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 failed. The decision, made at a Cabinet Member Decision Meeting on Thursday, September 3, 2026, will see the transition of staff from Capita Business Services Ltd to the council from October 1, 2026.
The procurement process was abandoned when the council's preferred bidder attempted to renegotiate terms, seeking to make all the staff redundant on day one, and to add those redundancy costs in.
This led to a significant increase in bid costs of about a million pounds,
primarily related to pension and redundancy costs. The bidder's actions were not permissible under procurement rules, leading to the rejection of the bid and the subsequent decision to insource the services.
Councillor Peter Zinkin, Leader of the Conservative Group, raised concerns about the reasons behind the bidder's request for additional funds, suggesting it indicated perceived risks in the original contract price. He also questioned how the council would mitigate risks related to single points of failure and innovation.
Officers explained that the increased costs proposed by the bidder were primarily related to pension and redundancy costs, as they intended to make staff redundant on day one. 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 cost of insourcing the service is estimated to be in line with the existing contract cost,
and the in-house option is now financially equivalent to the revised bid from the supplier. The original bid would have offered savings of only about £200,000,
indicating that the costs were fairly similar. The decision was deemed urgent and therefore exempt from the standard call-in procedure, with agreement obtained from the Chair of the Overview & Scrutiny Committee, as waiting until the next scheduled meeting of the Executive would have been prejudicial to the best interests of the Council.
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, rather than relying on a single managed service provider.
To manage the transition and the new operational model, the council is bringing in IT procurement and contract management expertise. A risk mitigation plan is being developed to address potential single points of failure and access to wider development and innovation.
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 like Microsoft, who are conducting a review of the council's licensing and exploring innovation opportunities.
Insourcing the service will 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.
See the Agenda frontsheet and Public reports pack for more details.
