Capita swoops in on 2e2's Barnet Council contract

Local authority hopes to extend short-term agreement following outcome of a separate judicial review

Capita has become the latest firm to benefit from the demise of 2e2, taking over its former operations at Barnet Council under a short-term agreement.

The local authority's contract with the fallen reseller was coming to an end, but was cut short when 2e2 suddenly stopped providing its services after falling into administration at the end of January, according to the council.

The council confirmed it would pay Capita £72,000 per month for its services, compared with the £69,000 it paid 2e2, according to a report in The Times.

Capita already won a £32m-per-year contract with Barnet last year to run its back-office services, but the emergency contract, set to last for just a few months, was put in place to ensure IT services provision overlapped.

The council hopes this short-term arrangement, which is set to last for about two months, will be extended thereafter, but is awaiting the outcome of a judicial hearing brought forward by a resident.

According to the council, the resident claims that the authority did not effectively consult on the proposals, a claim it denies. Proceedings are set to begin next Tuesday and could last for months, meaning the current Capita contract can only be short term while the outcome is decided.

The council said it would not be appropriate to appoint a different provider for the short two-month period and that it hopes the outcome will be positive.

A representative for Barnet Council told CRN: "We have appointed Capita on an interim basis awaiting a larger-scale outsourcing deal subject to a judicial review."

John O'Brien, research director at analyst TechMarketView, said that without the Capita contract, Barnet Council would have been left high and dry.

"2e2's demise would have left Barnet high and dry were it not for Capita stepping to the breach. So this is clearly good news for the council," he added.

"The big question in our minds is how many more of these 2e2 contracts are out there, and most concerningly, where does it leave 2e2's very small customers, which are unlikely to attract this kind of interest from suppliers?"

Capita and 2e2's administrators FTI Consulting both declined to comment.