Capita take over from Serco and G4S on tagging contract

We’ve talked many times about the UK Government’s reliance on a small number of large suppliers, most recently in the context of the two recent National Audit Office reports. One looked at four major service providers (Capita, Atos, Serco and G4S), and the other into the Cabinet Office management of those and other large suppliers.

But one of the key problems faced by government was shown perfectly last week when the interim contract for prisoner tagging was awarded to Capita by the Ministry of Justice (MoJ). This is the contract previously held by Serco and G4S, now both under investigation for over-charging based on misleading data. As City AM reported:

 Capita will manage the service until the end of March 2014, when G4S’ and Serco’s contracts with the MoJ terminate. The interim contract is worth around £44m, but Capita will pay G4S and Serco to use their equipment during this period, although the value of the subcontract was not disclosed.

Seems a lot of work to award an interim contract for 3 months!  But I suspect that it may run on further, particularly if Capita don’t win the permanent contract which is to be awarded in January to one (or more I guess) of  Capita, Buddi, Astrium or Telefonica.

So anyway, when two of the giant service providers get rapped over the knuckles, who gains? Another one of the inner circle of suppliers. Now Capita has been criticised itself for work on a number of projects – such as the MOD recruitment outsourcing (probably not their fault at all) and the translation and interpreters contract with MoJ itself (a less clear picture here). They have not however been tarnished with the accusations of serious wrongdoing or even criminal behaviour that have hit G4S and Serco.

But the fact is, there are precious few firms who can take on contracts of this size, scope and sensitivity – issues inherent in may government projects. So when one of the usual suspects gets bounced, another steps in.  It’s a shame in many ways that some interesting smaller firm couldn’t step in here, but it just doesn’t happen often with such large, complex contracts, where there is a high risk factor for politicians and officials if things were to go wrong.  And of course the leading firms are very good at managing their way through the bidding process too, another barrier for market entrants.

So we can see the difficulty government will have if it really wants to reduce its dependence on these firms, introduce new suppliers and maybe even promote the use of smaller firms. No simple answers, I’m afraid.

Voices (3)

  1. Dave Orr:

    Thank goodness the Government outsourcing market isn’t operating like Energy, where a few large suppliers operate in a dysfunctional market!

    What next? Serco take over the Birmingham City Council contract (from Capita), whilst G4S take over South West One in Somerset (from IBM)?

    The “Magic Roundabout” keeps on turning……

  2. Rob Wake:

    I don’t see any press coverage of how Capita completely ballsed up its ‘vehicle tagging’ contract with DVLA! They were let go this year – 2 years into a 5 year deal to detect and clamp vehicles that had no tax disc! What no one (except those who do!) knows yet is that allegedly Capita is being gifted the TfL Congestion Charge contract in January!! Little real competition – pretty much like the tagging op. Yet the congestion charging op is the world’s biggest – shouldn’t the tax payer expect it to at least go to a provider who had undergone a rigorous competitive process?!

    1. Phoenix:

      But hasn’t Capita won the Congestion Charging competition a couple of times already? Which competitor is going to risk (throw away) quite hefty bid costs when there’s only a very remote chance of winning? You’d have to agree to pay my bid costs to make me remotely interested and what are the chances of that?

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