IT suppliers deal with fall out of BSF cuts

Resellers in the education sector are this morning dealing with the fallout from the Government's freeze on spending under the Building Schools for the Future (BSF) programme.

Resellers in the education sector are this morning dealing with the fall out from the Government's freeze on spending under the Building Schools for the Future (BSF) programme.

The coalition has finally confirmed 58 projects that cover 700 schools and academies will be cancelled, no longer funded by BSF.

However, 44 projects that have reached financial close will be safeguarded, alongside 14 sample schemes.

Education secretary Michael Gove said just 96 out of 3,500 secondary schools had been re-built under BSF since its launch in 2004 and pointed to the red tape - the nine meta stages - that hamstrung the roll out of programme.

"BSF has been responsible for about one third of this Department's capital spending, but throughout its life it has been characterised by massive overspends, tragic delays, botched construction projects and needless bureaucracy," said Gove.

"Given the massively flawed way in which BSF was designed and led, it failed to meet any of its targets. BSF schools cost three times what it costs to procure," he added.

A review team led by among others, Sebastian James, group operations director at DSGi will pour over every area of the Department's capital spending.

Ed Balls, Shadow Secretary for Education, said the decision to effectively axe BSF was "another attack on jobs, another assault on opportunities and a huge blow to the life chance of children in communities across our country."

As with any large scale Government initiative of this ilk, a huge eco system of construction firms and IT suppliers built up around BSF.

RM has reached financial close on 14 BSF projects, the majority of which it had reckoned on delivering in fiscal 2010/11, but it was also a preferred bidder for another 7 valued at £200m which "may be scaled back significantly".

However, the specialist has little option but to put a brave face on the developments and CEO Terry Sweeney said it would watch closely the "impact of the DfE's review".

He added: "With our strong position in the Academy market, we remain confident that RM is well-placed to adapt to changes in capital spending programmes," said CEO Terry Sweeney.

Outsourcing giant Capita had built up an IT portfolio of acquisitions that were involved with BSF including Ramesys in late March and network infrastructure provider Synetrix in December.

It also had a contract with defunct quango Becta worth over £15.7m over 15 months to manage grant marketing and administration for the Home Access programme. Capita was unavailable to comment at the time of going to press.

Yolanta Gill, chief executive at specialist education reseller European Electronique said it had been "evaluating with great concern" the list of scrapped and unaffected BSF projects and ascertained that it will not be immediately impacted.

Other BSF suppliers included Northgate Information Solutions, Redstone, Civia Group, Liverpool Direct, Dell and Sun Microsystems.

The cuts to BSF will come as a major blow to the incumbent IT suppliers but is another indication of the tighter spending climate in the Government sectors, said Alastair Edwards, principal analyst at Canalys.

"The reality is that a big proportion of public sector business is now looking vulnerable, BSF is only the thin end of the wedge for the channel," he said.

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