Barnet Council has decided to bring its IT End User and Managed Infrastructure services back in-house, effective from October 1, 2026. The decision follows the abandonment of a procurement process for a new IT contract after the preferred bidder attempted to renegotiate terms and significantly increase costs.
The Cabinet Member Decision Meeting on September 3, 2026, authorised the Executive Director for Strategy and Innovation to manage the transition of staff from Capita Business Services Ltd to the council, implementing TUPE (Transfer of Undertakings (Protection of Employment)) regulations. This move aims to give the council greater control over its technology operations, decision-making, and cyber risk management.
The procurement process for a new IT contract was halted when the preferred bidder sought to increase its bid costs post-submission by approximately £1 million, primarily related to pension and redundancy costs, as they intended to make staff redundant on day one. This move was not permitted under procurement rules. Councillor Peter Zinkin, Leader of the Conservative Group, had raised concerns about the bidder's reasons for requesting additional funds and potential risks. Council officers explained that the increased costs were primarily related to pension and redundancy expenses, which the council's own costing had already factored in, making the in-house option financially comparable. The cost of insourcing the service is in line with the existing contract cost, and while the original bid would have saved approximately £200,000, the costs were fairly similar.
Significant IT modernisation projects, including migration of networks and data centres to the cloud, have reduced the risks associated with insourcing. The council is now better positioned to manage IT services on a consumption-based model, working directly with specialist suppliers like Microsoft, rather than relying on a single managed service provider. This approach aims to take out the 'middle layer' and offers long-term benefits such as retaining ownership of technology operations and decision-making, leading to clearer accountability and a more responsive approach to managing cyber risks. However, potential drawbacks include the risks of a single point of failure within a standalone service and the risk that the service may not have ready access to wider development and innovation. To support this transition, the council is bringing in IT procurement and contract management expertise to manage these direct relationships.
A risk mitigation plan is being developed to address potential single points of failure and access to wider development and innovation. Specific measures mentioned include building buffering into costs for potential issues, having a contingency budget to parachute in technical resources if needed, and setting up agreements with IT consultancy contractors and specialist IT providers that can be called upon. This plan will be shared with the Cross-Party Member Reference Group at the earliest opportunity, with a meeting scheduled for next Tuesday. The council is also building strategic relationships with major suppliers, such as Microsoft, who are reviewing licensing and exploring innovation opportunities.
In a report presented to the meeting, it was noted that insourcing would allow the council to retain ownership of its technology operations, leading to clearer accountability and a more responsive approach to managing cyber risks. While some social value commitments from the original tender may not be fully delivered, the in-house option will enable the council to directly address workforce-related commitments and support wider sustainability and poverty reduction objectives. Consultation with staff affected by this decision will be carried out in accordance with TUPE regulations, and the council will determine its position on whether TUPE applies, with any consequent TUPE-related matters being managed throughout the transition period.
Further details on the meeting can be found in the Agenda frontsheet and the Public reports pack for the Cabinet Member Decision Meeting.
