Thirty line up for Sheffield council outsourcing deal worth hundreds of millions

Sheffield city council has attracted interest from more than 30 suppliers for a major outsourcing contract that could be worth hundreds of millions of pounds.

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Sheffield city council has attracted interest from more than 30 suppliers for a major outsourcing contract that could be worth hundreds of millions of pounds.

The “Outstanding Sheffield” contract, which will run for up to seven years, will see the council outsource IT and communications, revenues and benefits, payroll and some financial transaction services as core elements.

The contract could also include human resources, property and facilities management, business transformation and the remaining financial transactions – services that are currently provided in-house.

Sheffield aims to use the tendering process to assess whether or not outsourcing the non-core services offers the best delivery option. Core services are currently provided by Liberata, under a £30m contract that ends next year.

The deal saw Sheffield and Liberata unveil a new integrated council tax and benefits system in February 2006.

Council leader Jan Wilson said: "We are a council that's constantly striving to improve and innovate. We want to deliver outstanding services to the people of Sheffield, and we're looking for a partner who can work alongside us to deliver that."

Sheffield council said 31 suppliers had sent representatives to a recent bidders conference. But it has not yet put a price on the contract, preferring to finalise the scope of the outsourcing during the bidding process.

The Outstanding Sheffield” programme puts the council in line with several other local authorities that have recently signed large-scale and long-term “partnership” arrangements covering swathes of council services - contracts that indicate the likely scale of the Sheffield deal.

The largest so far is that in Birmingham, where the council signed a £474m 10-year deal with Capita in April 2006 – a contract recently topped up with another £142m last month.

In March, Southampton city council also selected Capita as preferred bidder to develop its own 10-year strategic partnership – a deal expected to be worth £290m, nearly double the original value of the contract.

Southampton’s deal will cover IT, customer services, human resources, payroll, revenues and benefits, procurement and property services. But the proposed contract has sparked anger from opposition Labour councillors concerned that Capita was the only bidder when it secured its preferred status. Council workers have also taken strike action in protest.

In a joint move, Somerset county council and Taunton Deane borough council chose IBM as the preferred bidder for their £400m 10-year strategic partnership in March.

And in January, Sandwell metropolitan borough council inked a £300m strategic partnership deal with BT.

Sheffield was one of the first councils to outsource its IT and business processes in 1998, when it signed an £18m a year deal with CSL, the company that later became Liberata. But the move hit teething trouble with the council fining CSL over failures in the housing benefit service.

In an echo of those early days, Sheffield councillors called an emergency meeting with Liberata in July last year, after benefits errors that the council termed “totally unacceptable” led to 758 pensioners being wrongly billed.

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