Atos and Nest end £1.5bn contract eight years early

Two years into decade-long deal

The UK's National Employment Savings Trust (Nest) has reportedly terminated its £1.5 billion contract with French IT services firm Atos after just two years.

The Register reports that both sides have agreed to the early termination.

The UK government established Nest in 2010 to ensure every UK firm could provide a workplace pension to its workers. With more than 9.7 million members, Nest has expanded to become the nation's biggest occupational pension plan by enrolment.

In February 2021 Nest named Atos as the future scheme's administrator, contracted to provide the IT infrastructure, networking, and software required to operate the service.

The contract award notice said Atos would be in charge of designing, delivering, and running the scheme's administrative services, which would "support auto-enrolment and be delivered primarily via digital channels."

According to sources, Nest sought contract termination after Atos argued product delivery dates should be changed because Nest had insisted on last-minute design revisions. Nest declined to modify the delivery schedule and insisted on adhering to the terms and conditions of the contract.

Up to 1,000 Atos jobs might be lost in the UK and India because of the contract failure.

The deal was expected to last 10 years, with a five-year extension option and a potential three-year extension for an exit transition. Nest indicated at the time that the deal could be valued up to £1.5 billion if it were allowed to run its full 18-year term.

The original 10-year contract, worth £600 million, was awarded to Tata Consultancy Services in 2010.

Nest and Atos are believed to have completed their active programme of work. Nest will continue to work with its current partner, TCS, while reviewing its longer-term needs and plans.

"We want to thank the team at Atos for all their support and partnership over the past two years," Gavin Perera-Betts, Nest's chief customer officer, said.

"As we start to plan the next phase of our transformation programme, we're taking some time to review the support we'll need. The services Nest offers to members will continue to operate as usual."

John Ainsworth, head of Atos Business Transformation Services, said: "We are proud of the work we've achieved with Nest and have helped set strong foundations for the organisation's digital transformation journey."

"We are working with our teams and partners to manage the transition of the contract."

The loss of the contract comes at a challenging time for Atos. The business is reorganising with the goal of separating its security, big data, and digital operations into a new company to be listed on the Paris Stock Exchange.

Atos' previous CEO Rodolphe Belmer resigned from his position in September, amid reports of 'significant differences' in the board's approach to strategy.

Last month, it emerged that the UK government had paid Atos £24 million in an out-of-court settlement, following a legal challenge the company filed over an £850 million contract given to Microsoft to develop a weather supercomputer to be used by the UK's Met Office.

Atos said in its complaint that the UK government had improperly rejected the company's offer as being out of compliance.