Capita and IBM make £500m Birmingham shortlist

Birmingham City Council has shortlisted two consortia led by Capita and IBM as the preferred bidders for a strategic 15-year IT outsourcing partnership worth more than £500m.

Birmingham is looking to overhaul its IT systems and practices to underpin the council's stated strategic priority of "flourishing neighbourhoods and improved services".

The council rejected two other bids from EDS and SCC after evaluating four proposals submitted in response to an invite to tender last year.

The outsourcing will be carried out incrementally with the first phase to include IT services and the council's call centre, which are currently delivered by both in-house and external third-party suppliers.

Birmingham's IT staff have been told that the council may consider employment arrangements which do not include the transfer of staff from the council to the private sector. This is an issue that has led to long-running industrial relations disputes and strike action at Bradford and Swansea councils.

The business transformation plans and future service delivery methods will be developed between the council, the winning bidder and other local government partners, and the outsourcing deal will include the handover of existing third-party agreements the council has with ITNet (now taken over by Serco) and SCC.

Stephen Hughes, strategic director of resources at Birmingham City Council, said in a statement: "This was a tough decision. The council received four excellent proposals and after an intensive evaluation process it was felt that the proposals from Capita and IBM offered the best fit to the council's needs. There is still a long way to go before we can finally select who we would want to work with as a long term strategic partner."