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The government has held secret consultations over financial difficulties at a major contractor which could cause severe disruption to public services. I can be revealed.
Concerns are growing over cash flow problems affecting French IT giant Atos, which has received nearly £1 billion in contracts from the UK government.
The extent of the financial difficulties facing Atos’ UK branch is unclear, but its French parent admitted in April that it was facing a wall of debt worth 3.9 billion euros (£3.3 billion).
Viewed secret internal government documents IIt warned that if its UK branch collapsed there would be “serious implications” to the continuity of “vital” public services such as benefit payments and NHS bookings.
The government is scrambling to line up alternative IT providers who may be called upon to provide these services to key departments such as the NHS, the Home Office and the Department for Work and Pensions. I I learned.
The Cabinet Office has been working on contingency plans since February, with experts looking at the extent of suppliers’ financial difficulties and how “critical” contracts could be protected if they are unable to recover, documents show.
The extent of the work Atos does within the UK public sector may not be known to many, but it includes providing disability benefit assessments for Personal Independence Payment (PIP) and running the technology behind the Student Loans Company and NHS records for hospitals across the UK.
The company also runs the Home Office’s critical and sensitive file sharing systems, provides IT services to the Ministry of Defence and the Ministry of Justice, and carries out critical software testing for HM Revenue and Customs.
The government is concerned that if contractors’ financial problems hit their ability to provide services to the public sector, there could be disruptions to NHS bookings and the sharing of health records, as well as delays to benefit payments, court cases and assessments which determine tax refunds from HMRC.
The documents reveal that the government, working with the Cabinet Office, has hired leading consulting firm PwC to work on a risk assessment project codenamed “Project Aztec.”
PwC was asked by the Cabinet Office to assess the likelihood of contractors being able to weather the financial difficulties and, if they couldn’t, what impact their failure would have on the running of key public sector services.
The French company at the centre of the crisis is not named in the internal government documents, but its Paris-based parent company is called “Aztec Group” and its British subsidiary is codenamed “Aztec UK”. I It turns out the company mentioned is Atos, a debt-ridden French technology company.
An Atos spokesman said: I He said he “cannot confirm or deny” whether the company was at the center of the Aztec plot.
Since 2016, Atos has billed the government for more than £6 billion in services, according to data provided by public sector contract information website Tassel.
A Cabinet Office spokesman did not name the company, known in government as Aztec, but said: “We carry out regular reviews of our suppliers and in some cases carry out further due diligence to ensure public services are maintained in a range of scenarios.”
Despite its financial problems, the company is a multi-million pound sponsor of UEFA’s Euro 2024 tournament and an official technology partner of the Paris 2024 Summer Olympics.
The French government said in April it would help Atos, providing a series of loans to help it get through the coming months.
The IT services company signed a contract It has received an interim loan of 450 million euros (£380 million) from the French government and some creditors to buy time to “find a solution to stabilise its financial situation”. According to the French Ministry of Finance.
Atos signs contract with UK government
Financial problems facing Atos, one of the UK’s main IT suppliers, could have a “serious impact” on Britain’s public services, according to internal government documents.
Atos currently has over 40 government contracts worth nearly £1 billion.
Since 2016, the French company has billed British taxpayers more than £6 billion, according to analysis by government contracts website Tassel.
The company’s largest contract, worth £1.5bn, was won by National Employment Savings Trust to develop a new system to manage the group’s pension scheme.
However, that contract expired in February 2023, just two years into an 18-year deal.
The group has a £124m contract with the Department for Work and Pensions which includes providing Personal Independence Payments and Work Capacity Assessments, but this contract ends in September.
Atos also has a contract of up to £126 million to run the technology underpinning the Student Loans Company, a £90 million contract with Inland Revenue and Customs to provide critical testing of software, and a £72 million contract to provide IT services to the Home Office.
The group also runs contracts for the Ministry of Defence, the Ministry of Justice and the Met Office, as well as technology services for NHS England and a range of NHS hospitals across the UK.
Last Friday, President Emmanuel Macron’s government It has made a €700 million (£589 million) offer for the group’s data and cybersecurity division.
But it remains unclear whether the French Treasury will support Atos’s UK operations.
Cabinet Office officials I“This is not a UK-based company. Aztec is a French company so the costs of keeping it from going under will be borne by the French government.”
The parent company decided last week to go ahead with a financial restructuring plan led by French investor David Layani.
“Project Azteca”
Confidential government discussions about financial problems facing French IT giant Atos were accidentally made public by the Cabinet Office in May.
This despite the fact that they quickly replaced documents on the government contracting website with blank pages. I I saw the original.
A Cabinet Office official said, “The notice was published in error and has been republished in an appropriate manner.”
The May document followed an earlier agreement that had noted concerns about Atos’ financial future, but it did not mention the company’s name, replacing it with the codename “Aztec.”
In April this year PwC, which is paid up to £500,000 for emergency work, was asked by the Cabinet Office to assess Aztec’s chances of weathering its financial difficulties and, if it did not, what impact its collapse would have on the running of key public sector services.
Concerns about tech company collapses first emerged in February when the Cabinet Office first asked PwC to carry out a risk assessment. The work was initially codenamed “Project Inca” but in subsequent months became known as “Project Aztec”.
PwC, who is believed to report to the Cabinet Office’s chief financial analyst Aisling McGeheehan, is thought to have won the big-ticket job without a full tender process.
On May 15, another contract document was made public, referring to “consulting assistance for special situations (Aztec Project).”
The document was initially published unredacted by the Cabinet Office but was then hastily removed from the government website and replaced with a blank page.
but, I The firm has obtained the original document instructing PwC to “review and comment on Aztec UK and Aztec Group’s short-term cash flow forecasts”.
Aztec UK is understood to be a subsidiary of London-based Atos, while Aztec Group is thought to be the Paris-based group’s parent company.
The contract calls for PwC to explore restructuring options for the company. What plans the French government is considering and whether these include a financial rescue of Atos’ UK subsidiary, which holds public sector contracts.
The May document also sets out the Cabinet Office’s position that it will seek alternative contractors to replace Atos if the UK branch of Atos does not receive financial support from the French government for any restructuring.
The contract states that PwC should “consider and comment” on “the feasibility of an alternative supplier providing the services currently provided by Aztec.”
A further document, dated 10 June, details the level of government concern over the consequences if Aztec were to find itself in a position where it is unable to fulfil its public sector contractual obligations.
The revised contract states: “This incident has a significant impact on the delivery of public services. The aim is to ensure continuity of essential public services.”