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IT services relationships at the London tri-borough group of Westminster, Hammersmith and Fulham and Kensington and Chelsea are likely to become more complex following the acquisition of Westminster's IT supplier Vertex by Serco.

Serco said the acquisition last week, for £55m, brings it additional skills and capabilities to support expansion into new areas of middle and back office support and adds further scale to its recently created global services division.

In 2002, Westminster city council awarded Vertex a £442m 10-year contract to manage its customer services and council tax bills, which was then extended in 2011 to 2014. The contract was one of the biggest to be won by Vertex and saw about 300 council staff transfer over to the company.

A spokesman for the council told Guardian Government Computing that it considers Serco's acquisition of Vertex to be "business as usual" and that it will "look at the contract" closer to 2014.

In the tri-borough's proposals report, published in 2011, the three councils admitted that relationships with their IT services suppliers was complex and that the procurement implications of any future strategy will need to be well thought through to avoid legal challenge, especially under EU procurement rules.

Besides Westminster's Vertex relationship, Hammersmith and Fulham's IT is provided by a joint venture with Agilisys and HFBP, which involves a profit share element, while Kensington and Chelsea has an in-house infrastructure management team coupled with a line of business support teams using procured solutions.

The three boroughs are currently jointly tendering for a 10-year, £300m to £455m, total facilities management contract due to start in May 2013. The contract is largely non-IT based, but may cover property management IT services, such as maintaining the asset register. It may offer a template for a future tri-borough IT services contract.

Serco said the Vertex acquisition improves its position for large scale outsourcing opportunities and that it expected it to enable the company to provide additional services into existing local government customers.

It added that the Vertex operations brought significant experience and scale to leverage in future opportunities within the central government market, as well as the potential transfer of capabilities to private sector customers.

Vertex's other major business process outsourcing customers include Thurrock council, the Child Maintenance and Enforcement Commission (CMEC) and Job Centre Plus.

A progress report published by the London tri-borough group of Hammersmith and Fulham, Kensington and Chelsea, and Westminster city council has revealed that the councils are on track to save £40m a year by 2015-16 by combining services and management costs.

At the end of June, the three authorities are to host a seminar for council officers detailing what the tri-borough project has delivered and how it can be replicated across local government.

This article was originally published at Guardian Government Computing.

Guardian Government Computing is a business division of Guardian Professional, and covers the latest news and analysis of public sector technology. For updates on public sector IT, join the Government Computing Network here.

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