Business > Procurement

Serco wants Glasgow to run open IT services contest

David Bicknell Published 26 May 2017

Two sides at loggerheads over Glasgow’s pursuit of an IT services contract with CGI to replace Serco deal expiring next March; Serco argues Glasgow cannot use Edinburgh framework to conclude CGI deal


Serco wants Glasgow City Council to run an open procurement competition to find a new supplier for IT and digital services when Serco’s contract with the council runs out at the end of next March.

Serco yesterday said it has taken legal action against the council over the council’s pursuit of a deal with CGI which is likely to be worth between £300m-£400m over a twelve year term, comprising a seven year contract and five year extension.

Serco has taken expert legal advice and is understood to be pushing for a legal hearing to take place as soon as possible.

Glasgow’s incumbent vendor, despite the legal action, is hopeful of maintaining cordial relations with Glasgow until the end of the contract. However it felt compelled to take legal action because its staff were being asked to do due diligence on a prospective CGI contact that it believed would be an illegal direct award.  

Liz Benison, chief executive of Serco’s UK & Europe Local and Regional Government division, said yesterday, “We have consistently said that we believe a decision to directly award the contract to CGI without an open competitive process would be illegal under Scottish law. Despite six months of attempted engagement with Council officers, we were not given any convincing legal justification for the direct award, leaving us with no choice but to legally challenge the decision.

“By refusing to hold an open and fair competition, the previous administration failed to ensure they were getting the best IT service and the best value for money for Glasgow’s taxpayers. We would urge the new administration to reconsider the decision and hold a competitive process in which Glasgow residents can have confidence.”

In response to Serco's action, a council spokesman said, “We have received a challenge to the contract from Serco, which is being assessed. Challenges to procurement are not uncommon.”

The legal action, if it succeeds, could have serious implications for the validity of the current City of Edinburgh Council (CEC) agreement, under which the prospective Glasgow-CGI deal is being negotiated, for other authorities to use.

CGI concluded the seven-year £186m transformational outsourced ICT services deal with CEC in August 2015. The contract, a framework deal, allowed other local authorities in Scotland to follow suit with similar contracts. Scottish Borders Council indeed concluded its own separate deal with CGI and Glasgow was set to follow suit.

Serco, however, believes that the decision to award the contract to CGI is an illegal direct award, and breaches the Council’s duties under the Public Contracts (Scotland) Regulations 2015.

It is understood to contend, under expert legal advice, that the CEC contract under which GCC intend to contract with CGI is not a framework agreement, and was never bid as such by participants in the procurement process. Serco believes CEC procured a contract designed to meet its own specific requirements for IT services in Edinburgh.

Serco believes that while the original OJEU Notice and Contract Award Notice referenced other contracting authorities who may wish to use the services procured by CEC, it argues none of these contracting authorities actually took up this offer as part of the procurement exercise and the procurement procedure was closed between CEC and CGI only. It believes the original procurement is not therefore open to other contracting authorities such as GCC to use. (However, Scottish Borders did use the framework to conclude its own deal with CGI.)

Serco also believes that Glasgow’s requirements for IT services are “fundamentally different” to those of CEC and it argues that the contract is of much greater scale. A recent official notice from the council quoted an £800m figure, but it is understood that the actual range of the CGI contract remains at between £300m and £400m.

The problem for Glasgow is that there is insufficient time for it to run an open procurement competition before the Serco contract runs out in March. Typically such contests take well over a year to run.



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