Banks have to comply with tough regulations on data security. And that affects how they procure the buildings that store the information. Data centre procurement hit the headlines recently because regulators imposed multimillion-pound fines on several high-street banks for failing to maintain adequate data storage and security. Financial institutions are now setting up new data centre procurement programmes in order to comply with increasingly tough regulations.
Quality control and programme tend to be the main drivers when choosing a procurement route. Many clients adopt a two-stage route with a single main contractor. Any two-stage process has to manage conversion risks, including being “held to ransom” by a high, stage-two lump-sum offer from an incumbent contractor. Although this risk can be mitigated by carefully drafted conversion triggers and termination rights, timing and commercial pressures often outweigh legal rights at this juncture.
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