By Tony Collins
Bitten by misfortune over its outsourcing/joint venture deal with IBM, Somerset County Council has become more open – which seemed unlikely nearly a decade ago.
In 2007 the council and IBM formed Southwest One, a joint services company owned by IBM. The deal was characterised by official secrecy. Even non-confidential financial information on the deal was off-limits.
That’s no longer the case. Humbled a little by a failure of the outsourcing deal (including a legal action launched by IBM that cost the council’s taxpayers at least £5.9m) local officials and their lawyers don’t automatically reach for the screens when things go wrong.
In 2014 Somerset County Council published a useful report on the lessons learnt from its Southwest One contract.
The latest disclosure is a report to the council’s audit committee meeting in June. The report focuses on the poor management and lack of oversight by some of Somerset’s officers of a range of contractor contracts. The council has 800 contracts, 87 of which are worth over £1m and some worth a lot more.
Given that the Council is committed to becoming an increasingly commissioning authority, it is likely that the total value of contracts will increase in the medium term, says the audit report by the excellent South West Audit Partnership (SWAP).
SWAP put the risk of contracts not being delivered within budget as “high”, but council officers had put this risk initially at only “medium”. SWAP found that the risk of services falling below expected standards or not delivering was “high” but, at the start of the audit assessment, council officers had put the risk at only “medium”.
None of the contracts reviewed had an up-to-date risk register to inform performance monitoring.
No corporate contract performance framework was in place for managing contracts above defined thresholds.
“Some key risks are not well managed,” says the report.
“It is acknowledged that the Council has implemented new contract procedural rules from May 2015 which post-dates the contracts reviewed in this audit; however these procedural rules contain only ‘headline’ statements relating to contract management.
“Most notable in the audit work undertaken was the lack of consistency in terms of the approach to contract management across the contracts reviewed. Whilst good practice was found to be in place in several areas, the level of and approach to management of contracts varied greatly.
“No rationale based on proportionality, value, or risk for this variation was found to be in place. The largest contract reviewed had an annual value of over £10 million but no performance indicators were currently being actively monitored.”
Soon after the report was published the council withdrew it from its website. It says the Audit Committee meeting for 3 May has been postponed until June. It’s expected that the audit report will be published (again) shortly before that meeting.
Fortunately campaigner Dave Orr downloaded the audit report before it was taken down.
How many councils manage outsourcing and other contracts as unpredictably as Somerset but keep quiet about it?
Why, for example, have Barnet’s officers and ruling councillors not made public any full audit reports on the council’s performance in managing its contracts with Capita?
It could be that councils up and down the country are not properly managing their contracts – or are leaving it to the outsourcing companies to reveal when things go wrong.
Would that regular SWAP reports were published for every council.
All public authorities have internal auditors who may well do a good job but their findings, particularly if they are critical of the management of suppliers, are usually kept confidential.
Freedom of information legislation has made councils more open generally, as has guidance the Department for Communities and Local Government issued in 2014.
But none of this has made councils such as Barnet more open about any problems on its outsourcing deals.
Indeed clear and perceptive audit reports such as the one from SWAP are rare in the world of local government.
All of which raises the question of whether one reason some councils love outsourcing is that they can pass responsibility to suppliers for things that go wrong knowing the public may never find out the full truth because secrecy is still endemic in local government.
Thank you to Dave Orr for drawing my attention to the audit report – and its (temporary) withdrawal.