The Risks Around Carillion Step-In Providers – Allan Watton Speaks

We’ve featured Allan Watton many times over the years. He and his firm, Best Practice Group, are genuinely deep experts in major outsource service contracts, including IT services but also Business Process, PFI, and Shared Services type contracts. They work in the public and private sectors, and cover procurement, but also have a real expertise, often called upon, in helping to rescue contracts that are going wrong.

Watton’s articles on their website are always worth reading, and his latest looks at an issue we’ve been aware of and were thinking of covering ourselves. No need to do that now, we can just suggest you read his piece. The issue is around what is happening to contracts that were being delivered by Carillion, who went bust earlier this year of course.

He talks about the situation in which many customers of Carillion now find themselves, needing to find another supplier to step in quickly to ensure continuation of the service. That’s fine, but it is important that buyers don’t get ripped off, to put it bluntly, by the more unscrupulous firms or sales teams who might want to take advantage of the client’s vulnerability. As he says:

“When there are ‘easy pickings’ on offer it tends to bring out those with the best capability of maximising the profit they will gain from such ‘easy pickings’. Suppliers with the capacity to step in to such situations are walking into a storm of heightened tensions, and where there is worry and stress, there are opportunities for those of a certain mindset to take advantage. Some step-in suppliers could well attempt to charge far higher prices for the service and some clients may feel backed into a corner to accept”.

There is nothing wrong with taking on a step-in supplier for a short-term contract, even if it is at a higher price. That buys time to think about the longer term.  But don’t get sucked into agreeing an un-commercial longer-term deal out of desperation, ignorance, or high-pressure sales tactics.

Watton gives some good advice, including on the issue of TUPE. I didn’t know that “as Carillion went into liquidation rather than administration, TUPE Regulation 8(7) applies and TUPE can often be relaxed or even disapplied. So, beware of suppliers claiming this cost as its reason for an increase in their fees”.

So he recommends that you don’t get railroaded into signing up for a long-term contract without doing the usual due diligence you would in normal situations. He lays out eleven points to take organisations  through the whole step-by-step process, from “socialise the organisation’s vision” to “implementation and performance management”.

As we say, well worth reading – absolutely essential for Carillion clients, and interesting for others too.

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