Westminster council has been left with a single qualifying bidder
for a £1bn IT and business services outsourcing contract.
Capita, the present incumbent supplier, deliberately submitted a
bid that broke the terms of the restricted tendering process set
out by the council.
Westminster is now left with United Utilities subsidiary Vertex as
the sole qualifying bidder for the 10-year deal.
The Westminster situation highlights the problems faced as both
customers and suppliers get more experienced in negotiating
outsourcing contracts, according to Robert Morgan, chief executive
of outsourcing advisory consultancy Morgan Chambers.
"The go-live deadline in Westminster is punishing and the terms are
commercially harsh," Morgan told CW360.com. "No supplier can afford
to accept risk beyond a certain point. Capita reached that
point."
Vertex now faces a serious commercial decision, he added. "They
will have to decide whether to take the risk and get the business
or try to moderate the terms and let Capita back in. Perhaps it is
in Westminster City Council's and the rate payers' best interest to
moderate this and ensure a competitive process."
Morgan said that the success of the contract might be in doubt
without negotiation. "Westminster is the show case for [the
government drive to] e-enable all members of society. It must
succeed politically. Early moderation will pay hugely in avoiding
headline stories later."
Peter Rogers, chief executive of Westminster council, said any
outsourcer would have to satisfy the highest level of service
provision and employment practice. The authority was determined to
get the contract right, he said.
Capita, which reports its results this week, has won significant
new contracts including a deal with the Greater London Assembly to
build the systems for Mayor Ken Livingstone's £300m road pricing
scheme.
It has also been severely criticised for its role in the
government's Individual Learning Account scheme, which was closed
down after security breaches.