Case Study: Cambridge Management Consulting Supports a Major Outsourcing Tender in Excess of £750m

Across networks, IT, contact service centres and hardware

Cambridge Management Consulting and Norton Rose Fulbright (NRF) were appointed by a UK public sector body to support them on a major SI/Telecoms outsourcing tender, with a contract valued in excess of £750m. 

The outsourcing involved a multi-supplier procurement covering telecoms network, IT implementation and ongoing services, service integration and management, as well as contact centre services and provision of consumer hardware.

The Strategy

The project began with the two internal teams working closely together, to gather a detailed set of requirements and a thorough understanding of the challenges facing the client.

This collaborative method of working from the project’s outset, ensured our team had a clear vision of ‘what good looks like’, and of areas of importance to the client regarding risk and issues that required specific solutions.

We assisted with the design and implementation of the tender process. A key challenge was designing a process that would allow the client to agree contractual terms, whilst competitive tension amongst bidders was ongoing.

Normally, we would seek to achieve this by providing bidders with a full draft contract to mark up as part of the tender evaluation. In this context, that approach was not possible due to the technical complexity of the project and that contract terms in one service line are dependent on the choice of supplier and technical solution in another service line.

To address this, we prepared key contract principles to be evaluated in the tender response. This allowed the client to agree key terms while there was still competitive tension, whilst retaining flexibility.

Ensuring parallel negotiations

To meet the required timescales, contract negotiations must run in parallel with separate bidders. In addition, each contract involved multiple technical, commercial and legal work streams, each of which run in parallel. We put together a core team, split into 3 sub teams, that supported the project throughout and then scaled up with additional NRF personnel to support the parallel negotiations.

It was crucial that consistency was achieved across the entire suite of contract documents to ensure that the client had end-to-end contractual coverage. To achieve consistency in the context of parallel negotiations, we put in place a number of measures:

• Designated an NRF lead responsible for reporting back to key client stakeholders and paired an individual NRF lawyer with a subject matter expert at the client, so that negotiations on related issues were dealt with by the same personnel

• Prepared a pre-agreed playbook and fall-back positions on key issues

• Pre-agreed escalations and reporting to the client from the individual workstreams (with issues tiered and assigned a RAG status)

• Ensured that the client’s steering committee were fully briefed on the terms of the negotiation, so they could report internally to the board and government shareholder

• A daily status call for exchange of information

• Built detailed financial model templates which the bidders were required to complete as part of their bid proposal. The financial model templates ensured a common financial understanding between the various bidder proposals and ensured the client had a robust methodology to measure and evaluate the various bidder proposals in a fair and consistent manner.

Our financial modelling expertise is industry-leading and based on many decades of commercial and financial experience. A well-built financial model template requires an investment of time and effort

Negotiations

We identified key risk items and worked in detail to determine how best to mitigate the risk, thereby achieving significant overall savings for the client. Ultimately, we created a negotiation strategy focused on achieving a win-win outcome for both the client and supplier.

We provided specialist knowledge from the telecoms industry to ensure the client was fully up to speed with the latest technology and industry developments.

Governance & evaluation

To support the OJEU procurement process, we implemented a fully compliant evaluation process, with the necessary assessment process and associated documentation to ensure the project outcome was robust, transparent and defensible against challenge.

Our end-to-end support extended to supporting the internal governance requirements, including working with the internal strategy, finance and management team to produce an approved Business Case, support internal presentations and reviews, as well as the production of Board Reports.

Exit/ transition of services

A key component of outsourcing, where a change of service providers is envisaged, is the exit from the incumbent and transition of services to the new service provider. Cambridge MC and NRF were able to provide expert commercial and legal advice throughout the process, resulting in a well-structured transition plan and a thorough understanding of the timelines and costs involved.

Cambridge MC played a key role in negotiating with the incumbent while maintaining a positive relationship with them, an essential component that ensured a timely and orderly transition of services.

Our role as advisor

Cambridge MC and NRF performed separate but overlapping roles. Cambridge MC provided commercial support and advice at Board level. NRF’s role was to provide legal advice on the contract.

Both parties collaborated to support the client in these areas:

• Create the content & strategic advice for an effective RFP

• Ensure process compliance and appropriate governance is followed

• Support the running of parallel negotiations

• Be part of the team in direct commercial negotiations with bidders

• Advise on the commercial and legal aspects of the deal

• Write Board papers and provide high-level strategic advice

• Capture the arrangements of the deal in a robust and enforceable contract

• Provide and facilitate all necessary project management

• Undertake full financial analysis of bidder proposals and make a recommendation

Outcomes & Results

The benefits of the joint partnership between Cambridge MC and NRF:

   1.  A ‘one stop shop’ for advisors

The team was a ‘one stop shop’ for advisors. The client avoided the procurement effort of running separate processes to appoint consultants and lawyers to support the project.

   2. Negotiations

We identified key risk items and worked in detail to determine how best to mitigate the risk, thereby achieving significant overall savings for the client. 

   3. Knowledge

We provided specialist knowledge from the telecoms industry to ensure the client was fully up to speed with the latest technology and industry developments

   4.  Evaluation

We provided end-to-end financial analysis and evaluation, including real time scenario analysis to support real time decision making

   5.  Improvements

The procurement replaced the incumbent providers. We managed to secure a much better deal for the client, generating additional savings of £170m. We also managed to achieve significant improvements in the contractual arrangements, including better liability positions, improved risk profile, better SLAs and increased contractual protection.