The Post Office has put out two contract tender notices for back office IT applications services and network infrastructure and management services worth up to a total £516 million.

The procurement is to support the transformation of the Post Office following its separation from Royal Mail. As part of its long-term strategy published at the end of November, the Post Office outlined plans to modernise its business to become a modern, digital, multi-channel retailer.

After reviewing its existing supply chain, the Post Office said it has decided to adopt a service towers operating model, similar to moves by central government over the past few years. In October 2013, it appointed Atos IT Services UK as its Service Integrator and Service Desk (SISD) provider, responsible for managing the service towers.

Under the Back Office Tower contract, the Post Office is looking for a prime supplier to provide the development, maintenance and support for centrally-managed applications that support non-customer facing transactions, and support and management for the back office tower applications. The business’s current back office applications include finance, accounting and HR systems.

Meanwhile, under the Network Tower, the Post Office is looking for a supplier to provide IT network services “to support secure connectivity and communication between and within Post Office locations”.

This may include wide area networks (WAN), local area network (LAN), network and IT security, unified communications, mobility services and contact centre solutions.

In addition, through the Network Tower, the Post Office is seeking the option to acquire services including, but not limited to, hosting and infrastructure support and management services. However, it said that the hosting and infrastructure services is intended to come under the Data Centre Tower that is currently in procurement.

“A scalable and flexible solution is required to allow Post Office to grow with customer needs and support increased product diversity, reduced running costs and faster integration with its partners and suppliers,” the Post Office said both its contract notices.

“At the end of the contract term, the bidder is expected to provide exit management services to transition the services to new suppliers.”

The Network Tower contract is worth between £102 million and £240 million for the initial eight-year contract term, including two extension years.

The Back Office Tower contract value ranges between £60 million and £276 million for the initial seven-year term, including two extension years.

The Post Office offers over 170 different products and services through 11,780 Post Office branches, supported by online and telephone customer services.

Last year, the organisation launched a mediation scheme - overseen by former Lord Justice of Appeal Sir Anthony Hooper - for sub-postmasters to resolve complaints about its Fujitsu-built IT system.

The Horizon point of sale system has been the source of much controversy over allegedly problematic accounting – resulting in heavily disputed legal battles with sub-postmasters who claim that they have been wrongly accused of fraud. Some sub-postmasters have been sent to jail over the claims.