Barnet Council has decided to bring its IT End User and Managed Infrastructure services back in-house after a procurement process for a new contract was abandoned. The decision, made at a Cabinet Member Decision Meeting on Thursday, September 3, 2026, follows a significant cost increase proposed by the council's preferred bidder.
The preferred bidder sought to increase its bid costs by approximately £1 million, primarily related to pension and redundancy costs, after the original bid was submitted. This attempt to significantly alter the bid after submission was not permissible under procurement rules, leading to the rejection of the bid and the subsequent abandonment of the procurement process. The original bid amount is not explicitly stated, but it was considered the most favourable costed option before the attempted renegotiation.
Councillor Peter Zinkin, Leader of the Conservative Group, had raised concerns about the bidder's request for additional funds, suggesting it indicated they perceived risks in the original contract price. Officers explained that the increased costs were primarily related to pension and redundancy costs, as the bidder intended to make staff redundant on day one. This approach was considered too risky by the council due to the potential 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 had completed its IT modernisation projects, migrating networks and data centres to the cloud. This has positioned the council to manage IT services on a consumption-based model, working directly with specialist suppliers like Microsoft. Barnet Council is building strategic relationships with major suppliers like Microsoft, who are conducting a review of the Council's licensing and exploring innovation opportunities. The council is also moving to a consumption-based model, managing a set of specialist suppliers rather than a single managed service provider.
The cost of insourcing the service is in line with the existing contract cost, and there are no direct financial implications arising from the report. The in-house option became financially equivalent to the revised bid of the supplier after the supplier proposed to make staff redundant on day one and add those redundancy costs in, amounting to an additional cost of about £1 million.
The entire workforce from the incumbent supplier, Capita Business Services Ltd, will transition to the London Borough of Barnet. The council is also bringing in IT procurement and contract management expertise, with an IT procurement specialist starting the following week. The council is also seeing that most of the staff do want to come back into the council, which mitigates the risk of knowledge loss.
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 at the earliest opportunity. A meeting with the group is scheduled for the following Tuesday.
The decision to insource the service was made to retain ownership of the council's 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.
Further details on the meeting can be found in the public reports pack.
