Up to 44% wiped off value of existing contracts
The Government’s freezing of the £45bn+ Building Schools for the Future (BSF) Programme earlier this month (see Government slashes BSF programme) could cost ICT suppliers more than £3.5bn in lost opportunities, according to the latest research from TechMarketView.
Having spent the last week analysing the detail behind the cuts we also believe that SITS suppliers are set to lose an average of between 37% and 44% of the total value of the BSF contracts that they have signed, or been awarded preferred bidder status on, to date. In monetary terms, the 44% reduction equates to more than £660 million from contracts with an estimated total value over their lifetime of almost £1.5 billion.
Our analysis also reveals that in many cases suppliers are set to lose revenue from contracts that were signed several years ago. Indeed, they may have successfully delivered ICT to a number of schools in the region but now face having the contract curtailed with immediate effect. Unless the contract was profitable on a per school basis, this could have worrying consequences for suppliers’ profit margins particularly given the high bidding costs and reportedly thin margins on BSF deals.
Which suppliers will be worst affected? How will the cuts change the shape of the UK education IT supplier landscape? And will suppliers fight back?
Subscribers to the TechMarketView PublicSectorViews research service will find the answer to these questions, along with the detail behind the numbers above, in our latest PublicSectorViews research note, Counting the cost of BSF cuts, available for download from our website now.
Posted by HotViews Editor at '07:32'
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