Bill for DfT's replacement shared service centre could top £750m

The total anticipated cost for establishing a new shared services arrangement for the Department for Transport (DfT) could hit £750m, according to an updated tender notice.

The rise in costs is set against the backdrop of increasing concerns around shared services deals and their ability to deliver value for money.

When the DfT first published pre-tender information in March 2011, for a shared service centre covering HR, finance, payroll and procurement, the maximum cost was pegged at £500m.

The initial contract will cover the central DfT, along with four agencies: the Driving Standards Agency, the Driver and Vehicle Licensing Agency, the Vehicle Certification Agency, and the Highways Agency.

The centre is supposed to replace the current shared services centre – established in 2005 – which will be acquired – along with its 250 staff – by the winning bidder.

That centre was strongly criticised by the National Audit Office for failing to meet expectations. By January 2008, the shared services centre had met just four of its 18 key performance indicators.

The DfT was rebuked for failings in its IT procurement process, which resulted in the original specification for the main IT system being inadequate.

Recently, analyst firm Ovum reported that half of European public sector IT chiefs did not believe that shared services arrangements would live up to their promise.

Elsewhere, a report in early June 2011 from Somerset County Council noted its shared services agreement was failing to deliver the savings expected.