Cornwall Council’s cabinet approves BT deal after hurried talks

By Tony Collins

Independent Cornwall councillor Andrew Wallis has revealed on his blog that the councils’s cabinet has approved a tender from BT which involves the transfer of 132 staff in information services, 76 in shared services, 46 in document management and 28 in telecare.

Cornwall Council has rushed through agreement of a deal with BT – whether deliberate or not – ahead of the voting in of a new council in May. A formal consultation with the staff affected will begin next month.

All cabinet members apart from one, independent Bert Biscoe, approved the tender. Wallis says that a meeting today has brought to an end a “long, emotive, and fraught process”.

He adds: “I am pleased the Cabinet meeting today, and the information surrounding the bid, was all done in open session. It might bring some confidence back in to the process of partnership working.”

Cornwall’s cabinet ratified the recommendation that

“…  award of the contract to BT plc for the Strategic Partnership for Support Services, as set out in the Invitation to Submit Final Tender issued by the Council on 4 March 2013, be approved.”

The cabinet also gave authority for the signing of the contract to the Interim Chief Executive in consultation with the Leader, the Corporate Director of Resources, the Head of Legal, Democratic and Procurement Services and the Head of Finance.

Wallis says the deal guarantees the creation of 197 new jobs by end of year 4 and 313 new jobs to be delivered through reasonable endeavours by end of year 5.

“I am told the term reasonable endeavours has legal meeting, but for me, it still sounds wishy-washy,” says Wallis. “I am there will be some nervous staff wanting to know how they will fit into this new utopia.

Fifty two jobs have been identified to go by the end of year 4. There is a contractual commitment for most of the affected staff to be re-deployed.

Says Wallis: “The deed is done, and I just hope it will not turn into the disaster like so many other councils’ joint ventures up and down the land.”

There is a warning in a report to the cabinet about the risks of not signing a deal with BT. The report implies that BT would have to receive compensation for its bidding costs.

“If Cabinet chooses not to award a contract the Council will face a different set of risks (when compared to the risks of signing a contract).

“These risks would be higher in relation to finance and similar in relation to legal and delivery. As the bid meets the requirements as set out in the Evaluation Guidance … there are financial and legal risks in deciding not to award a contract.

“The ‘in-scope’ services have developed proposals with bidders over the past 12 months and if a contract is not awarded, work will need to be undertaken to ensure a level of continued service delivery in these areas in light of recent budget decisions.”

The report to the cabinet gives no projected cost of the deal. Officers are expected to sign a contract anytime after 24 March 2013.

Comment

BT’s promises, contractual commitments and guarantees are built into a concrete frame. Except that the frame can be broken apart by any legal dispute that throws clauses in the contract into doubt.

Let us hope Cornwall Council understands that its failure to keep its contractual commitments may bring BT’s litigation lawyers into play – and BT has more experience in outsourcing legal disputes than Cornwall Council.

Councillors will assume that Cornwall’s officers will be monitoring BT’s performance from day one of the contract. They may not realise that, perhaps with impressive diligence,  BT will be monitoring Cornwall Council’s performance from day one.

But not all councillors will need care how the contract progresses – for there will be a new council in May and some councillors may not stand or be re-elected.

If things go sour the new council could claim it wasn’t in any way responsible for the BT contract. All of this is within the context of rushed talks and a rushed agreement to sign the contract.

As Churchill said in the House of Commons in 1947:

“Democracy is the worst form of government, except for all those other forms that have been tried from time to time.”

Things run well and efficiently now at Cornwall Council. How can BT guarantee  197 jobs, invest more (Trading investment in bidding for new work – £1.9m plus £7.8m investment in transformation), make savings (£17.4m over 10 years) and run services more efficiently – and make a profit?

The Council says that BT will invest £157.5m in the partnership over 10 years, excluding an additional £16m spent outside Cornwall trying to win bids. The cabinet was told in a report that BT has made an “excellent offer”. But is it too good to be true? Indeed the one figure the report to the cabinet doesn’t give is the projected cost to Cornwall’s council taxpayers.

With the prices charged by BT for inevitable and as yet unforeseen changes, could the costs to the council more than wipe out savings?

It may be that all but one of Cornwall’s cabinet councillors, perhaps encouraged by council officers, have been naive. I hope I am proved wrong.

Andrew Wallis’s blog

Cornwall Council rushes to sign BT deal ahead of elections

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2 responses to “Cornwall Council’s cabinet approves BT deal after hurried talks

  1. IBM made exactly the same improbable claims in 2007 prior to signing Somerset up for Southwest One.

    5 years later in 2013:

    – Fewer local Council jobs
    – No new private jobs
    – No promised iconic building for a SW1 HQ (an empty demolition “bomb” site in the town centre where it was meant to be built)
    – No new business or revenue
    – Procurement contracts now out of County & SW Region
    – Business apparently unprofitable – SW1 has made losses in every year of trading, requiring parent company guarantees and for Councils to indemnify the Councillors who are Directors on the SW1 Board
    – No true net savings made for Councils (in fact higher net/true costs)
    – All new or changed IT requirements to support change are an add-on cost said to be “holding Somerset Council back through inflexibility”
    – No IT replacement costed into the contract, so now a 6+ year old ageing & risky IT infrastructure (see risk log extract from this week below)
    – Local Council IT skills degraded and key SAP skills offshored to India degrading Councils’ contract exit ability
    – High Court contract dispute to be heard in November – broken relationships, no mutual trust or respect
    – Many service (KPI- measured) levels lower (see internal audit extract from this week below) as an inadequately resourced & skilled contract management client in Councils cannot verify the service levels measured & reported by SW1 (on themselves).

    March 2013 Risk 7 ICT Infrastructure Taunton Deane Borough Council (TDBC) has an ageing ICT infrastructure (95% is over 6 years old) and a replacement of key elements is well overdue. A risk of significant failure of key servers and/or internal networks. Risk score 15 (Red)

    March 2013 Risk 14 Southwest One partnership SW1 is sustaining significant losses & one of the partners has renegotiated significant elements of their contract with SW1. There is a risk of the SW1 partnership failing to deliver Taunton Deane Borough Council objectives, and/or a premature termination of the contract. Southwest One partnership SW1 is sustaining significant losses & one of the partners has renegotiated significant elements of their contract with SW1. There is a risk of the SW1 partnership failing to deliver TDBC objectives, and/or a premature termination of the contract. Risk score 10 (Amber expected to be re-assessed Red).

    March 2013 Internal Audit: Southwest One (SW1) Contract Monitoring – There is no independent verification on the accuracy of Key Performance Indicator (KPI) results.There is a risk that inaccurate data is reported which could financially disadvantage the Council.

    I still don’t understand why waiting a matter of just weeks, for a newly elected Council to endorse & own the contract and more importantly the relationship with BT, was an issue?

    If BT had waited from October to March, what was a few weeks more in a 2-year procurement process? Would anyone enlighten me please – just for the sake of a fellow SW observer of your joint venture procurement journey?

    For the sake of Cornwall’s impoverished local economy & for decently-waged jobs, I really do hope that BT are able to deliver all or most of the above, where IBM and so many others (Capita, Liberata etc) have failed (BT themselves in Suffolk Council recently).

    As I am a BT shareholder in a modest self-invested ISA (for their broadband and YouView prospects & not for their troubled consultancy division), then I hope that BT remains profitable; their first loyalty and key objective will (quite rightly) be to make good returns to investors (probably including your own Council pension fund) through dividends from profits.

    You might arrange for some Cornish pixie dust to be sprinkled on the contract at the signing ceremony (it will 1,000s of pages long, so stock up on the pixie dust now), to help the “circle” of greater investment, better service, more jobs and substantial savings, with profitable business for BT, to be “squared”.

    Best of luck (will watch with interest as no-one else in the UK has ever pulled this off),

    Like

  2. I do hope that BT didn’t employ that old (double glazing) sales trick of guaranteeing a price if deal signed before the end of March?

    I struggle to understand that this deal could not wait 8-10 weeks for a new Council and a proper mandate.

    Or were the deal proponents in the Council worried that a new Council might not be so keen to privatise valued in-house services?

    Beware the Ides of Cornwall in 3-5 years time?

    The grass is defintely greener in New Zealand – ask ex Cornwall Council CEO Lavery!

    Like

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