A £35m IT contract with the Skills Funding Agency (SFA) has been awarded to BAE Systems — despite the fact the multinational firm didn’t even bid for the job.

More than 20 firms had entered the bidding process for the SFA’s service integration and management (SIAM) and systems integration (SI) contract, referred to as SMI, through the G-Cloud Framework, which allows small and medium-sized enterprises (SMEs) to bid.

But none was successful as, according to the SFA, “suppliers, especially SMEs, could not provide the scale and capability required.”

The contract was instead handed to BAE Systems — whose group managing director Nigel Whitehead called for 95 per cent the publicly-funded adult vocation qualification market to be culled in a government-commissioned review last year — because it had already held a comparable contract with the Foreign and Commonwealth Office (FCO).

The award has come under fire from Andrew Corbett, board member of the UK IT Association, which also runs the Skillfair tender alerts service, because it comes despite an SFA commitment to offer more work to SMEs, favouring “multiple suppliers”, in its Supply Chain Transformation Prospectus released in June last year.

“The SFA’s Supply Chain Transformation Prospectus states ‘government policy has since progressed, and the guidance now is to procure these technology services from multiple suppliers, providing opportunities for SMEs to participate’. These are fine words, but we don’t see evidence that this has been applied in this procurement,” he said.

“As part of our Skillfair service we scan hundreds of public sector procurement tenders and we take a special interest in the IT tenders. We regularly see tenders which are clearly just going through the motions and they already know who they are going to appoint.

“The tell-tale signs include asking for very lengthy response documents with only a couple of days to the deadline or very complex requirements but only a couple of paragraphs of hastily-assembled description which is woefully inadequate to prepare any sort of response to.”

Under the terms of the contract, BAE Systems will be in charge of the transition of services from the SFA’s existing supplier Capgemini Plc, and will integrate new suppliers of the agency’s IT supply chain, among other services.

An SFA spokesperson, who said there was no conflict of interest in appointing Mr Whitehead’s firm as SMI contractor, told FE Week: “We assessed two sourcing options to deliver an SMI service — the use of other Contracting Body Framework Agreements and the G-Cloud Framework.

“We engaged with 25 suppliers using the G-Cloud Framework — allowing smaller suppliers the opportunity to bid for work — but were unsuccessful in this process as suppliers, especially SMEs, could not provide the scale and capability required.

“BAE Systems tendered for SIAM services via a procurement process run by the Secretary of State for Foreign and Commonwealth Affairs and were awarded the Framework Agreement as a result of that process.

“The Framework Agreement permits BAE Systems to provide services not just to the FCO but to ISRs (Independent Service Recipients) by Call-Off Form. We took up the option to be an ISR and completed a Call-Off Form for its specific needs and services subject to the terms of the Framework Agreement.

“The awarded supplier has a track record in providing the service at the necessary scale and level of complexity required by the agency and therefore this option was selected by the agency.”

A spokesperson for BAE declined to comment on why it was awarded the SFA contract without having bid.

Nevertheless, it comes after a period during which the SFA was dogged by software problems, particularly around the delivery of the new Funding Information System (Fis), which was supposed to be available last August, but was released in November, and still caused problems for providers.

The learning aims reference system (Lars) should also have been available by last August, but was finally launched in May after providers faced many months of having instead to use Lars Lite — a temporary downloadable database from the agency that providers claim is also producing unreliable data.

Private contractor Trinity Expert Systems was originally hired by the SFA to develop Lars through a contract thought to be worth more than £5m. But it went into administration last year and was bought-out by London-based Liberata IT Solutions in October.

However, SFA bosses will be hoping a contractor the size of BAE, which had a turnover of £18bn last calendar year, will not face similar administration risk.

Julian Cracknell, managing director of UK Services at BAE Systems Applied Intelligence, said: “We are delighted that we have been chosen by the SFA to provide the essential SMI role that will drive all of its IT services, providing the SFA essential business continuity through a period of extensive change. The contract win reinforces the position of BAE Systems Applied Intelligence as a leading provider of SMI services.

“This contract brings together our heritage in delivering ICT services at scale with our experience of providing strategic consultancy to clients across the public sector. We will work with the agency to take advantage of the full range of opportunities presented by digital transformation, ultimately improving the service to citizens across the country.”