Barnet Council is bringing its IT End User and Managed Infrastructure services back in-house following the collapse of a new IT contract procurement process. The decision, made at a Cabinet Member Decision Meeting on Thursday, September 3, 2026, will see staff currently employed by Capita Business Services Ltd transferred to the council.

The procurement for a new IT contract was abandoned after the preferred bidder attempted to renegotiate terms and significantly increase its bid costs post-submission, which was not permissible under procurement rules. This led to the council opting to insource the services from October 1, 2026.

Councillor Peter Zinkin, Leader of the Conservative Group, had raised concerns about the reasons behind the preferred bidder's request for additional funds, suggesting it indicated perceived risks in the original contract price. Officers explained that the increased costs proposed by the bidder were largely due to pension and redundancy costs, as they intended to make staff redundant on day one. The additional cost proposed by the supplier was approximately £1 million. The council's own costing had already factored in these full costs, making the in-house option financially equivalent to the revised bid. It was clarified that making staff redundant on day one was not the council's intention and would have been too risky, particularly concerning the loss of knowledge and resources.

The report noted that many of the risks associated with insourcing, such as potential costs and the complexity of the IT infrastructure, had diminished over time. The council has completed its IT modernisation projects, migrating networks and data centres to the cloud, positioning it to manage IT services on a consumption-based model, working directly with specialist suppliers like Microsoft. The original contract would have saved the council only about £200,000, indicating that the costs were fairly similar to the in-house option.

Barnet Council will ensure access to 'wider development and innovation' by building strategic relationships with major suppliers like Microsoft, who are conducting a review of the Council's licensing and exploring innovation opportunities. Additionally, the council is bringing in IT procurement and contract management expertise to manage a consumption-based model working directly with specialist suppliers. Specifically, an IT procurement specialist is starting the following week, and there is funding in our budget that's been profiled in the papers that will give us that contract management expertise. Their role will be to manage the new operational model, which involves managing a set of specialist suppliers on a consumption-based model, rather than capital management.

To manage the transition and the new operational model, the council is bringing in IT procurement and contract management expertise. A risk mitigation plan, addressing potential single points of failure and access to wider development and innovation, is being developed and will be shared with the Cross-Party Member Reference Group. The council is also building in buffering and has a contingency budget to parachute in technical resources if needed, and has set up agreements with IT consultancy contractors and specialist IT providers that can be called upon. The decision was deemed urgent and exempt from the standard call-in procedure.

Insourcing the service is expected to allow the council to retain ownership of its technology operations and decision-making, leading to clearer accountability and a more responsive approach to managing cyber risks. The transition is scheduled to take effect from October 1, 2026.

Read the Public reports pack for more details.