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Southampton City Council is extending its existing IT/BP contract with Capita for a further five years taking the long-term partnership through to September 2022. Capita will continue to run the current range of services, which include IT, procurement, post room as well as HR, payroll, revenues and benefits, occupational health, property and health and safety services.
The additional five-years will be worth £124m to Capita and see it commit to a further £24m in savings over the whole contract lifetime. This will be in addition to the £30m+ that has already been saved since the partnership started in 2007. However, like all big public sector IT/BP renewals there is downward pressure on price, so Capita will receive on average £25m per year for the period between 2017 and 2022, compared to £29m per year currently.
One of the really interesting things about this renewal is how early Southampton has made this commitment, with four years still to run on the current deal. This is an endorsement of Capita’s work at the council, and also a reflection of Capita’s ability to stay ahead of the game, negotiating and planning with the client, when long-term local government IT/BP megadeals are becoming far more difficult to retain (see Sandwell terminating IT/BP contract with BT). Capita showed its determination to extend the deal, having wanted to begin talks as early as November 2010 (see here), but they actually started in 2011.
Other suppliers should take note from Capita how important it is to get in early, respond appropriately to concerns, and continue dialogue all the way, if they want to renew/extend existing local IT/BP government deals.