IBM has secured a deal with the UK Home Office to supply user services for the troubled Emergency Service Network (ESN) upgrade, providing voice and data communications after Motorola withdrew from the project.
In a contract award notice released this week, the government department said IBM was awarded £1.362 billion (excluding VAT) set to run until December 31, 2031, with two options to extend for 12 months each.
The agreement is for a “managed service to be provided to the 3 Emergency Services (Police, Fire and Rescue and Ambulance) and other future users.” It is part of the Emergency Services Mobile Communications Programme (ESMCP).
The award notice adds: “The US supplier will provide end to end systems integration (including interfaces and testing services) for the ESN including, but not limited to providing public safety communications services (including developing and operating the public safety applications), providing the necessary telecommunications infrastructure; user device management, customer support, and service management.”
The contract was first tendered in May 2023 at £895 million (excluding VAT) over the same period, which suggests the price has increased by £467 million.
A Home Office spokesperson explained that the contract value advertised in May 2023 was the Home Office’s estimate for the procurement based on the understanding of the market and the complex set of requirements at that point in time.
“These requirements have since been refined as part of the tendering process. After the evaluation of bids, IBM was selected as the most suitable for this contract, following rigorous government procurement procedures,” they said.
“Any impacts on ESN delivery and costs will be set out in the Programme’s revised Programme Business Case, expected early this year.”
The Home Office began talking to suppliers about the new contract in October 2022 after Motorola pulled out of the project due to perceived conflicts of interest owing to its supply of the existing emergency services network, Airwave.
Motorola won a place on the ESN project in 2015, with a contract first awarded for around £300 million, which climbed to £400 million following a project reset in 2019.
However, delays to the delivery of ESN meant the government had to negotiate an extension of service supporting Airwave, which was first commissioned in 2000 and was scheduled to close in 2019. In 2016, the Competition and Markets Authority (CMA) cleared the acquisition of Airwave Solutions Limited by Motorola, expecting ESN to be delivered on time.
As the two projects overlapped, the CMA became concerned about Motorola’s dual role. In October 2022, the regulator proposed plans to cap Motorola’s fees on the Airwave network. In December, Motorola began to discuss ending the ESN contract with Home Office, with some residual termination services.
In October 2023, the CMA estimated that the US vendor could make nearly £1.3 billion ($1.6 billion) in excess profits over a decade given its position as a supplier of the legacy network as the ESN replaces it.
“The CMA imposed a charge control to mitigate Motorola’s ability to price above a competitive level, which is equivalent to an estimated saving to the taxpayer of £200 million per year. In February 2024 Motorola applied to the Court of Appeal (CoA) for permission to appeal the CMA’s decision and a ‘rolled up’ hearing of the application for permission of the appeal has been fixed for November 2024,” Matthew Rycroft, Home Office permanent Secretary, explained in September.
“In addition to the CMA market investigation, a termination agreement was concluded with Motorola to terminate the User Services contract early,” he said.
Motorola appealed the decision at a hearing in November.
The notice awarding IBM the new contract said more than 300,000 frontline emergency service users would depend on ESN, using handheld devices or operating equipment in 45,000 vehicles, more than 66 aircraft, and more than 100 control rooms. While IBM will provide user services, EE provides the 4G network to cover the majority of roads, aircraft at altitudes up to 10,000 feet, and areas up to 12 nautical miles from Britain’s coastline.
ESN is expected to deliver essential capabilities for users of this new communications system, “including the push-to-talk (PTT) function and data,” the government said.
It is expected to go live in 2029 at the latest, according to estimates from 2023, a decade later than first planned.
Simon Baxter, principal analyst at TechMarketView, said:
“Although this is a big win for IBM, ESMCP is a complex programme that has been beset with costly overruns, which will present risks and challenges for the company and the other ESMCP suppliers. It is vital that the revised programme delivers quickly and effectively to avoid further costs and distruption being incurred by the emergency services.” ®
