Public Services > Devolved

Glasgow weighs up terminating its Serco ACCESS contract early

David Bicknell Published 12 June 2017

City council concerned at deteriorating relationship with supplier following what it describes as a “very public attempt to put pressure on elected members through the media”


Glasgow City Council is understood to be considering taking action to terminate its ACCESS contract with Serco nearly nine months ahead of schedule.

It follows Serco’s decision to take legal action against the council over its pursuit of a deal with CGI which is likely to be worth between £300m-£400m for a seven year contract, with the possibility of a further five year extension.

Glasgow’s incumbent vendor said that, despite the legal action, it was hopeful of maintaining cordial relations with the city council until the end of the contract.

However, the company said 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.  The ACCESS contract with Serco expires at the end of March 2018.

It is understood that because of the deteriorating relationship between the two sides, Glasgow is now prepared to end the contract with Serco early, take back its staff that are currently seconded to Serco and for the meantime, run its IT in-house.

The council will at the same time explore what action it needs to take in terms of future procurement activities. That may include the pursuit of a potential deal with CGI under the framework contract the City of Edinburgh Council (CEC) concluded with the supplier nearly two years ago.

Glasgow sources say the relationship with Serco has been deteriorating for some time. It was not helped, insiders say, by Serco “putting pressure” on elected members.  Serco’s recent reference to the new council leader Susan Aitken being “critical of the process the previous administration followed” has not gone down well with the authority.

A city council source said, “There have been serious concerns within the council, for some time now, about how Serco has been conducting itself as the end of the ACCESS joint venture has approached.

“However, the straw that broke the camel’s back was the very public attempt to put pressure on elected members through the media after Serco launched its legal challenge against the CGI deal.

“Officers are absolutely astonished that a supposed partner would think it was acceptable to go down that road.  It rings all sorts of alarm bells and, frankly, the council doesn't want anything more to do with them. They want to terminate the existing contract.”

Council officials are understood to believe that the relationship with Serco is now unlikely to improve as the contract runs down and it would be better to make a decision to end the agreement immediately rather than later this year or in 2018.

It had previously been argued that in discussing CGI’s bid, Glasgow has continually had to “tread on eggshells” to maintain a ‘good’ relationship with Serco as the contract begins to run down. Insiders say the description ‘good’ is no longer an accurate one.  

Serco told Government Computing it would be inappropriate to comment on speculation about the Glasgow contract. A spokesman for Glasgow City Council declined to comment.

For its part, Serco has queried 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 concluded its own separate deal with CGI and Glasgow is 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 wants the council to hold an open procurement process.

Last month, Liz Benison, chief executive of Serco’s UK & Europe Local and Regional Government division said, “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.”

GlobalData Public Sector research director Alan Mo said, "It's difficult to see how Serco will win from this. This will have not gone unnoticed to other local authorities, and in a market where new opportunities are scare, the cost of reputational damage will be high.

"Even if its pressure forces Glasgow to go through a new competitive tendering exercise, it's difficult to see how Serco will be considered, and such a result would actually benefit its competitors. For others, it's a case of watch this space as any reluctant move to transition services back in-house will open up opportunities for suppliers to work directly with the authority."

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