Capita closes Sheffield council deal until 2022

Leading public sector outsourcing player seals off another £140m to £170m over six years

Smaller resellers hoping for a chance on Sheffield City Council IT may now have to wait much longer, as incumbent Capita has extended its core services deal with the body until 2022.

Until now, Capita's seven-year contract to deliver core IT, revenue, benefit, payroll, HR and financial services was set to end in January 2016, but the customer has given the nod to a six-year extension worth £140m to £170m overall.

Andy Parker, chief executive of Capita, said the extended agreement reflects the provider's commitment to developing the relationship as well as helping transform the council's services delivery.

"Capita will work with the council to help it shape services to meet the future needs of citizens in Sheffield and we are committed to making a positive difference," Parker confirmed.

Sheffield City Council's cabinet met in November and approved the extension from January 2016 to January 2022, he revealed.

"Capita will also provide additional business change capacity where it will work in partnership with the council to define and deliver projects designed to raise revenue and save money," according to a statement from Capita.

"The partnership has identified the potential to generate significant additional savings for the council over the life of the extended contract."

Capita group is a FTSE100 company specialising in business process outsourcing (BPO) and integrated professional services, turning over nearly £4bn a year from 400 sites worldwide with a headcount of 64,000.

Local government bodies have been under increasing pressure from Westminster to save money in recent years.

Six days ago, Sheffield City Council announced it plans to slash another £63m from its budget in the next financial year, going so far as to canvass citizens' views via Twitter and YouTube on how to save money.

Ben Curran, cabinet minister for finance and resources at Sheffield City Council, said: "This is the toughest budget we've had to set, not just in the last four to five years but in recent history."

Curran said the body has a difficult task ahead of it as the cuts needed are "deep and unfair", with its government funding having been halved since 2010. "Due to the level of cuts we are facing we have to look at everything," he said.

At the same time, the council is facing an expanding population - not least of people who want school places and social care. More things would have to be done differently if it was thus to meet its targets, according to Curran.

A November statement from Sheffield City Council revealed that it believes £38m can be saved within services departments, and £10m from working more closely with the NHS.

Simply renegotiating the Capita contract saved it £15m, it said, and it also plans to lay off another 200 staff in the 2015-16 financial year on top of the 600 it made redundant during the past two years.

There could be further contract extensions and re-tenders involving other providers if they appeared to be more cost-efficient yet still met the required quality standards, it added.