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Home Office to Place Largest Outsourcing Contracts in UK Government History
Outsourced contracts worth up to £500m each have just been put out to tender by the Home Office for the government's identity card scheme. Five firms will be chosen to supply computer equipment and manage the application and issuing of ID cards. Government officials said that yesterday (9th August) marked an "important milestone" in delivering the £2bn scheme, which will see ID cards issued to UK residents in 2009.
The deals range from £50m per year, while two are expected to be worth up to £500m per year, making them among the most expensive contracts ever awarded by the UK government. The contracts will run for up to 10 years and a high level of interest is expected from companies across the world, including IT services giants, such as EDS, IBM, TCS, Accenture, HP, BT, Capgemini and Fujitsu services.
Officials would reserve the option to change the length of the contracts, with an option to terminate the contract within 1 year if the company doesn’t perform but they would nominally be for a period of up to 10 years. The first contracts are expected to be let in nine months, although firms that express their interest in bidding will be invited to a conference at the Home Office in September.
Martyn Hart, chairman of the NOA (National Outsourcing Association) commented in a press statement, "Clearly outsourcing this service makes sense to achieve the Home Office’s implementation targets. However, whether the contacts can actually be let in time for a ‘ready for service’ date of October 2009 is doubtful.
"Trying to force a timescale onto contract negotiations can be a double-edged sword. It can result in customers awarding a contract before all the negotiations, such as due diligence, are settled. This is a similar situation to the ‘forced’ award of contracts for the NHS – which has had negative repercussions for the Home Office, suppliers and ultimately the general public, who have to pay for it.
"Questions remain as to whether termination within a year is a sensible precaution. Would it be possible for a Government department, abiding by EU procurement rules, to actually procure a replacement service within a year? Perhaps it would make sense for the Home Office to consider having two suppliers for 50% of each service. In this situation, if one fails to perform the task to a suitable standard, the other can take over some of the services. At least this would create competition through the service delivery period."
