BT tries to rescue its faltering IT outsourcing deal in Cornwall

bt cornwall logoBy Tony Collins

Cornwall council logoBT has appointed a new senior management team in Cornwall to help rescue a faltering IT-based outsourcing deal there.

Two years into the 10-year contract, BT has not met commitments and guarantees it gave when setting up BT Cornwall to take over the running of ICT, human resources, document management and other services for Cornwall Council,  Peninsula Community Health and Cornwall Partnership NHS Foundation Trust.

BT has made improvements in the past two months. If these are not sustained the council says that it will consider its options including early termination.

A BT spokesperson told Campaign4Change this week “We are working closely with our partners in this project to ensure we deliver on all aspects of the contract.”

A table in an officers’ report to the council this month puts the situation bluntly. The only commitment that is met 100% is for baseline savings – which are deducted at source.

Overview of BT Cornwall’s performance against commitments and guarantees

KPI measures Achieved (185/289) – 64%

PI measures Achieved (266/402) – 66%

Service Transformation (percentage of plans completed) – 38%

Financial contractual baseline savings (10% & 11.6%) – 100%

Trading gain share received (est £17.4m over 10 years) – £0

Guaranteed new jobs in Cornwall (yrs 1 & 2 111 new jobs target / 35.1 created) – 32%

Committed new jobs in Cornwall (yrs 1 & 2) – 0

Cornwall Council rushed into signing a contract with BT, before local elections in May 2013. This appears to be acknowledged in the report to the council. It says that, in the timescales available, due diligence and analysis before the contract signing was not at an ideal level.

BT made contractual commitments over new jobs, service transformation, key performance indicators, and performance indicators. The council’s report says that some contractual commitments have not been met.

The report also says the council “might be paying twice for replacement assets”.

There were delays in securing contract novations with suppliers which meant, as an interim measure, the council “had to pay suppliers and reclaim the monies from BT Cornwall”.

As part of their bid submission, BT estimated trading gain share to the public sector partners of £17m over the 10 years of the contract. “To date, no gain share has been received from trading. It is recognised, however, that this is not a contractual commitment,” says the report.

BT Cornwall made a contractual commitment to deliver a minimum of 197 additional jobs to Cornwall over the life of the contract with 111 of these being delivered in the first two years. “Of these, 35 have been delivered so far.”

There was also a commitment to try and deliver a further 240 jobs in the first two years and none of these has been delivered.

The Service Desk has failed to cope with or process the number of incidents being reported. Users have abandoned calls after “lengthy and fruitless waits for assistance”. The report adds: “The latest KPIs demonstrate that there is still some way to go in terms of Service Desk performance.”

There have been concerns among some councillors about reports of job losses within BT Cornwall, and the loss of expertise that had been transferred to BT Cornwall from the council.

A problematic upgrade to Windows 7  left users on Windows XP and in some cases unable to access their desktop or laptop. The report says:

“Despite being discussed extensively throughout the dialogue stages of the contract, it was noted that the delivery of Windows 7 had been under-resourced and the deployment methodology inefficient.

“Fortunately, because the government had negotiated the extension of support to Windows XP, the Council had not suffered the very serious consequences the delay would otherwise have caused.

“It is fair to say that the council is not entirely blameless for the long delay to the upgrade process as many officers failed to attend for their upgrade appointment. That said, had BT Cornwall adopted a more user-friendly method of upgrade, the ‘no-shows’ would not have been such a problem.

“There has also been an issue around the number of software applications which have required Windows 7 compatibility but, again, this was an issue which BT were aware of during the dialogue leading up to the Contract and knowing the challenging timescale, it was their responsibility to design a methodology and/or to commit the resources required to ensure the complexities were addressed and the process completed by the due date.

“Members have asked for an estimate of the time lost and financial cost to the council caused by the overall delay and the operational downtime as a result of issues with upgrades which have prevented use of laptops/PC’s and meant teams/individuals have been unable to work effectively or at all for periods of time.

“It is not possible to calculate this accurately any more than the time lost through unjustified ‘no-shows’ or late notification to BT Cornwall of software applications can be estimated. It is also difficult to estimate the downtime due to the failings of the upgrade process when compared with the problems inevitably caused by the large organisational transition to a new operating system.”

Andrew Wallis cornwall

Andrew Wallis, an independent councillor in Cornwall and cabinet member, says on his blog that is concerned that BT Cornwall has had two years to deliver on the contract and has failed.

“There is only so many second-chances you can give. For me, if by summer BT Cornwall do not deliver their commitments, than I am afraid we must be in the area of looking to terminate the contract …”

 The council’s report highlights:

–  A lack of challenge to requests for replacement equipment.

 – ICT support much reduced

– Performance under the Service Level Agreement down.

– Projects taking longer to be initiated.

 – Peninsula Community Health and Cornwall Partnership NHS Foundation Trust unhappy with the responses they had received from BT Cornwall in respect of the delivery of their ICT services.

New management

bt logo

The new management at BT Cornwall includes an interim chief executive, Gavin Finlayson, an interim chief technical officer, Phil Healy, and an interim project delivery director, Chris Swann.

Ian Dalton, President of BT,  Global Government and Health, who is head of the public sector for BT in the UK, has written to Cornwall Council this month to restate BT’s commitment to the 10-year service delivery agreement.

Comment

Campaign4Change warned in 2013 that the signing of a deal was being rushed – Council approves BT deal after hurried talks.

We also said that if the promises, commitments and guarantees came to nothing, nobody in the public sector – officer or councillor – would be held accountable. And nobody has.

How is it that councils – whose officers are supposed to be professionals – can continue to sign outsourcing deals that are clearly at the outset no more than superficially attractive and which put public money and service to users at obvious risk?

Services at Cornwall seem to have worsened since the deal was signed. So why were councillors given rosy reports on the future of services, jobs and IT support in the period running up to contract’s signing?

Better surely if councillors had received neutral reports on the pros and cons of outsourcing. Too often naive councillors are in awe of beautiful marketing brochures – sometimes commissioned by the council itself -that eulogize the benefits of outsourcing and put the risks in the appendices.

The word “guarantee” means little before an outsourcing deal is signed. Indeed in 2003 we suggested the “G” word be banned from the outsourcing lexicon.

BT’s corporate management, having realised how bad things were in Cornwall, appears to be doing all it can to rescue the deal. But can it afford to employ people it doesn’t really need, to meet a contractual commitment?

It’s extraordinary that the BT Cornwall outsourcing deal went through the full council with hardly a word of opposition.

There again, councillors believe their officers are the professionals who would not sign an ill-considered outsourcing deal. Or would they?

Isn’t it time that the elected representatives of the public became more professional themselves before putting services to users and so much public money at risk?

Public sector outsourcing failures – European Services Strategy Unit reports

Cornwall Council approves BT deal after hurried talks – 2013

BT Cornwall is not working for Cornwall Council as it should – councillor Andrew Wallis’s blog

Cornwall Council report

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7 responses to “BT tries to rescue its faltering IT outsourcing deal in Cornwall

  1. Pingback: BT loses its outsourcing legal case against Cornwall Council | UNITE@SOMERSET COUNTYCOUNCIL

  2. Pingback: The biggest cause of shared services failure? | The Service Review

  3. Andrew – Why was the former Cabinet so strongly motivated to rush signing then?

    Are there any former Cabinet members who signed in the current Cabinet? If so, should they now consider their positions?

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  4. Andrew – Can you please explain why the Council didn’t wait a few weeks until after the elections?

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    • Why didn’t the Council wait till after the election? That’s simple to answer, even though the full Council gave their views, the final decision was made by the Cabinet (was not a Cabinet Member then), and they knew, if it had gone after the election, there was a chance it wouldn’t have been signed. I certainly wouldn’t have…..(now a Cabinet Member).

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  5. I need to clarify the previous comment. The deal did not just sail through full council. There was a long, and difficult battle by back-benchers who could see the BT deal was undeliverable. It cost the Leader his position, with a no-confidence motion and the CEO left. In the end, the Council signed a much watered down deal. It gives those who fought against the BT outsourcing credibility of sticking to their guns and rejecting the original ‘wholesale outsorucing’ deal. And thank God we did, as we would be in a far graver position than we find ourselves now.

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  6. I WARNED CORNWALL ABOUT THISB REPEATEDLY RIGHT UP TO CONTRACT SIGNING.

    From: Dave Orr
    Sent: Friday, March 15, 2013 11:13 AM
    Subject: Hope that BT “squares the circle”…..add Cornish pixie dust?

    I can add nothing to the blog by Tony Collins on your recent signing with BT: https://ukcampaign4change.com/2013/03/13/cornwall-council-signs-bt-deal-after-hurried-talks/

    “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?”

    IBM made exactly the same improbable claims 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),

    Dave Orr.

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