DfE seeks to break firm's stranglehold on back-office IT

10th June 2011 at 01:00
Capita insists it offers value for money to schools despite 80% market share

The Government is seeking to weaken the dominance of private services company Capita over the vital back-office computer systems used by schools.

The Department for Education is currently talking to a number of companies in a bid to shake up the market for management information systems (MIS), which control all parts of school administration including dinner money, registration and admissions.

The news comes just a week after The TES reported that schools and local authorities had accused Capita of making "excessive" profits out of the expansion of the academies programme.

In many cases, the firm is charging schools converting to academy status more than #163;20,000 for an updated MIS licence.

Capita's version of the software, SIMS, is used by more than 20,000 schools across the country, equating to about an 80 per cent share of the market.

According to research released last year by the now defunct IT quango Becta, schools are paying over the odds for their systems because of Capita's dominant market position.

The issue has become a pressing concern for the DfE; the Becta report highlighted that schools are likely to spend more than half a billion pounds on the computer systems over the lifetime of this parliament.

As well as selling management systems to schools, Capita also signed more than #163;313 million worth of contracts with the Government this year.

RM, a competitor to Capita, has welcomed the Government's consultation on MIS, adding that any action as a result of the review could dramatically reduce the cost for schools.

Nigel Rayner, RM's head of education systems, said: "There is an interesting time coming up. Becta, in a parting shot before being abolished, came up with the conclusion that having one dominant supplier doesn't lead to good value for money for schools.

"The report stated in a number of different ways that with a lack of competition from the market it is hard to see how the best interests of schools can be served.

"The DfE has taken this very much on board."

Mohamad Djahanbakhsh, managing director of Serco Learning, another supplier in the MIS market, said: "We're very happy that the DfE has decided to act on Becta's recommendations.

"We supported all of the recommendations in the report and we believe, in these austere times, that customers must get the best value for money they can."

The DfE has given a deadline of 17 June for companies to respond to its consultation before deciding on any action it will take to overhaul how schools buy their computer systems.

Capita said it welcomed the Government's work, adding that it still offered schools good value for money.

Phil Neal, managing director of Sims for Capita Children's Services, said: "In the four most recent local authority competitive tenders for MIS, Capita has been awarded three out of the four contracts.

"In two cases, the local authority concerned has moved from another supplier and I think this demonstrates that we offer schools good value for money."

A DfE spokesman said: "We are currently engaging with stakeholders about the development of a new framework for learning platforms and management information systems."


Becta's final act

Before it was disbanded, schools IT quango Becta published a report laying out a raft of recommendations to ensure schools achieved the best value for money.

The report, called School Management Information Systems and Value for Money, warned that the marketplace was dominated by a single supplier because local authorities were not abiding by EU procurement law.

Authorities were simply renewing their contracts at higher costs, without going back to the marketplace and trying to find the best offer, the report said.

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