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‘Formality’ puts Evry’s £278m outsourcing contract in Sweden at risk

Court of appeal overrules City of Stockholm’s decision to award IT deal to Norwegian firm

Sweden’s court of appeal has ruled that Norwegian IT company Evry should not have won the bid for the City of Stockholm’s IT outsourcing contract.

Evry was awarded the multimillion-euro deal in a public tender in 2016, but the result was quickly appealed by the second-placed IT supplier, Finland-based Tieto.

The court’s decision to overrule the result came down to a “formality”, reports Computer Sweden. The City of Stockholm’s invitation to tender states that when suppliers submit their bid as a group, they must enclose a copy of their cooperation agreement that specifies who is entitled to represent the group. Evry’s tender was submitted as a group comprising Evry AB (Evry Sweden) and Evry Norge AS, and although it included the cooperation agreement, it failed to name the representatives for the group. 

This seemingly small error could cost the IT provider an outsourcing contract estimated to be worth SEK3bn (£278m). It covers the joint IT services for Stockholm’s administrative operations, which affect about 22,000 employees. The city’s current contract with Volvo IT (acquired by HCL in 2015) will expire in December 2018.

The court of appeal’s decision upholds the same ruling by Stockholm’s Administrative Court, which first heard Tieto’s appeal in February. Evry said it is evaluating the latest ruling, and has yet to decide whether to appeal.

“We still believe the City of Stockholm made the right decision,” said Bengt-Göran Kangas, vice-president public sector at Evry. “We feel confident in the fact that we were evaluated as the absolutely best bid and the absolutely best pricing. We are looking forward with confidence knowing that we are very competitive.”

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The court of appeal’s decision requires the City of Stockholm to re-evaluate the tenders, excluding Evry’s bid. This leaves Tieto, HCL and CGI vying for the contract, and it might also push up the price. According to Computer Sweden, Evry’s bid was significantly lower than those of its competitors, SEK256m a year compared with second-placed Tieto’s SEK332m.

The City of Stockholm is currently analysing the ruling and will not comment for the time being. The city is in the midst of a large digital transformation project, which includes the IT outsourcing contract.

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