NEWS
07/02/2019 14:57 GMT

Revealed: The Private Companies Paid £4.2bn To Provide Public Services Last Year

The list includes a £514m contract for immigration enforcement services.

PA Wire/PA Images
The Home Office purchased the most outsourcing services from the strategic suppliers in 2018

The companies that have won more than £4.2bn in government outsourcing contracts to provide public services last year have been revealed.

New data shows how many contracts were awarded to 30 companies designed by the Cabinet Office as “strategic suppliers” to government.

These are firms whose revenue from government exceeds £100m annually or who are deemed significant suppliers of public services in their sector.

These companies – which include Capita, Atos and Interserve – are deemed so important to the delivery of essential public services that the government’s relationship with them is centrally managed.

Exclusive analysis by Tussell, a market intelligence company, of contracts won by these strategic suppliers in 2018 reveals 30 firms won more than 1,000 contracts with a total lifetime value of £4.2bn.

This was despite 2018 being a turbulent year for some of these firms – starting with the collapse of Carillion in January and continuing with mounting stock market pressure on others, Tussell says.

In 2018, two thirds of the strategic suppliers won a lower value of new contracts than in 2017.

The outsourcing and energy giant Mitie was the biggest winner, securing contracts worth £715m – £616m more than in 2017. These included a £514m Home Office contract for immigration enforcement services.

Five firms won contracts in total worth more than £200m – including Interserve which agreed a rescue deal with creditors to prevent its collapse on Tuesday through plans to issue £480m of new shares.

Interserve sells services including probation, cleaning and healthcare, and is involved in construction projects.

The other firms that won contracts totally £200m plus were Mitie, Amey, Capita and Kier Group.

The Tussell analysis shows Capita alone won 164 contracts – 16% of the total number of strategic supplier contracts in 2018. 

Capita has come under fire for performance on a number of key government contracts. Defence secretary Gavin Williamson warned during a select committee hearing in January that Capita could be stripped of its contract to recruit soldiers for the Army unless its performance improves.

The biggest loser among the strategic supplier firms was construction company Amey, which saw a drop of £1.2bn in the value of new contracts won.

The Tussell research also reveals there was a year-on-year drop of £2.4bn – or 36% – in the total lifetime value of new contracts won by the strategic suppliers in 2018.

This was driven by a steep fall in the value of contracts awarded to firms by local government.

Central government awarded 499 contracts worth £2,669m (62.9% of the total) compared to 265 contracts worth £733m for local government (17.3%).

The NHS awarded 82 contracts worth £226m (5.3%) and there were 188 other contracts totalling £618m across other areas of government (14.5%).

The Home Office was the central government department that purchased most from the strategic suppliers in 2018, largely driven by the £514m contract awarded to Mitie for immigration transport services.

DWP awarded contracts to the largest number of strategic suppliers - 11 in total.

Gus Tugendhat, founder of Tussell, said: “2018 was a turbulent year for some of the biggest suppliers to the UK government.

“In such times, the transparency of public contracts is particularly vital to monitor which firms the government is engaging with.

“Our analysis of the performance of the Cabinet Office’s strategic suppliers’ in 2018 shows a diversifying public sector marketplace, with the top suppliers seeing their market position challenged.”

Top 5 Highest Value Contract Awards To Strategic Suppliers In 2018

(Company / government department / contract value)

1. Mitie - Home Office - £514m

Provision of in-country and overseas escorting, operation and management
of short term holding facilities and holding rooms and related services

2. Amey - Highways England - £326m

Area 10 maintenance and response contract for trunk roads and motorways in Cheshire, Merseyside, Greater Manchester and Lancashire

3. Amey - Scottish Prison Service - £238m

Scottish court custody and prisoner escort service

4. Capita - Department for Education - £225m

Test Operations Services (TOpS) to manage the administration, processing and support for all primary school national curriculum assessment tests in England

5. ATOS - Department for Environment, Food & Rural Affairs - £135m

Hosting and application support for the Defra UnITy Programme, including the implementation, provision, management and operation of data centre site services

SOURCE: Tussell Strategic Suppliers 2018 report