Interserve, one of the Cabinet Office's 30 'Strategic Suppliers', entered into administration on 15th March 2019 after shareholders rejected its proposed debt-for-equity swap. The company currently has at least 50 live public sector contracts with a total lifetime value of £2.1bn, providing various outsourced public services including probation, facilities management and construction projects.
Tussell analysis of the firm's public sector contract portfolio has been cited extensively in the press over the past week, even triggering an Urgent Question to the Cabinet Minister. Our short report builds on that press coverage by drilling in to the firm's public sector contract footprint to identify some key findings - enter your details below to get the full report sent straight to your inbox, or read on for the highlights.
Excluding frameworks, Interserve has at least 50 live contracts with the wider public sector worth over £2.1bn in total.
Its five biggest live contracts are:
- Three contracts to provide probation services across the North West and Yorkshire for the Minstry of Justice, together worth over £1bn. One other provider of these services, Working Links, also entered into administraton earlier this year.
- Interserve subsidary Landmarc Support Services manages the Army's UK training estate in a £320m contract with the Ministry of Defence which expires in 2019.
- A £225m contract to provide facilities management services for the DWP estate due to run until 2023.
48 distinct public sector bodies have exposure to Interserve through live contracts. In Central Government the list includes the MoJ, MoD, DWP, DfT, FCO and Home Office. The firm also works with 20 Local Government bodies, including the Met Police and London Fire Brigade.
Interserve is the second major government outsourcer to face administration in just over a year. However it seems the government has learned lessons from Carillion, including reducing its contractual exposure to Interserve much sooner after the company's profit warnings and being more prepared for the eventual outcome.
This new chapter will inevitably reignite public scrutiny of government outsourcing, prompting renewed questions about the merits of providing public services through private companies. Since this has been government policy for many years, and is unlikely to change overnight, the focus must therefore be on managing risk in the supply chain. The government has already taken steps in this area - the policies of supplier diversification, contract disaggregation and living wills were introduced for precisely this reason - and must continue to make further progress in the future.
We applaud the government for its continued commitment to transparency in procurement, even when it raises awkward questions. Its provision of open contracting data is what allows us to analyse the market and identify opportunities and risks within it. We will continue to monitor progress towards a more accessible and effective government marketplace.
To drill into Interserve's live public sector contracts, enter your details below to get our full company report sent straight to your inbox.