Rt Hon David Lidington CBE MP Chancellor of the Duchy of Lancaster and the Minister for the Cabinet Office Cabinet Office 70Whitehall • London SW1A2AS

Web www.cabinetoffice.gov.uk

Our Ref: CDL/1566

Sarah Wollaston MP Chair, Liaison Committee House of Commons London SW1A OM

15 March 2018

Dear Sarah,

Thank you for your letter of 22nd February, following my appearance before the Liaison Committee on 7 February. In your letter you cover areas that I undertook to respond to in the Committee session, as well as some further questions from Committee Members subsequent to the session. The responses to these questions are provided below.

RT HON DAVID LIDINGTON CBE MP 1. The Minister agreed to provide the Committee with as comprehensive a list of Cari/lion's public-sector contracts as is . av~ilable (See q35). It would be helpful if information could also be provided on the current estimate of Government spending with each of the strategic suppliers. We should ask what provision is made in the Cabinet Office for consolidating this kind of information from across all government departments andpublic bodies in respect ofall strategic suppliers and contractors.

During the hearing, I undertook to write with details of Central Government contracts, subject to. the limitations of the data that we hold and confidentiality issues, for example where the Official Receiver is engaged in negotiations.

I am able to provide the following details relating to these contracts: Contracting Authority, Government Department and Contract Name. This list is provided at Annex B.

I am not able to provide the following details:

• PFI subcontracts - these are contracts·held between the Special Purpose Vehicle (a private company) and Carillion. As John Manzoni stated in his response this information belongs to the Special Purpose Vehicles (SPV) and Carillion. Government is not a party to these subcontracts. In light of the public safety risk resulting from any collapse contingency plans were developed, jointly, by the SPVs and NHS Trusts. • University construction contracts - these are between the University and their contractor. The Department for Education is not party to these contracts and therefore does not hold any information. · • Contracts held by Devolved Administrations- we do not hold contractual information. We engaged with the Devolved Administrations to ensµre they were aware of the need to undertake contingency planning. • Information on three contracts has been redacted due to their sensitive nature. · • Revenue information - this information is commercially sensitive. The Official Receiver is in the process of conducting commercial negotiations to sell the Carillion contracts and therefore any publication of revenue information may impact the Official Receiver's negotiating position ..

Fol.lowing the collapse of Carillion there have been no significant impacts to service delivery across public sector contracts. Minor impacts to ser:vice within the first week were quickly resolved.

The Cabinet Office works with all Central Government bodies to understand the portfolio of contracts held by each Strategic Supplier. Data for other suppliers is held by the Department or ALB holding contracts with that supplier. Annex A contains an estimate of the revenue that each Strategic Supplier earns from the UK public sector.

It would not be feasible to collate data from all public bodies in respect of all contractors. We estimate that between 750 and 900 new opportunities are advertised every month that are over the statutory thresholds.

2 2. For outsourcing to be sustainable, the risk of strategic providers failing must be · managed effectively. How does Government assess and manage risk in its relationship with these providers so they are less likely to fail, and it is less catastrophic ifthey do fail? Other than close monitoring by Government, what consequences do strategic suppliers face when they become higher risk (financially fragile)? For example, Should the Government require strategic suppliers to maintain a safe level of capital on their balance sheet? (For background see qq1-6 to the C&AG)

The risk of strategic suppliers failing is managed at two levels. At contract level, financial distress clauses usually give contracting authorities rights, up to and including termination, to protect services in the event of supplier failure. In addition, Parent Company Guarantees give recourse to properly capitalised entities wh~re, as is common, the contract is actually held by a subsidiary. Performance bonds that can be claimed in the event of default or non­ performance are also common on Construction contracts.

At a s!rategic level, where a supplier holds contracts across multiple Departments and their revenue from Government exceeds £1 OOm per annum and/or the suppliers is deemed a significant supplier to Government in their sector, it is classified as a Strategic Supplier. It thus falls within the scope of the· Strategic Supplier Risk Management (SSRM) policy. This policy contains triggers that allow Government to take action in the event of financial distress. These actions include reducing where possible the extent to which the Strategic Supplier is given additional work under the terms of an existing contract (by, for example the exercise of any ·option or change requests) so as to contain the risk to the taxpayer. In addition, we can demand data and regular interactions with the company, depending on the risk rating assigned to the company.

Companies of different sizes and in different sectors require different capital structures, so there is no such thing as a one-size safe level of capital. This 'safe level' is dependant on the nature of business, size of business, trading conditions and the nature, size and duration of contracts. This is why each procurement uses appropriate and individually tailored tests of financial standing for that particular contracting situation.

3. How does the Government justify the continued use ofan optimism bias adjustment within its Value for Money assessments for publicly funded projects, but not for privately financed projects, given that it is now clear thatprivate sector contractors are equally capable ofover optimism when bidding or forecasting costs? (For background see qq1-6 to the C&AG)

What is being delivered through a privately financed project (i.e. under PFI/PF2) is typically a building or asset. An 'optimism' bias will be included for P.rivately financed projects in their value for money analysis until the contract is signed as then the estimated costs of building and maintaining that asset are the responsibility of the vendor. We do not need to add contingency or 'optimism bias' to them, as they are fixed for us; the vendor is responsible for any errors in the estimates.

In most of these PFI/PF2 arrangements the whole life pricing risk has been transferred to the contractor. The 'optimism' bias that might be included in a publicly funded project of similar scope is built into the price bid by the SPV, and we expect the SPV to honour that price.

3 4. Has any of the £150 million Government funding to support the work of the official receiver been used to ensure ongoing short-term delivery ofSPVIPFI contracts? If so,· whatproportion ofthe £150 million has been used in this way? Is £150 million yourbest internal estimate or will the final amount needed to support the work of the official receiver end up being much higher?

The Cabinet Office is to provide £150m of funding to the Official Receiver in respect of Carillion in liquidation in the current financial year. This f_unding was identified in Supplementary Estimates laid before Parliament on 7 February 2018.

Some of the funding will be used by the Official Receiver to provide working capital to the company in liquidation. This allows former Carillion employees and the Carillion supply chain to continue to supply services where the end customer is a public sector entity: In the case of SPV/PFI arrangements, these services are supplied under contract to the SPV, which then in turn is contracted to the NHS Trust or school. Any sums spent on such delivery will be recovered from the SPV in question. It is not possible to estimate at this stage what proportion of the £150m will be used to ensure the ongoing short term delivery of SPV/PFI contracts.

In addition to this working capital, the £150m is intended to cover the cost~ of the liquidation which include: the responsibility for making Carillion construction sites safe and secure; irrecoverable VAT due to change of status of Carillion to a company in liquidation; some back office costs relating to the on-going operation of the company;·and the fees of the Official Receiver, Special Managers and their Professional Advisers. The Official Receiver will be looking to raise funds from recovering trade debts owed to Carillion, settlement of claims owed to Carillion and from the sale of assets. These funds .will be applied in line with statutory duties of the Official Receiver and used to offset funding provided by the Cabinet Office to the Official Receiver in respect to Carillion in liquidation. Any unused funding wm be returned to the Cabinet Office.

5. Do the assets which are under the control ofthe Official Receiver (OR) and are to be sold include SPVIPFI contracts? (See q53)

Carillion was involved in a number of different PFI contracts. Carillion normally was an equity shareholder in the SPV during the construction phase of a project, then became a subcontractor to th~ SPV to provide ongoing services and subsequently sold its equity holding.

The contracts which can potentially be sold by the Official Receiver include a number of PFl­ related service contracts. These contracts were between a Carillion entity and the SPV, and the SPV in turn held the main PFI contract with the public body. The SPV has the right to terminate these contracts upon liquidation. Some of these contracts can be sold as assets as they have a long time to run, but this is subject to the consent of the SPV.

Carillion did have partial equity holdings in some of the PFls where construction was still in process, such as the Midland Metropolitan Hospital in Smethwick, the Royal Liverpool University Hospital and the Aberdeen Western Peripheral Route. Carillion was one of several shareholders in each SPV. The Official Receiver can sell the equity shareholding to the other shareholders (or potentially to a third party) if the equity has any value.

4 6. Under insolvency legislation. when selling company assets, the Official Receiver is under a statutory duty to achieve the best price he can for the benefit of the creditors as a whole. What guidance (if any) are you giving the OR. on what would be an acceptable level of difference between the original contract value and the price achieved in a liquidation situation, to ensure best value for the taxpayer in selling of Cari/lion's assets? (See q62, qq131-134)

HM Government is not giving guidance to the Official Receiver on the 'acceptable' value of contracts. The Officials Receiver is a court appointed official and his duties are set out in statute as noted above.

The question implies a misunderstanding hoVl(ever. There are different meanings of the word 'value' at play here. The original contract value (as published in the OJEU or on Contracts Finder) is the anticipated annual price paid by the customer, (the contracting authority) for the services, m.ultiplied by the maximum number of years the contract could runs for; whereas the 'price achieved in a liquidation situation' is the value attributed by a replacement supplier to the cash flows and profit achievable if they were to take on and complete the contract at the original price.

This is quite a complicated calculation and involves, for example, the perceived risk of the contract, the match with the replacement supplier's current business and alternative uses of that supplier's capital. For example a contract with a 'contract value' of £1 Orn per year for 5 years, i.e. £50m, which is making 5% profit on sales, will yield a profit of £2.5m over that term. If a potential buyer feels there is no risk in that contract, and it has 2 % years yet to run, they might bid up to £1.25m for it, but that purchase cost would wipe out all the anticipated contract profit, so realistically they would probably only offer £0.3m to £0.6m for it, as they also have to make a return on that £0.3m. ·

7. What are the implications ofgovernment stepping into private sector SPVs? (See q 135) Is there something in the contractual structures of the SPV model that mean SPVIPFI contracts could not be taken over by the Government? (See q141)

HMG did not step in to (terminate and take over) the private sector SPVs. Had the Officials Receiver not temporarily covered the staff and overheads cost of the Carillion subcontracts then the SPV would have been immediately responsible for continuing the service and finding a replacement subcontractor. In all" likelihood this would have resulted in serious service disruption. However, a short period of no or poor service performance is unlikely to have led to a contractor default enabling termination of the contract.

The SPV in a PFI cont~act has subcontracts for construction and FM. An insolvency of a subcontractor is not a breach of the main contract with HMG. There is no right for HMG to terminate as no contractor event of default has occurred. It is the SPV's responsibility to replace the subcontractor for·no change in price to HMG. It is possible to voluntarily terminate the contract with the SPV but this is very expensive and so not appropria.te as it fully pays out the lenders and compensates the SPV for future loss of profits. In extreme cases, the SPV may in due course become insolvent if the cost to complete the project is significantly higher than the original cost.

In the case of Carillion's failure, Carillion was contracted with the SPV to perform certain services ( either construction or FM). The PFI contracts place the responsibility for replacing

5 Carillion with the SPV. To the extent that Carillion's failure has led to a breach of the SPV's contract with the public sector customer, the contracts allow the SPV some time to repair the breach, and in addition if the SPV fails then the lenders also have an opportunity to effect a repair. If all these attempts fail then the PFI contract can be terminated and there are defined procedures that determine the rights .of all parties, including the public sector entity holding the contract.

B. What asse~sment have you made of the impact the collapse of Carillion has had on its subcontractors? What level of losses have Cari/lion's subcontractors incurred? What impact has the collapse had on smallercontractors who mayfind it difficult to get support from banks due to their increased credit risk? Did the government's attempt to keep Carillion going further increase the financial pressure on its subcontractors as their credit risk increased? How many subcontractors will go out ofbusiness?

Carillion's debts are still being assessed by the Official Receiver, but there is no doubt that many subcontractors were owed money by Carillion. Those subcontractors that are owed money are being encouraged to register claims as unsecured creditors.

The Government has put measures in place to help companies who are impacted by Carillion's insolvency including extra support from the banks and time to pay taxes.

Lenders. have made a fund of £900m available to support small businesses exposed to Carillion's liquidation - and a Government taskforce, led by the Secreatry of State for Business Energy and Industrial Strategy has been set up to monitor and advise on mitigating the impacts of Carillion's liquidation on construction. firms, particularly SMEs and those working in the sector. ·

The British Business !3ank through its Enterprise Support Scheme will guarantee loans of up to £1 OOm through its partner banks, which can be used to support overdraft borrowing and refinancing of existing debt.

Lenders are contacting customers and, where appropriate, are putting in pl~ce emergency measures, including overdraft extensions, payment holidays and fee waivers to ensure those facing short term issues can be helped to stay on track.

We dispute that government made an 'attempt to keep CariUion going further'. This was confirmed by the oral evidence of former Carillion directors to the joint PACAC/PAC session on 27 February 2018. Contracts which were awarded after Carillion's profit warnings were only let to Carillion under the relevant procurement regulations and only where financial standing tests were still met. It would be inappropriate for Government to award contracts to suppliers in order to 'prop them up' and consideration of any such factors would be contrary to public procureme"nt law. We regret any financial pressure on subcontractors that has flowed from the failure of Carillion but deny that there is any link between Government action and that financial pressure.

9. What assessmenthas Government made ofthe impact ofCari/lion's failure to honour the promptpayment code for its sub-contractors, or whetherit has put any ofthem into financial distress? How will Government encourage better compliance with prompt payment and ensure that such codes have credibility? (See qq73-79)

6 In 2015 BEIS strengthened the Prompt Payment Code. All of the government's Strategic Suppliers have signed up to the Code - promising to pay suppliers promptly and fairly.

The Small eusiness Commissioner (SBC) role was created by the Enterprise Act 2016 to tackle late payment and poor payment practices in the private sector, and Paul Uppal was appointed in the post in December 2017 The SBC is an independent public body and covers the whole of the United Kingdom.

The SBC will provide general advice and information to small businesses on matters such as resolving disputes; signpost small businesses to existing support and dispute resolution services through the SBC's website; and consider complaints about payment issues between small business suppliers and their larger customers, making (non-binding) recommendations on how the parties should resolve their disputes.

In the 2017 Manifesto it says: "Government will be harnessing its buying power to ensure that its big contractors comply with the principles of the Prompt Payment Code." We are deveroping the detail of how this will work within the procurement rules."

In October 2017, the Government announced that it was looking at how a supplier's payment performance can be considered as part of the procurement process when bidding for public contracts. We are working through the detail of how this will operate within the framework of the Public Contracts Regulations and will consult on our proposals soon.

10. How many apprentices were employed by Cari/lion's subcontractor companies before its collapse? (See qq 88, 99) What assessment has been made of the impact on apprenticeships with companies in financial trouble because of Cari/lion's collapse? (See q102)

Mr Halton asked how many apprentices within Carillion's supply chain would be affected by its insolvency.

In total, the Carillion Group had over 9,000 UK subcontractors. Any assessment of .the number of apprentices affected would require the identification of these sub-contractors followed by an individual analysis both of the number of apprentices employed by each one and how Carillion's liquidation might affect it.

During the Committee hearing Gareth Rhys Williams said that a number of apprentices being trained by Carillion Training Services (CTS) were employed by Carillion subcontractors. In fact, all of the apprentices being trained by CTS are/were employed by Carillion although many were seconded to other firms in the industry which then reimbursed Carillion for their employment costs.

The Carillion Group employed and/or trained some 1,400 1Apprentices at the point of liquidation. The Construction Industry Training Board (CITB) has been working to find new employment for these Apprentices including the provision of financial incentives to new employers. To date, some 753 Apprentices in England have been matched with new

1 This figure excludes Level 1 Learners who have been offered places on alternative courses.

7 employers and approximately a further 180 have either completed their courses or decided to pursue other activities.

The CITB remains confident of finding potential construction industry employers for all Apprentices who wish to complete their training. The CITB has also worked with the Education and Skills Funding Agency to ensure funding is available to support the continued training of these Apprentices and Level 1 Learners.

11. What reassurance can you provide about government contingency plans for other large government contractors? (See qq116-121)

As John Manzoni said i~ the hearing, government has contingency plans for a range of circumstances including possible difficulties faced by other large contractors. These plans are proportionate to the criticality of the services supplied and the perceived level of'risk.

12. What will be the net cost for the Health Service of the collapse of Carillion,· for example due to legal and other costs associated with changing contracts? (See q 130)

The net cost for NHS Trus_ts in changing services contracts under PFI arrangements should be restricted primarily to legal costs in inspecting the form of consent required to enable the SPV to change their subcontractor from Carillion to' a new company. If the Trusts wish to examine other opportunities such as changes to the main contract these costs may be higher, but these are matters for the relevant Trust boards. '

The situation with regards to the two hospitals under construction is different. Followin~ the failure of Carillion, under PFI arrangements it is the responsibility of the Project Company (SPV) to find a new construction partner. Both SPVs have identified possible candidates. These replacement partners have been estimating the cost _to complete the respective hospitals. Following these estimates, it is up to the SPV to determine, with its lenders, the most appropriate wa_y to complete and maintain the hospital.

13. How did the government consider how the collapse of Carillion could provide an opportunity for Government to exit an expensive PFI contract in respect of the health sector? What opportunities still exist to exit such NHS contracts? (See also qus 4-7 above)

The immediate priority for Government following the collapse of Carillion was to maintain public services. It was important that cleaning, porterage and other services continued so that hospitals and other health facilities could continue to operate at full capacity in the middle of winter. The opportunities to exit these contracts have been considered alongside other options for the continuation of public services, and within the constraints of the contracts which confer rights and place obligations on the counterparties.

For the two PFI hospitals in construction, the SPV and the lenders have committed the bulk of the investment needed to build the hospital, and spent the majority of the money already. They have a contractual right to be given time to try and find an alternative,contractor to finish the building work ..

8 . For the hospitals and schools that were built using private finance upfront and where Carillion was providing Facilities Management and maintenance services via an SPV, in the days following the liquidation. the Official Receiver offered to step in with the same contingency services it was offering to other public services contracts, to avoid any risk that public services would be disrupted, even for a short time. It would have been possible for the OR to stop providing these services, and the SPVs are contractually obliged to find an alternative Facilities Management provider. This would have taken some time and likely led to some disruption.

Without the intervention of the Official Receiver, some important public services would likely have suffered at least-a temporary disruption: but the SPV would have had time to correct that loss of service and it would not have constituted a breach under the PFI contract such as to justify termination for cause.

14. What delays are now expected to the completion of the two hospital construction projects in which Carillion was involved?

Midland Metropolitan Hospital The contract between the Trust and the SPV is still in place, which means that the SPV is still contractually obliged to manage the project and find another construction or facilities · management services subcontractor who can continue to deliver the building work and subsequent services.

The SPV is currently in discussions With the Official Receiver, its lenders and with other service and construction companies and the Trust to assess how best to continue delivering these contracts.

Royal Liverpool University Hospital The PFI company at Royal Liverpool is in discussions with the Department for Health and Social Care, the Trust and its senior lenders about the prospect of completing construction and delivering the subsequent services. ·

The Trust Chief Executive issued a statement on 6 February 2018:

"In order to get construction started as soon as possible, The Hospital Company is working to secure the services of existing sub-contractors and former Carillion construction staff to continue the work. This is because they have the best understanding of the work that is required to finish the job."

"There are highly complex discussions taking place between various parties to get sub­ contractors back on site as soon as possible. However many of these firms are facing financial difficulties as a result of Carilfion's collapse, therefore this process will take some time. Given this situation, we expect a significant delay and it will prove challenging to get the new Royal finished before the end of the year."

"The Trust is doirig all it can to minimise the delay. Our local politicians and others have all been hugely supportive and we will continue to liaise closely with them and the Department of Health. We all want the best for our patients and the people of Liverpool and that is to move into our world class new hospital."

9 15. What additional costs the official receiver and PWC have charged to which councils related to the transfer ofcontracts previously held with Carillion by those councils; and what (a) financial and (b) other support the Government is providing to each of those councils related to such charges. (See Qq 124;.26):

All customers that have received services following 15 January 2018 have been charged an uplift because of additional costs. This uplift allows for the extra costs of supplying services resulting from the contraction of Carillion's operation and the costs of the liquidation. As Carillion's f<;>rmer customers migrate to alternative providers, the fixed costs at the 'centre'. of Carillion - IT, back Office services, call centres - have to be spread across a smaller number of contracts. For public sector customers, we anticipate a reconciliation process at some later point when a more accurate estimate of these extra costs has been gained. Considerably higher additional costs would have been incurred if services to councils and other public sector customers had been discontinued, and these have been avoided. ·

In addition, during the hearing Mr Jenkin asked about why Government is not getting first refusal on contracts and extracting value (Q131-141). I provide details on thispoint below. ·

Where a public sector body is the direct customer of Carillion, Government does, effectively, have 'first refusal' on these contracts. In the case of the MoJ (National Offender Management Service) contracts discussed in the Committee hearing, Government is taking services back in-house, through a Government-owned service company. This action will transfer the employment of 1,000 former Carillion staff to this service company, and transfer a number of subcontracts. These subcontractors employ a further 130 pe?ple.

This decision is open to any contracting authority holding a direct contract with Carillion. In making such a decision the authority has to weigh up a number of considerations such as operational risk and value for money. Both of these considerations are impacted by the speed of transition, as the Official Receiver (OR) cannot sustain the former Carillion operations indefinitely and also, as customers transition away from Carillion, the remaining operations have to carry a higher burden of overhead and become more costly to run.

The public sector does not have to put in an 'offer' for these contracts. Customers rely on the termination provisions in the existing contract with Carillion. The OR is facilitating the transfer of former Carillion staff to new employers, and to date over 8,216 jobs have been preserved. in this way.

For the majority of relevant Carillion contracts, the contract was between Carillion and a 'Project Company' ($PV) which had been set up as part of PFI or PF2 arrangements. This SPV then provides services to the public body concerned; for example a hospital trust or a school. The contract impacted by the liquidation was between Carillion and the SPV and not . between Carillion and the trust or school. The risk of providing services has been passed, by the PFI contract, from the public body to the SPV. The SPV must choose exactly how to continue that provision, following the liquidation, subject to the rights of the lenders. The public body concerned does not have the option of 'taking services ~ack in house' as a result of the liquidation, as the SPV is not in liquidation.

10 The OR has reached agreement with a major supplier to transfer part of Carillion's business that fulfilled some of these service contracts with SPVs. The supplier has agreed to pay the OR a consideration for this transfer, which is subject to the agreement of those SPVs and the consent of the end customer.

The OR is bound (by its legal obligations) to make a judgement regarding which course of a_ction returns the most value to the creditors of the liquidation. It is also the OR's judgement that this 'bulk transfer' offers the 111ost quick and efficient way to transfer these contracts to new management, with the lowest risk of operational disruption to public services.

11 Annex A - Contracts List

Contract Name ·contracting Authority Department Land Registry FM Land Registry BEIS ACKtiv JV Sellafield Limited BEIS British Museum FM British Museum OCMS The Heath Academy OFE OFE British Transport Police FM British Transport Police OFT A14JV Highways England OFT M60JV Highways England OFT A 1 Elkesley Junction Improvements Highways England OFT A 1 Leeming to Barton Highways England OFT M6 Jct 16 to 19 Kier JV Highways England OFT M6 Jct 13 to 15 Kier JV Highways England OFT M20 Jct 3 to 5 Kier JV Highways England OFT M23 Jct 8 to 10 Kier JV Highways England OFT Carillion Traffic management services, Highways England OFT lot 11 and lot 13 Carillion construction - contract for buildability advice with Highways Highways England OFT England Carillion Rail - historic railwayey estate Highways England OFT examinations East, North and West. Lot Central 2: North Portal Chiltern HS2 OFT tunnels to Brackley - CEK JV Lot Central 3: Brackley to South Portal of Long ltchington Wood Green tunnel HS2 OFT -CEKJV Kettering to Corby- GRIP 3.:.4_5 Network Rail OFT · Kettering to Corby Works Net\Vork Rail OFT Market Harborough Grip 3 Phase 3C Network Rail OFT Market Harborough LSI Network Rail OFT London to Corby MML Network Rail OFT Brent Cross station - Grip 3/4 Network Rail OFT L2C T&C (Package 1) Network Rail OFT NEP - MML/Scotland Network Rail OFT PLTR- LNE -WBI 2017-2018 Network Rail OFT Sheffield Tram Train Early/Main Works Network Rail OFT IEP Gauging Priority 2 Sites Network Rail OFT North West Electrification Programme Network Rail OFT OOCPA Network Rail OFT WITI (Western Inner Track Imp) Network Rail OFT Oxford Corridor Trackworks Network Rail OFT West Ealing Sidings Network Rail DFT Knottingley Area LX Renewals Network Rail OFT EW Rail Project (CBJV) Network Rail DFT Cardiff Intersection Bridges Network Rail OFT

12 Ebbw Vale Frequency Enhancement Network Rail OFT CPS Western Design Network Rail OFT CPS Renewals Oxford Network Rail OFT Splott Road Bridge Network Rail OFT Hinksey Flood Resilience Network Rail OFT L2C Electrification (CPL) - GRIP 4-8 ­ Network Rail OFT MML Waverley NR12 G4-8 Network Rail OFT Carmarthen Grip 5-8 LX Renewals Network Rail OFT SIG008 Doncaster Station K107 Network Rail OFT Kettering Electric Stabling K167 Network Rail OFT PLTR - LNW - WBI 2017-2018 NW069 Network Rail OFT Stroud Valley LX SIG009 Network Rail OFT Home Office South FM Home Office HO Leeds City Cycle Super Highway 5094 Leeds City Council Local Government Birmingham City Council Birmingham City Council Local Government Doncaster Metropolitan Borough FARRS - MSF2 Framework Local Government Council Whitehill To Bordon East Hampshire District Council Local Government The Heath School Halton Borough Council Local Government Harrow Library Harrow Borough Council Local Government Vision Tameside -TMBC Offices Main Inspired Spaces Tameside Ltd Local Government Building Temple Green Park & Ride Leeds City Council Local Government A58M Essential Maintenance ph 2 Leeds City Council Local Government Elland Road Park & Ride Ph2 Leeds City Council Local Government Lincoln Eastern Bypass Lincolnshire County Council . Local Government Croydon Libraries London Borough of Croydon Local Goverriment Ealing Library London Borough of Ealing Local Government Hackney Learning Centre London Borough of Hackney Local Government Hounslow Parks London Borough of Hounslow Local Government Hounslow Library London Borough of Hounslow Local Government MSF2 Framework JV Midlands Highways Alliance Local Government Morpeth Construction Phase Northumberland County Council Local Government Oxford County Council FM - Oxfordshire County Council Local Government King Alfreds School Oxford Oxfordshire County.Council Local Government Lower Don Valley Flood Defence Local Government · Scheme Sheffield CC Tinsley Link Sheffield CC Local Government A45 South Bridge Replacement Solihull CC Local Government Taunton NIDR Somerset County Council Local Government A6 to Manchester Airport Relief Road Stockport County Council Local Government Stockport Metropolitan Borough Stockport Strategic Partnership Local Government Council Tameside Metropolitan Borough Tameside Primary School Catering Local Government Council Tameside Metropolitan Borough Tameside FM Local Government Council ELL Maintenance Transport For London Local Government

13 Heltwate SEN School Peterborough City Council Local Government Jack Hunt Secondary School Peterborough City Council Local Government [REDACTED] [REDACTED] MOD [REDACTED] [REDACTED] MOD [REDACTED) [REDACTED] MOD Hestia Southeast DIO MOD Hestia Scotland & NI DIO MOD Hestia North DIO MOD Carillion Amey (Regional Primes) DIO MOD Carillion Amey (Housing Prime) DIO MOD Prisons HMPPS MOJ Legal Aid Agency . MOJ MOJ

14 Annex B - Headline Statistics on Strategic Suppliers

Strategic Supplier Total Annual %of Revenue Number of ·Market Revenue 2016 from UK Public UK Employees Cap (£m) (£m) Sector

Babcock 4,547 77% .27,000 3,386

Capita 4,909 34% 54,750 1,112

G4S 7,590 8% 34,000 4,054

Serco 3,011 42% 25,200 1,049

Amey (Parent: 10,759 16% 17,282 12,587 Ferrovial)

Atkins (Parent: 1,862 19% 8,527 9,985 SNC-Lavalin)

lnterserve 3,245 49% 50,000 109

ISS 9,311 6.7% 43,000 41,868

Engie 58;441 1.4% 19,000 32,218

Mitie 2,126 26% 62,600 601

Sodexo 17,745 5.9% 35,000 · 15,346

24,062 4% 82,800 23,772 BT

Motorola 4,556 0.6% Not reported 17,497

Vodafone 42,533 1% 13,238 54,970

Virgin Media 15,097 3% 13,600 7,250 (Parent: Liberty Global) .

Arqiva 944 25% 2,112 n/a

Accenture 26,255 0.6% 9,330 101,858

Atos 10,464 7% 9,000 11,767

Capgemini 11, 197 6% 8,342 17,741

CGI 8,060 5% 5,600 15,050

DXC 17,600 8% . 15,000 29,254

Fujitsu 30,400 2.4% · 10,972 1320

IBM 60,060 1% 13,134 144,617

Microsoft 68,000 0.6% 3,000 727,091

Oracle 28,800 0.9% 5,000 215,797

Sopra Steria 3,341 11% 6,700 3,464

BAE Systems 17,790 1% 33,000 18,719

15 Note.: market data correct as of 9 March 2018

16