Will Lincolnshire choose Mouchel again?

Lincolnshire County Council are going to market for a major outsourcing contract, covering IT and other services. (For our non-UK readers, Lincolnshire is in the East Midlands of England, and Lincoln itself is quite possibly the most beautiful and interesting City - outside London -  in the country).

Lincoln. Beautiful. Historic. Visit.

As the Guardian website reports,

"Lincolnshire county council is to launch a procurement exercise later this year to investigate the provision of various support services, including ICT systems. A pre-tender document issued by the council says the estimated value of the deal is between £100m and £150m over five years".

The contract is currently held by Mouchel, who also this week announced that their financial restructuring would leave shareholders with just one penny per share. And this is a company that four years ago was valued at £537 million.

The whole story of what went wrong has not really been told – bidding too low on contracts, cock-ups with the pension fund, a bit of plain bad management perhaps? But it’s a stark warning of how quickly a healthy looking supplier can turn into a potential problem. Mouchel deliver some important contracts as well, particularly in the public sector, where they run significant back-office type contracts as well as a large amount of work connected with road maintenance.

At least they have managed to continue trading through this period, so councils and others have not had to face the sort of problems that arose, for instance, from the failure of Southern Cross, the UKs leading care home providers. That caused considerable pain for many councils, as well as stress and uncertainty for residents of the homes and their families.

But now Mouchel are starting to get into re-tendering of their existing key contracts, there’s  obviously a danger for them of a slow gradual decline if customers have lost faith in them. Have they managed to maintain operational performance through the financial restructurings? That may be the key factor. If they have, they may come through this period successfully. If they haven’t, then customers are unlikely to come back for more when they go to the market.

First Voice

  1. David Orr:

    For a “frying pan to fire” experience why not switch to IBM and South West One (SW1) down here in Somerset – an equally lovely County by the way.

    You can 5 years into a 10 year contract, save just 7% of the £200m of savings claimed and that after paying £33m more than the lower bid from BT for “transformation” to enable Somerset County Council to (I kid not) go “Beyond Excellence”.

    One Somerset MP has blogged on this:

    http://www.liddellgrainger.org.uk/local/THETRUTHABOUTIBM.html

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