REFILE-UK seeks fairer share for small firms from outsourcing "oligopoly"

Fri Jul 5, 2013 1:35pm EDT
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* 93 bln stg public sector contract spend in 2012/13

* Government wants small firms to have 25 pct by 2015

* Possible pick-up in mergers and acquisitions activity

By Christine Murray

LONDON, July 5 (Reuters) - When a modest IT firm in southern England won a 13-million pound local authority contract in 1988, it was a huge coup for a business that had annual revenue of just 4.3 million pounds.

Nowadays that company has annual revenue of 3.4 billion pounds thanks to its dominance of the public sector services market - and Britain's government thinks it's time that Capita returned some of that business to smaller firms.

"We have an oligopoly," said Bill Crothers, the government officer charged with overseeing all central government contracts. "We have a huge concentration of business in relatively few suppliers."

Outsourcing public sector services to private companies has been a controversial issue in Britain since former prime minister Margaret Thatcher introduced compulsory competitive tendering in the 1980s. That forced local authorities to give private firms the chance to run everything from councils' IT systems to hospitals and rubbish collection.   Continued...