Industry news

United Utilities has awarded Fujitsu with a 10-year deal to provide data centre services.

United Utilities which provides water and sewerage services in North West England tendered for a supplier to deliver a transformational IT programme.

Services include the management and support of United Utilities complete data centre framework and the design and provision of a fibre optic network between sites.

The contract will see the IT giant provide scalable data services in order to help the utilities company as it looks to “increase its overall agility and encourage business growth, while reducing costs" according to United Utilities.

Fujitsu pledges to attract UK SMEs

Fujitsu announces creation of 192 jobs in Ireland

Security giants G4S and Serco are set to lose their electronic tagging contracts with the Ministry of Justice after an investigation into fraudulent claims surrounding overcharging.

Capita is set to take over the running of the electronic tagging contract of criminals on an interim basis according to Justice Secretary Chris Grayling, with the firm looking to run the contract permanently.

Mr Grayling said: "We have signed a contract with Capita to take over the management of the existing electronic monitoring services on an interim basis.

"This will mean that management of these services, which are now operated by G4S and Serco, will transition to Capita by the end of the current financial year.

"Under these arrangements, Capita will be using the systems and equipment of G4S and Serco, but the two companies will no longer have a direct role in delivering the service on the ground."

MoJ rejects £24 million overcharge payment from G4S

Serious Fraud Office to investigate Serco and G4S

Ongoing contracts

If you already operate a broadly comparable scheme in relation to a contract with some time left to run, you should look now at what you might be liable for at the end of the contract, and consider your options. It may be advantageous to transfer back into the public service scheme now rather than at the end of the contract.

This will reduce the number of deferred and pensioner members to be left in your scheme at the end of the contract and will also reduce the funding risks over the rest of the contract term. The potential downside is that any current deficit would be crystallised, rather than facing an uncertain future (which could be either a surplus or deficit). The preferred option will depend on your attitude to risk and the size of the contract relative to the organisation as a whole.

Contracts up for re-tender

The incumbent contractor needs to understand the obligations it faces under the terms of the existing contract to pay a particular level of transfer value at the end of the contract. Even if they win the contract again, it is likely they will have to transfer staff (and their past benefits) back to the public service scheme.

The transfer terms out of an existing broadly comparable scheme will be set by the incumbent contractor in line with the provisions of the existing contract, if applicable. The terms for securing the necessary service credits within the public service scheme will be set by the actuary to that scheme. If bidders (including the incumbent contractor) feel that there is likely to be a shortfall between the two transfer amounts, they must request a pricing adjustment within their contact bid supported by a “Reasoned Statement of Need”. In the event that a shortfall does arise in respect of members choosing to transfer their past service, the contracting authority will be required to meet the shortfall. The important point for new bidders is not to inadvertently agree to meet the costs of any shortfall in the previous contractor’s scheme.

The new guidance does allow for broadly comparable schemes to continue to be used for re-tendered contracts, where this is deemed to be the only viable course of action by the contracting authority. The guidance also allows employees to be offered compensation in lieu of continued membership of their public service scheme or membership of a broadly comparable scheme if neither option is deemed appropriate. In practice, we would expect these exceptions to be invoked in a very small proportion of cases. Where the specific details of staff contracts of employment are problematic (for example requiring benefits broadly comparable to those at the time they left the public service scheme, whereas these schemes will shortly be converting to a Career Average Revalued Earnings basis) then the awarding authority is required to ensure that reasonable steps are taken to amend contracts, or other action taken, to enable the new guidance to be followed.

Closing down schemes

Existing broadly comparable schemes will see members transferring out at the end of each contract and no new members coming in, so their employers will eventually need to think about whether (and how) to start decommissioning these schemes. For example, whether there are enough members remaining in the scheme for it to be viable, or whether it is time to consider buying out the remaining benefits with an insurance company. Understandably, there is no suggestion of being able to transfer deferred and pensioner members back into their public service scheme.

So the MoD has bombed in its attempt to outsource its procurement arm, Defence Equipment and Support. They were looking for one provider to come in and seal up the holes in the sinking ship - and one provider did.

Yes, that’s right. In the entire outsourcing industry, only one provider fancied their chances of taking on a £15bn budget, 15000 and making a better job of it than the incumbent civil servant leadership. You’d think there’d be money to be made there - and hopefully, provide Our Brave Boys with some decent, warzone-worthy equipment to do their frightfully difficult job with….but only one provider tables a bid. Can’t say I’m surprised really.

The worst part is how it cost the MoD £7.4 million to conduct this stark unpopularity contest. Now, £7.4million might not seem a lot of money when your annual spend is £15billion, but to most people it is. From families struggling to put presents under Christmas trees, to virtually every CFO of every company in the world, £7.4million is a huge amount of cash to get absolutely nothing in return for.

And you can bet that if the MoD had to spend £7.4million pulling the bid together, any interested bidders would have had to spend millions at their end.

Herein lies one of the biggest problems facing public sector procurement - Competitive Tender has priced all of the competition out of the market. Supply-side has shrunk down to a handful of major players who can afford take the hit, of millions at a time, to go through a process where they might not even get any business at the end of it. Smaller players - no matter how efficient, innovative and market-savvy they may be - are effectively barred from entering the fray.

With the average procurement running at 18 months, public procurement protocol is too long, unnecessarily complex and widely misconstrued throughout the civil service - leading to a belief that Competitive Tender is the only right and proper way to engage suppliers.

Informal pre-contract negotiations do not contravene EU Law. They are, in fact, possibly the most valuable tool at a prospective buyer’s disposal. Such talks can save the taxpayer millions of pounds over a cup of coffee. The MoD way would be to fill in hundreds of forms over the next two years, engage legions of consultants, endless meetings…and £7.4millionof taxpayer cash. It’s got to stop.

Bernard Gray, the Chief of Defence Materiel, has got an unenviable job on his hands, now that the proposed government company will become a multi-sourcing arrangement, with him in the crow’s nest. His journey is an interesting one - he spent 10 years as a journo with the Financial Times and two years as a Director of UBM, a huge publishing and events company. Now, after being involved in reviewing defence policy for the Labour government, he’s ended up in charge of military procurement. Well, it is often said that outsourcing is the accidental profession!

If he needs any help - and I’m sure he needs all the help he can get - there’s a place at an NOA Public Sector Skills Academy with his name on it.

Cabinet Office minister Francis Maude has said that despite “inconsistencies”, the UK is still a “world leader” in digital services.

The comments during a brief to the Cabinet Office come as the UK’s digital strategy becomes a year old since its 2012 launch.

While discussing the UK’s position as a digital leader, Francis Maude pointed out the comparison between the launch of the U.S. Healthcare.gov website and the UK GOV.UK domain.

Mr Maude, said: “We have got international recognition. When the Obamacare website got released to universal criticism it was interesting that quite a lot of the commentary said: why didn’t they do what the British government is doing?” He added, “They did it the old fashioned way. We have gone from crap at this stuff to being recognised as a world leader.”

While the digital strategy has seen wide change within the public sector, the program has been delayed, with the final transition of departments to the GOV.UK domain now being extended from a deadline of March 2014 to July 2014.

Government Digital Services executive director Mike Bracken said: “we should feel more proud of a year that has seen services improved, taxpayer money saved, civil service digital capability boosted and a greater variety of partners and suppliers working with government.”

Calls for shorter public sector procurement processes

Public sector procurement facing ‘crisis of confidence’

High profile IT projects will be pressured to deliver increased visibility in 2014, as businesses look to protect against IT failures according to predictions for next year.

Data analytics company ExtraHop has revealed that its top predictions for next year are that businesses will look to develop insight into IT programmes in order to protect against service disruption after publicised IT industry failures, including downtime for the U.S. Healthcare.gov website and IT systems used by RBS and NatWest.

ExtraHop predicted that businesses would move to treat their IT services with the same managed approach employed across other key areas. Businesses are also increasingly likely to employ a variety of analytics sources in order to monitor applications.

Jesse Rothstein, CEO, ExtraHop, said: “As these technologies become more sophisticated and line-of-business stakeholders demand rapid adoption, IT teams must take an operations-oriented, business-minded approach to deployment and management. In this way, IT organisations can ensure business-critical performance, availability, and security.”

IT spending to break £75 billion barrier

IBM acquires analytics firm for network monitoring

IT services supplier Fujitsu has announced the creation of 192 jobs in Northern Ireland.

The jobs will be situated in the company’s new Business Services Centre in Derry, Northern Ireland, with the new roles including business support, HR, finance and administration positions.

The job announcement comes as Fujitsu announces funding of £12 million for Northern Ireland, over the next three years. The funding will be used to create another business Services Centre at its current Timber Quay site.

Greg McDaid, client managing director of Northern Ireland at Fujitsu, said: “This Business Services Centre will now form an important part of our overall strategy to achieve business growth in this region and the choice of Timber Quay is a reflection on the highly skilled and motivated workforce as well as the excellent telecommunications infrastructure that we know exist here.”

Fujitsu pledges to attract UK SMEs

E-payment provider Worldline and fraud prevention company ReD create a strategic partnership in order to enhance Worldline’s payment and fraud protection services.

ReD under the partnership will make its real-time fraud prevention services available to Worldline’s merchant customers throughout the world – in France, Benelux, Germany, UK, Spain, India and other Asian countries.

Manish Patel, regional president EMEA, at ReD, commented: “We are very pleased to formalise our partnership with Worldline as we have been working alongside each other, supporting joint merchant customers in France, since our successful entry to the market last year.”

Xavier Brucker, Head of Multichannel Payment, from Wordline added: “We have a strong commitment to providing the most advanced and innovative solutions to our customers.

Integration of the ReD Shield solution and expertise will enhance our fraud prevention services for Merchant Services online payments globally, so we can offer our clients personalized protection adapted to specific regulations.”

HMRC tenders for supplier for fraud prevention and credit check role

A report carried out by the National Audit Office (NAO) found that the Department for Communities and Local Government’s (DCLG’s) failed to gain enough information on contract costs, such as analyzing what outcomes would be delivered, even if the DCLG’s scheme had not been in place.

The scheme involved the department paying local authorities for the number of troubled families that authorities brought to the help scheme.

The scheme seeks to help families into work and bring children back into school, in order to reduce the strain on social services.

The NAO report said that while the payment-by-results scheme had helped to increase focus on achieving outcomes: ““There is a lack of information on costs and the non-intervention rate (the level of outcomes that would have been achieved without the programmes). Without this information, there is an increased risk that the outcome payments will be set either too high or too low.”

The report added: “Whilst payment-by-results has benefits, both departments could have done more to understand its risks. Neither department is likely to achieve all the potential benefits of using payments-by-results. And performance varies significantly between the best and worst performing local authorities and the best and worst performing contractors.”

NAO warns public sector on out-dated ICT risks

A report by the Public Accounts Committee (PAC) has found that the Border Force IT systems are ‘inadequate’ and that development plans are ‘unrealistic’.

The report stated that IT systems risks collapsing and that targets for passenger checks are unlikely to be achieved due to the current state of Border Force procurement.

The report identified that the Border Forces’ use of the e-Borders programme as a at risk area, given that the e-Borders scheme has already come under criticism earlier in the year.

The PAC report called for the Border Force to underline how it would deliver new IT services required to meet targets, including the carrying out of exit checks on 80 per cent of passengers by 2015.

"There are worrying gaps in the intelligence data available to the Border Force and its IT systems are not up to the job”, said PAC chair Margaret Hodge MP said.

Immigration minister Mark Harper, said: "It will take time to transform Border Force and fix all the problems we inherited but I am confident that we are making the right changes. None of the issues raised in this report come as a surprise and they are already being actively addressed.”

Home Office awards contracts for visa applications services

UK e-borders scheme criticised