Capita loses London C-charge licence to print money
Discussion
Daily Telegraph said:
Capita was served a humiliating blow yesterday when it was stripped of its contract to run London's Congestion Charge just four-and-a-half years after the scheme was set up.
Transport for London's (TfL) decision to opt for IBM is a major embarrassment for Capita, which has boasted of the "450 man years" spent designing and building the network of cameras that guards the zone boundary.
Capita has also won awards for the project, which was extended into west London in February this year. However, it will now have to hand the project over to IBM in November 2009.
TfL said the IBM bid offered superior technology, which would be vital as it seeks to introduce new automated ways to pay in the next few years. It is currently working on trials of electronic tags that can be read by roadside beacons and would automatically deduct the charge from a driver's credit card.
However, TfL also admitted that IBM had offered to run the congestion charge for less, although details will not be released until December. Privately, Capita executives are believed to be furious at the decision and have questioned how IBM expects to make money from the contract. "We are disappointed not to have been chosen to deliver this next stage of congestion charging for TfL," the company said.
Capita made an operating profits of around £10m a year on revenues of £60m a year from the congestion charge — equivalent to around 2-3pc of total group sales. The shares initially slumped more than 10pc on the news before closing down 5.5pc at 700p.
Not that it will make any difference Transport for London's (TfL) decision to opt for IBM is a major embarrassment for Capita, which has boasted of the "450 man years" spent designing and building the network of cameras that guards the zone boundary.
Capita has also won awards for the project, which was extended into west London in February this year. However, it will now have to hand the project over to IBM in November 2009.
TfL said the IBM bid offered superior technology, which would be vital as it seeks to introduce new automated ways to pay in the next few years. It is currently working on trials of electronic tags that can be read by roadside beacons and would automatically deduct the charge from a driver's credit card.
However, TfL also admitted that IBM had offered to run the congestion charge for less, although details will not be released until December. Privately, Capita executives are believed to be furious at the decision and have questioned how IBM expects to make money from the contract. "We are disappointed not to have been chosen to deliver this next stage of congestion charging for TfL," the company said.
Capita made an operating profits of around £10m a year on revenues of £60m a year from the congestion charge — equivalent to around 2-3pc of total group sales. The shares initially slumped more than 10pc on the news before closing down 5.5pc at 700p.
- StreakyFiveStar said:
Shouldnt be any profit in the CC anyway. If there is it should go back into the public transport system. It should be government run (but we all know they cant run shit)
precisely why it is "better" (i.e more cost effective) to out-source this sort of stuff to the private sector, they have to break even at the very least or heads will roll, ideally make a profit!Public sector just dont give a shit, the council, local authority, quango, central goverment will just give them another handout if they run out of cash! if it was run by the goverment I would imagine revenues of 60m and costs of 100m!
as it is TFL DO pump a lot of the money from the congestion charge back into public transport.
davido140 said:
precisely why it is "better" (i.e more cost effective) to out-source this sort of stuff to the private sector, they have to break even at the very least or heads will roll, ideally make a profit!
Because Capita don't need to treat its staff as well as the civil service does, so it probably works out cheaper, and if it goes wrong you don't have to find another "job for life" for thousands of people elsewhere in the civil service. So the taxpayer benefits.Presumably what's happening here is that IBM are taking a "loss leader" on the existing services contract, to sell lots of higher-margin next-gen technology down the road.
Must be a win for TFL, or they wouldn't have done it.
John
LathamJohnP said:
davido140 said:
precisely why it is "better" (i.e more cost effective) to out-source this sort of stuff to the private sector, they have to break even at the very least or heads will roll, ideally make a profit!
Because Capita don't need to treat its staff as well as the civil service does, so it probably works out cheaper, and if it goes wrong you don't have to find another "job for life" for thousands of people elsewhere in the civil service. So the taxpayer benefits.Presumably what's happening here is that IBM are taking a "loss leader" on the existing services contract, to sell lots of higher-margin next-gen technology down the road.
Must be a win for TFL, or they wouldn't have done it.
John
monumental can of worms we have stumbled on here though... possibly for another thread..
Many sides to this argument...
All industry should be state owned
All should be privatised and "prove" it has a worth to the state. (NHS + police with targets??)
Why do "civil servants" get it easy with all the fancy pensions etc and private sector dont
why do "civil servants" earn less than private sector
social housing is bad, why do they get free houses
social housing is good, house the proletariat, property is theft.
ooooh the list goes on..
Thing is there needs to be a happy medium which we "sort of" have at the moment
In my humble opinion
The lower paid but working in better conditions (less hours, more holiday, better pensions) civil service are not best suited for IT projects as the kind of people needed to do this sort of stuff command huge money as they are good at thier job. a 100k a year engineer is not going to take a 25-35k a year civil job to get a better pension, he doesnt need it.
hence why we sometimes need outsourcing.
davido140 said:
In my humble opinion
The lower paid but working in better conditions (less hours, more holiday, better pensions) civil service are not best suited for IT projects as the kind of people needed to do this sort of stuff command huge money as they are good at thier job. a 100k a year engineer is not going to take a 25-35k a year civil job to get a better pension, he doesnt need it.
hence why we sometimes need outsourcing.
I worked alongside civil servants (as a contractor) in central government IT for about five years. As far as I could tell, there is no real concept of dropping salary in the civil service - you only go up pay grades. So if they bring an IT person with "cutting edge skills" of the moment in on a proper civil service contract, they have to stick them on a very high grade, which they will stay on for their whole career, regardless of the value of their skills or their productivity. This is obviously not a good idea.The lower paid but working in better conditions (less hours, more holiday, better pensions) civil service are not best suited for IT projects as the kind of people needed to do this sort of stuff command huge money as they are good at thier job. a 100k a year engineer is not going to take a 25-35k a year civil job to get a better pension, he doesnt need it.
hence why we sometimes need outsourcing.
So, you end up with IT people at crappy grades earning less than the private sector pays, but with more job security.
Ergo, civil service IT doesn't tend to attract top people (although there are some good people there who are just culturally suited to the civil service, and don't mind crap pay).
Consequently, civil service IT is not skilled to deliver the big stuff, and Crapita, Accidenture etc end up with nice juicy contracts.
Not really a great state of affairs IMO.
John
As an ex-civil servant IT guy (20 years), its a wonder that any projects ever get finished at all. The problem is down to the management structure. To get on above a certain level (£30k or so) you have to go into management, so there are loads of good techies being crap managers. We long argued for a specialism that allowed promotion whislt staying techie.
Private sector is a good bet for these projects, but they are so hamstrung by SLAs and daft requirements that it must be a nightmare for them.
Glad I got out - ended up in education which of course is very efficient......
Private sector is a good bet for these projects, but they are so hamstrung by SLAs and daft requirements that it must be a nightmare for them.
Glad I got out - ended up in education which of course is very efficient......
ashes said:
As an ex-civil servant IT guy (20 years), its a wonder that any projects ever get finished at all. The problem is down to the management structure. To get on above a certain level (£30k or so) you have to go into management, so there are loads of good techies being crap managers. We long argued for a specialism that allowed promotion whislt staying techie.
Private sector is a good bet for these projects, but they are so hamstrung by SLAs and daft requirements that it must be a nightmare for them.
Glad I got out - ended up in education which of course is very efficient......
20 years ago, good Civil Service programmers were being trained (at our expense) in CICS (as IBM ousted ICL) making them attractive to the private sector. To retain them, their departments promoted them to Principal (or even Senior Principal) grade ... but then they weren't allowed to program! - StreakyPrivate sector is a good bet for these projects, but they are so hamstrung by SLAs and daft requirements that it must be a nightmare for them.
Glad I got out - ended up in education which of course is very efficient......
FiveStar said:
Shouldnt be any profit in the CC anyway. If there is it should go back into the public transport system. It should be government run (but we all know they cant run shit)
Maybe there shouldn't be a profit, but profit was really the whole idea of the "congestion" charge. Congestion is about at the level it was before the charge (tax) was introduced, so by the terms of what the public were told was the intention, the charge has failed. It employs a load of otherwise unemployable people though and is useful for Labour with their usual trick of keeping the unemployment figures down.Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff