), for which Capita was initially announced preferred bidder back in November 2012 and which was expected to start in spring 2013 (see Capita beats BT at Barnet). NSCSO covers corporate programmes, customer services, estates, finance, human resources and payroll, information systems, procurement, and revenues and benefits, and should be worth c£320m over 10 years. It will now start on 1 September 2013.
The second contract for development and regulatory services (DRS), was awarded to Capita in June, but only now signed off. It covers support services like highways management, planning and development, regeneration and environmental health and trading standards services, and will be delivered by Capita’s property and infrastructure business (Capita Symonds). The deal is worth £154m over 10 years and will begin on 1 October 2013.
Capita has committed to save Barnet £126m over the next decade via these deals, which are intended to help the council protect front line services, and of course local jobs. Capita also took on Barnet’s IT support following the demise of 2e2 (see here).
This is one of the few mega BPO deals on the cards in local government - we don’t expect many similar first generation deals going forward. Future opportunities for suppliers will be in taking market share at renewal (see Lincolnshire plans second generation BPS deal).
But with the current cutbacks in local government it is unsurprising the level of disquiet towards big outsourcing contracts like this. For authorities the concern is how flexible their suppliers will be in the face of these painful cutbacks i.e. will they be prepared to reduce their charges in the event of lower volumes of work, or will they continue to charge solely on a per-FTE (full time equivalent) basis? BT’s recent termination at Sandwell Council should be a wakeup call for suppliers to avoid complacency (see Sandwell terminating IT/BP contract with BT).