BT bids with Cornwall as its partner – and no partnership deal in place yet.

By Tony Collins

BT has named Cornwall as its partner in competitive bidding though a partnership has yet to be signed. The company has the agreement of the council and NHS organisations to bid naming Cornwall as a partner.

Cornwall Council has not yet decided whether to proceed with a mega-outsourcing contract with BT. A majority of councillors at a full council meeting in September voted against a deal but the ruling “cabinet” decided to continue negotiations with the two shortlisted bidders CSC and BT. CSC has since withdrawn.

Tomorrow there will be another vote of the full council on whether to sign a joint venture contract. This is because a petition has attracted more than 5,000 signatures (about 6,300 so far). It means that the outsourcing plan must be debated by the full council. The cabinet says it will abide by the outcome of tomorrow’s full council vote.

A deal would see BT taking over staff and running services for Cornwall Council, Peninsula Community Health, Cornwall Partnership NHS Foundation Trust and Royal Cornwall Hospitals NHS Trust. The contract over 10 years would be worth between £210m and £800m.

BT appears to have some confidence it will win the vote. In its draft business plan written for the council and the potential NHS partners, BT explains that the strategic partnership for support services in Cornwall would bid for future government contracts. The partnership will be credible and low-risk trading vehicle from day one says BT.

Already, says BT, it has named Cornwall in competitive bid situations for telehealth, which has the agreement of Cornwall Council and health partners.

Comment:

Has an inner circle within the council taken it as read that a mega-deal with BT will be agreed? Is this why it has already allowed BT to name Cornwall as a partner in competitive bidding?

BT’s enthusiasm for winning new business for the proposed joint venture is impressive, but shouldn’t a contract be signed first? Cornwall council and its potential health partners have yet to agree to set up a joint venture.

How independent from each other are BT and Cornwall Council?

Officers and the cabinet have given councillors much information from BT about the proposed deal but independent information is conspicuously absent.

The council’s “Single Issue Panel” has expressed “deep misgivings” about the outsourcing proposals but its concerns were dismissed by the cabinet. Shouldn’t Gateway and any other independent reviews of BT’s proposals be published?

In its draft business plan on the strategic partnership for the council, BT uses the words “guarantee”,  “guarantees” or “guaranteed” 46 times. It uses commitment or similar at least 30 times.

But, in capital letters overprinted on every page, is the word “Draft”. Guaranteed outcomes, guaranteed savings, and guaranteed additional jobs in the draft report will need to be converted to contractual clauses.

Some questions for Cornwall’s councillors

The gap between guarantees in a draft business plan and commitments in a contract could be wide. Will those promises of “guarantee” clauses be unambiguous, without caveats? Will the full council be able to review the contract before it is signed?

The council says that if BT breaks commitments and guarantees it can exit the contract. But central government – the Department of Health included – has found it cannot exit large and complex contracts without paying tens of millions of pounds in compensation or facing legal action for its own contractual breaches.

Separately to the business plan, BT has produced a Powerpoint presentation for councillors on the joint venture. This document also uses the word “guaranteed” and “commitment” a great deal.

But BT’s small print in the Powerpoint presentation says: “This proposal is non-binding and all dealings, dialogue and negotiations are subject to the conclusion of appropriate terms and conditions.”

Are councillors aware of the small print?

A good deal – potentially

If BT fulfills all the promises in its draft business plan and non-binding Powerpoint presentation it could be good for the council, the NHS partner organisations, staff and council tax payers. There is no lack of a genuine conviction on BT’s part.

Do such deals have a history of success? It’s hard to tell.

Truth on outsourcing success and failure is hard to come by

Councils usually want to give a good news story on their outsourcing deals to the outside world, as do their suppliers, but independent internal reviews tend not to be published.

The little independent evidence there is – from say councils in Liverpool and Somerset – is not encouraging; and while Cornwall did get independent advice from its Single Issue Panel which visited supplier reference sites and spoke to clients of BT and CSC, the Panel, in the end, produced a “critical friend” report that was deeply sceptical of Cornwall’s proposals.

Are Cornwall’s outsourcing proposals outdated?

Central government is moving away from large and complex outsourcing deals in favour of “cloud” contracts that can be switched from supplier to supplier with months or even weeks of notice, with a clear and unambiguous per-transaction monthly charge.

By cloud standards, Cornwall’s plan seems outdated. Its proposals are similar in style and aspiration if not in detail to Somerset’s failed Southwest One joint venture, a contract for which was signed in 2007.

Strong contract management team?

If Cornwall planned to set up a large and strong internal management team to keep control of BT and arrange for independent audits of its performance and Key Performance Indicators (KPIs), it would inspire more confidence. But as procurement expert Peter Smith of Spend Matters says:

“If the current management of a service is judged to be incapable of bringing about improvements and efficiencies needed, then it is highly unlikely that they can manage someone else doing that.”

He also warns:

“Beware having aspirational pictures painted by expert sales people from large, sophisticated companies of how your (rosy) future will look. …

“When people are selling you something and stand to make a sales commission from the deal, do you look at them as impartial?”

We would suggest councillors in Cornwall commission an independent review of BT’s proposals before agreeing a mega-deal that could last 10 years or more. That review could answer key questions such as:

– Does the council have an independently audited baseline of the cost of the services to be outsourced, on which to judge the level of promised savings by BT?

– What are the most potentially serious risks, and how well prepared are the council and its potential partners if things to go wrong?

BT has told Cornwall council that its extensive experience of similar transformations in other partnerships “provides our Cornwall Partners with the security that our offer is based on fact”.

BT also says that a BT Guarantee, which puts its brand at risk, is worth its weight in gold.

Tomorrow the council may judge such assertions with or without an independent review.

Thank you to Dave Orr who provided information and informed analysis on BT’s proposals.