EXCL: Home Office and Motorola terminate £400m ESN contract as search for replacement supplier begins

Written by Sam Trendall on 20 January 2023 in News
News

Tech firm will continue to support Airwave system but its deal to develop the replacement has been mutually ended two years early

Credit: Mohamed Hassan/Pixabay

The Home Office and Motorola Solutions have agreed to terminate two years ahead of time their £400m contract for the delivery of the Emergency Services Network, with government already working on the procurement process to put in place an alternative supplier, PublicTechnology can reveal.

The mutually agreed and immediate conclusion means that the tech firm will no longer provide the core voice application for the new nationwide communications network to be used by police, ambulance and fire services.

The termination of the ESN deal comes alongside an ongoing dispute in which the Home Office has called for the company to be made to pay back £500m in revenue. This money, according to the UK’s competition watchdog, was generated as a result of a monopoly position that enabled significant overcharging for the use of the incumbent Airwave network – which is also delivered by Motorola Solutions.

The US-based telecoms outfit – an enterprise firm that is a separate entity from the Motorola brand of consumer mobile-phone handsets, which is now owned by Lenovo – first entered into a six-year agreement with the UK government in December 2015 for the delivery of the voice component of ESN. After a reset of the troubled programme in 2019, the deal was further extended to a scheduled conclusion of 31 December 2024. This took the total value of the contract to £409.5m.

In a brief note added to the end of a procurement notice, government has now indicated that the two parties reached an agreement to terminate the contract with effect from 19 December 2022. Motorola will continue to provide some “termination assistance services” for a further 12 months, the update added.

Both parties confirmed the termination to PublicTechnology.


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The Home Office indicated that it has already begun the initial stages of the procurement process through which it will put in place an alternative supplier of the voice services that will be used when ESN finally goes live. Having originally been slated to do so in 2019, after multiple delays, this is now expected to take place in 2026 – or “possibly later”, according to the government.

The comms functionality that Motorola was contracted to provide will be a central component of the replacement of the incumbent Airwave network. First commissioned in 2000, Airwave was bought by Motorola just weeks after it won the contract to deliver the voice component of ESN.

Although it will no longer be a major supplier for the new system for blue-light services, the US firm will continue to support Airwave.

A spokesperson for the Home Office said: “The Home Office and Motorola agreed to terminate the contract to provide services for the Emergency Services Network on 19 December 2022. We have agreed that Motorola will provide some services for twelve months following this date. The Airwave contract is ongoing and unaffected.”

A Motorola Solutions spokesperson added: “Motorola Solutions has agreed with the UK Home Office to end our role in the ESN programme. Motorola Solutions will continue to support ESN by providing certain ‘Lot 2’ transitional services for the next 12 months and an interworking interface capability that will enable the Home Office to facilitate interoperable communications between ESN and Airwave in the next phase of the programme. 

“In addition, the company will continue to deliver and maintain the essential Airwave network, which is relied upon by the UK emergency services and operates at the highest levels. Motorola Solutions will also continue to provide its full mission-critical technology ecosystem – including devices, control room software, in-field mobility applications and video security solutions – to support the agencies that rely on these solutions to help keep their emergency services personnel and communities safe every day.”

‘Supernormal profits’
When it published its most recent set of quarterly results in November, Motorola indicated that it had “made a business decision to begin negotiations regarding an early exit from its ESN contract”. The financial statement acknowledged that this would mean the company accepted a “a fixed asset impairment loss of $147m related to assets constructed and used in the deployment of the ESN contract” to date.

The indication that the company wished to call time on its ESN work came shortly after the Competition and Markets Authority published the findings of a year-long investigation which concluded that its status as a monopoly provider “is allowing Motorola to make around £160m excess profits a year” from the continued provision of Airwave. 

The regulator – which also expressed concerns about the company’s “dual role in providing the current network and in helping to deliver the ESN to replace it” – called for the immediate implementation of “price control measures” legally restricting what the company can charge for Airwave services.

Addressing the issue in its quarterly statement, Motorola said that: “The company disagrees with the CMA’s provisional decision and will continue to work with the CMA to demonstrate the value of the Airwave network and pursue its legal avenues to protect Airwave’s contractual position.”

But, in a response the CMA report issued shortly afterwards, the Home Office suggested that the regulator’s price-control proposals did not go far enough – and that the telecoms firm should also be asked to hand back hundreds of millions of pounds in “supernormal profits” the department believes were earned unfairly. 

“While understanding the CMA’s proposed charge control approach, the Home Office is concerned that the measure will leave Motorola, its shareholders and other investors with over £500m of value earned through supernormal profits,” the department said. “The Home Office would wish for a remedy that recovers this value for, ultimately, the benefit of UK taxpayers and citizens.”

The most recent set of major project data published by the Home Office indicated that the estimated cost of delivering ESN to completion now stands at a little over £12bn. This means that, in the best case scenario, the platform will launch seven years late and at double the originally intended cost.

 

About the author

Sam Trendall is editor of PublicTechnology. He can be reached on sam.trendall@publictechnology.net.

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