Industry news

The Court of Session in Scotland has cancelled a public contract between Inverclyde Council and Amey Public Services (APS) after a second supplier presented a legal challenge against the local authority.

It is the first time a UK court orders the termination of a contract following legal action from a supplier.

APS and the council entered a deal for the provision of street light services last year, after a public bid under the Crown Commercial Services framework agreement, despite the fact that APS was not included in the framework agreement as a supplier. Amey OW (AOW), a company from the same group as APS, was.

One of the listed suppliers, Lightways, took the local council to court for illegally awarding the contract directly.

In spite of Intercycle’s claims that the offer to APS was a simple mistake and that the deal had always been intended for AOW, the Scottish court interpreted the error had not been a simple “mis-designation” and declared the contract as ineffective.

Intercycle is set to appeal the court’s decision.

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Related: High Court allows Cornwall Council to terminate £160m BT contract

AT Kearney, a London-based global management consulting firm, rated India as the world’s biggest financial and business attractive outsourcing destination of the planet.

The 2016 Global Service Location Index (GSLI) - AT Kearney's study - analysed 55 countries, making to the top ten: India, China, Malaysia, Brazil, Indonesia, Thailand, Philippines, Mexico, Chile and Poland.

India and Philippines “are still top of mind when it comes to offshoring”, said Nikolai Dobberstien, a partner with AT Kearney’s Communications.

“The hunt for new talent is now taking companies beyond these countries’ capitals and major cites to tier 3 locations such as Surat, Nagpur, and Lucknow in India and Bacolod and Iloilo City in the Philippines”, Nikolai adds.

Among the main reasons, are the affordable real estate facilities as well as the availability of qualified labour and its lower cost compared to other major cities, such as Delhi and Kolkata.

Despite the fact that the top seven countries are in the same position order this year as in 2014, Arjun Sethi – global leader of AT Kearney’s IT practice – admitted that “this could all change radically”.

The new business model associated with the new trend of automation, “could displace the leadership of the likes of India and China in outsourcing”, he said.

This trend is seen as a main driver of market expansion. However, it poses a threat to the established concepts of offshoring.

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Related: Understanding Indian Culture for Effective Business in 2015/16

The Ministry of Defence has opted not to renew its £36 million defence business services (DBS) contract with Serco, choosing instead to bring the management of the service back in-house.

The MoD’s DBS was created in July 2011, providing a comprehensive range of services including HP, finance, information and vetting to a wider department.

Serco has been contracted to provide these services through a shared services centre (one of the largest in Europe) since 2012. The public sector outsourcing giant was originally contracted to “drive down costs and deliver efficiencies” with savings of roughly £71 million expected. It is unclear whether these targets have been achieved.

The MoD told Spend Matters that the contract has reached its “natural end” and that the decision to bring the services back in-house was made so that management can “fully consider options for the next phase of DBS”.

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Related: Serco presses on with strategic realignment towards the public sector

Castle Street Investments, an Edinburgh-based company, announced at the AIM exchange the intention of acquiring the IT outsourcing organisation Selection Services Limited.

The Edinburgh-based company aims to raise £30m from investors to acquire the entire IT outsourcing company.

According to the Daily Record, Selection Services has been losing money during the last years.

“Most recent accounts, covering the 2014 year to June 30, show a pre-tax loss of £4.88 million on sales of £36.3 million”.

“The company had reported a £3.88 million pre-tax loss on sales of £33.4 million in restated 2013 accounts”.

“Castle Street Investments proposes to acquire this company the business for an aggregate consideration of £34.8 million on a cash-free, debt-free basis”, the Daily Record adds.

The first stage of this process will be completed by 21 January after the issuance of the new shares.

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Related: Digital strategy at heart of public savings in 2014

The Department for Communities and Local Government has announced that from April onwards councils will be able to sell capital assets in order raise money for ICT projects.

At the moment, councils are not authorised to use receipts from capital asset sales on services; however, in the Autumn Statement, George Osborne declared new guidelines should be instituted this year.

Accordingly, the DCLG has published new guidelines on capital assets’ spending for councils. These will affect a variety of services such as the back-office and administrative shared services centres with other public authorities, taking a digital approach to the delivery of more efficient public services and improving systems and processes against fraud and corruption.

Councils will need to list the projects they wish to qualify for capital sales receipts, as well as present a cost/benefit analysis to go alongside each project.

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Related: Shropshire reveals its new ICT infrastructure plan

A new project between 34 police and emergency entities is meant to save £7m through a collaboration on vehicle procurement.

The new collaboration project led by the West Midlands Police, includes a contract for over 3,000 police vehicles with several suppliers such as the General Motors UK, BMW, Volvo and Ford over the next two years.

This collaborative project is thought to be the biggest vehicle procurement collaboration ever. David Wilkin, West Midlands Police’s director of resources, said: “A vehicle purchasing collaboration between police forces and partners on this scale has never been seen before”.

“The most important aspect is that the vehicles are the most suitable and safest available”, he added.

The selection of the different suppliers took into account their capacity to work with local dealers in order to ensure that the maintenance and warranty repairs of the vehicles could be carried out locally.

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Related: G4S announces outsourcing could save UK police forces £1 billion a year

According the Ivalua’s Trending in Procurement survey, carried out shortly after the UN climate change conference, more than 70 per cent of procurement professionals believe the Paris agreement will push for a change in the sector.

Ivalua’s survey assessed the procurement profession’s perception of the climate change agreement and its impact among 120 European procurement professionals.

The survey revealed the procurement departments are expected to review their strategies by the time the new agreement is transposed into national laws. Therefore, promoting the adoption of more rigorous supplier evaluations based on environmental and climate change risks criteria.

New environmentally friendly procurement strategies are not new within the industry. The digitisation of many services has previously helped saving costs as well as reducing the amount of paper used.

The Paris climate change agreement not only traces a new route towards a low-emission global economy but also offers the procurement industry an opportunity to take the lead on the environment issue.

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Related: Digital strategy at heart of public savings in 2014

CapeView Capital and Henderson Global Investors have decided to wager against G4S this year. Both firms have set up short positions in the troubled security firm’s shares.

The two London hedge funds’ strategy is undoubtedly justified by the turbulence endured by the company in the last few years since it failed to provide adequate security standards for the 2012 London Olympics.

When setting up short positions in a company’s shares, firms are loaning these out for a defined period of time with the intention of buying them back later, at a lower price.

The two firms join another hedge fund giant, Ako Capital, which has been shorting the security firm’s shares for more than two years.

The majority of the City’s biggest hedge funds, however, has taken the opposite course and closed out their short positions in the company during the last year.

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Related: G4S booted out of the FTSE 100 for first time since 2007

Ed Vaizey, the digital economy minister, announced the government is seeking suggestions from the public and private sectors to continue the digital transformation of both public and private sectors.

The use of more digital technology not only simplifies all sorts of administrative tasks and services, but also offers an environmentally friendly approach, with the substitution of paper-based systems for digital-based ones.

The government seeks to make the relationship between the state and the citizens more efficient and faster with the digitalisation of some many services, including the NHS, driving licence or paying tax bill.

The digitalisation of their services, so far, has also helped to save money, the government adds.

“We need to work hard to make sure we continue to take advantage of the benefits digital transformation has to offer”, Ed Vaizey adds.

The new digital strategy aims to shape the forthcoming digital era as well as to ensure the role of the UK as the global digital leader.

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Related: Digital strategy at heart of public savings in 2014

China’s stock markets have closed early today after shares took a sudden and sharp fall. On the first day of trading of 2016, trading was halted 90 minutes earlier than scheduled.

The Shanghai Composite Index hit a three-month low, falling by 6.9%. The Shenzhen Composite fell by more than 8%.

Today’s sudden plunge in stocks set off a “circuit breaker” system for the first time, which immediately halts trading when activated. The system is aimed at checking volatility in the Chinese stock market.

According to the BBC’s Karishma Vaswani, today’s performance hints at "volatile trading for the rest of the year [in China]".

"Retail investors in the Chinese stock market are often driven by sentiment and tend to follow the crowd. When they hear of some bad news from brokers or their friends, and other people start selling - they start selling too", Ms. Vaswani continues.

Financial analysts believe that reports of a contraction in China’s factory activity may have been one of the factors triggering investors’ sudden change in expectations.

In reaction to Shanghai and Shenzhen’s sudden suspension, the London’s FTSE 100 had fallen by 2% only minutes after opening.

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Related: UK outsourcing to benefit from China stock market woes