Edinburgh councillors block £170m Mitie FM deal

Aaron Morby 12 years ago
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Edinburgh City Councillors have voted not to award Mitie a prized seven-year integrated facilities management contract.

Council administrators had recommended Mitie as preferred bidder to take over its facilities and property management functions in a deal expected to be worth £170m.

The move to outsource the services was viewed as largely a done deal when it was announced to the Stock Market five days ago. But today council members voted to block the appointment.

Around 2000 council staff were expecting to transfer to a new subsidiary of Mitie. The services contractor said it also expected to create 200 additional jobs over the life of the contract.

A spokesman for Mitie said: “Despite this setback the company says the pipeline of outsourcing opportunities for the delivery of local public services remains strong across the UK and it will continue to invest in this area to support its future growth.”

The council expected privatising integrated facilities management services to bring savings of up to £13.5m, more than could be saved keeping the services in house.

Mitie was planning to set up a wholly-owned subsidiary, Vital Edinburgh, to manage the contract, which would be supported by Lambert Smith Hampton and engineering firm Atkins.

Capita/Carillion had also been shortlisted for the facilities management contract with Edinburgh Council.

City of Edinburgh Council’s Alternative Business Models plan aims to cut the council’s 20,000 full and part-time staff by 10 per cent in 2012.

The vote is a warning for Enterprise and Kier/Shanks, both shortlisted to take on environmental services at the council.

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