Revenue to spend £20m to attract bidders
The Inland Revenue could spend as much as £20m to persuade suppliers to bid for its £4.5bn outsourcing contract.
The Revenue will pay for the cost of moving from its current supplier EDS if a rival supplier’s bid is accepted, and may meet the actual bid costs.
In an exclusive interview with VNU News Net, Tim Flesher, deputy chairman of the Inland Revenue said that paying the transition costs is a ‘huge step to take’.
Stuart Payne, director of outsourcing consultancy Morgan Chambers said the transition costs could be as much as £10m, depending on how closely linked the Revenue and EDS have become: ‘The more they re-engineer the more difficult it is to transition it.’
If the Revenue agrees to pay for the bidding costs for suppliers that will cost another £5m to £10m. Flesher said the Revenue had not decided whether it will pay for bidding costs but said: ‘We will look at that again. There’s no decision yet.’
He said the decision to pay transition costs had been made to guarantee a level playing field for all bidders for the huge contract. And he said: ‘Whatever we do will set a major precedent for government.’
‘The worries people have are more about whether the contract is winnable. What potential bidders said was that they were concerned that the cost of transition from one supplier to another was so great it would outweigh any bid advantage,’ he told VNU News Net.
Flesher said the Revenue was committed to the idea of a single lead supplier, rather than splitting the mega-deal up: ‘The concept of a single point of contact means a great deal to us. Our view is that [more than one lead supplier] would pose extremely difficult integration issues down the line.’
‘We are seeking joined up delivery – what would stop that is breaking [the deal] up. We would be making concrete divisions that should be broken down. Our aim is to get a single strategic partner but with a constellation of others around them.’
A spokesman for the Office of Government Commerce said it had no policy on paying transition costs in outsourcing deals: ‘In this case we support what the Inland Revenue has announced. We are looking at this on a case by case basis.’