CSC win Ministry of Defence pensions outsourcing contract

The Times reported yesterday (behind their paywall)  that US IT firm CSC has won the contract to provide pensions admin for military veterans to the UK’s Ministry of Defence. What makes this particularly interesting is that CSC are still in dispute with the UK Government over their contract for the disastrous NHS IT programme. It was reported recently that the argument has been settled, but more recently CSC stated that negotiations were still going on.

As the Times says,

“An American contractor that David Cameron threatened to ban from public contracts has been handed a £400m deal to run pensions administration for military veterans. CSC’s appointment by the Ministry of Defence has stunned union leaders and MPs because of its failure to deliver an essential IT programme for the health service”.

What is even more surprising and impressive is that CSC has beaten off competition from HP and Capita, two of the scariest of the big supplier beasts who stalk the public sector contracting jungle.

Now we heard through the grapevine that Francis Maude, the Cabinet Office Minister with overall responsibility for public procurement, without saying anything that could be construed as illegal under procurement law, had made it pretty clear to CSC that they weren’t going to win any further contracts until the NHS issue was settled. So how have CSC pulled off this very significant win in MOD?

Our informed sources suggest that the answer is pretty simple. Price.

CSC have, quite literally, “made MOD an offer they couldn’t refuse”.

Given the nature of public procurement, and the transparency of process to bidders and anyone who asks an FOI question, you can’t fiddle tender evaluation other than at the margins on major projects these days. It is just too easily exposed. So if the price advantage was significant, and assuming the rest of the tender response wasn’t too shambolic (which it wouldn’t be, I’m sure, with CSC), then it would be very hard for MOD to do anything other than award CSC the contract.

And then there is no way Maude could stop it. The Permanent Secretary of MOD and ultimately MOD Ministers are responsible, and they’re not going to get sued because Cabinet Office don’t like it, which demonstrates neatly the limits of Cabinet Office power.

Actually, there may be wider advantages assuming CSC can actually deliver here. HP and Capita already have what is arguably a worryingly high share of public sector contracts. I have huge admiration for Capita but it never fails to amaze me that they have been so successful in winning public sector outsourcing work while making very healthy profit margins. So a bit of price competition wouldn’t come amiss there, we might think...

But let’s hope that MOD manage the contract well – there is sometimes a temptation for low-ball bidders to try and make their margin back though changes, add-ons, disputes and so on. I’m sure CSC understand how critical it is for them to perform on this contract to fully restore their reputation – but equally we’ll need some effective contract management from the MOD.

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First Voice

  1. David Orr:

    CSC & failed NHS contract:

    “There was no remorse from Computer Sciences Corporation last night as it told investors about another breakdown of talks with the National Health Service.

    While hospitals across England wait for CSC to deliver patient information systems due five years ago, CSC said it was launching its health software in the US.

    Talks broke up on 31 March, when CSC and the NHS failed again to find a contractual resolution to the computing giant’s broken 2003 promise to deliver its iSoft Lorenzo software to the NHS”.

    I contract a builder to build an extension. It is late, badly built and cost more than estimated, so the relationship turns bad and I am still in dispute over charges and work quality, with a long snagging list and no-one left on site.

    I then decide to have a garage built and the same builder comes around and offers me the lowest bid out of three tenders, even though the disputed contract & long snagging list remain.

    I would have to be some sort of stupid person to give out repeat business based on their performance and my experience wouldn’t I?

    Whatever happened to joined up Government. It is all taxpayers money and a bad performance should count against the supplier regardless of the structure of the civili service.

    Meanwhile and today, the Government are reported to want to penalise “poor performing” Teachers (criteria undefined & often subjective) through payment-by-results and by docking some pay from “poor” Teachers on around £30k/annum!

    Payment-by-results for £30K and not for the £14 BILLION largely wasted on NHS IT including CSC.

    “We are all in this together”.

    NO WE ARE NOT……..

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