Government seeks five-year £2bn shared services partner
Cabinet Office issues mega-tender looking for private enterprise partner to take majority stake in joint venture
The Cabinet Office is seeking a £2bn partner to invest heavily in being the government's go-to provider for shared services for at least five years.
A tender document issued last week reveals that the government is looking for a "connected partner" to buy a majority shareholding of the newly created Shared Services Connected Ltd (SSCL).
At the commencement of the contract, SSCL will be wholly owned by the Cabinet Office, but the winning bidder must ultimately be prepared to shell out for an equity stake of up to 75 per cent. Although the tender invitation stresses that "HM government intends to retain a substantial minority stake".
Over the course of a five-year contract, the government's partner is expected to deliver a wide range of "reliable, high-quality business services at competitive prices". Services will be used by "various government departments and other public sector bodies".
"The framework agreement involves the transfer and sale of assets, including property and technology platforms," adds the tender document. "SSCL is likely to require capital investment over a period in order to transform the legacy service and complete initial migrations before it is in a position to offer its services to new customers."
The Cabinet Office expects to ask three or four companies to bid for the deal. The successful bidder will need to demonstrate its "well-proven transition and transformation capabilities and the ability to build a growing, profitable, sustainable business". Also important is "a demonstrable commitment to employee incentivisation" through initiatives such as profit-share schemes and mutualisation.
The value of the contract is pegged at £2bn, excluding VAT. The framework will apply for five years, although "call-off contracts" awarded during that period could run for up to seven years, with options to extend these by a further 36 months.