The changes mean that companies and charities, which may previously have been unwilling or unable to take on the burden of a defined benefit pension scheme comparable to that offered in the public sector, could now be empowered to bid for contracts. LCP forecasts these changes will significantly remove many of the barriers to entry into the important public sector outsourcing market.
LCP’s step-by-step guide to participating in the market offers advice and guidance to companies on how to prepare bids and price them accurately and competitively, as well as how to manage contracts once they have been awarded.
Bart Huby, partner and head of LCP’s public sector outsourcing group said: “In a nutshell, the new Fair Deal guidance dramatically reduces pensions risk for contractors and presents many new opportunities for organisations which haven’t previously tendered for this type of work.
“However for this group of new contractors, and for those companies who are already involved in the outsourcing market, there is substantial “devil in the detail” to be considered – such as understanding how pensions costs can develop over the term of the contract and how the cost of redundancies might be met.
“The step-by-step guide we have produced will help companies consider how to avoid some of these pitfalls - both during the bidding phase and once they are managing the contract post-award.”
The UK has the biggest outsourcing market outside of the United States - with contracts worth £4bn being let every year - and outsourcing has become an important part of the Government’s programme aimed at improving the cost effectiveness and quality of public services, through their provision by private and third sector contractors. There has, however, been growing concern in recent years over the increasing concentration of public sector contracts amongst a small group of large outsourcing companies.