Category Archives: legal disputes

Sandwell Council and BT to agree “exit plan” on outsourcing contract

Posted on 28/08/2013 | 2 comments

By Tony Collins

Sandwell council and BT have agreed to work out an exit plan to their “partnership”, in which services will transfer back to the council in March 2014.

The 15-year £300m deal, which was signed in 2007, is being cut short by seven years. The outsourcing deal includes ICT, HR, project management, finance, procurement, and customer service.

The Express and Star reports a memo to council staff saying

“Discussions between the council and BT have been taking place to determine the way in which the current contractual arrangements will be brought to a close to both parties’ mutual satisfaction.

“As the 30-day notice period ends [Sandwell served a termination notice on BT on 16 July 2013], we will be entering into a transitional period.

“During this time, BT will continue to manage Transform Sandwell and deliver services. Also during this period, BT and the council will work on an agreed exit plan which will prepare all relevant services for handover in March 2014.”

The memo said that it would be at that point that any arrangements for staff working for Transform Sandwell to legally transfer their contracts would take effect.

The council’s ruling cabinet decided to begin the process to end the BT contract because it now has fewer workers, due to redundancies prompted by government cuts.

The authority wanted to pay BT less to reflect the reduced volume of work. It has also been unhappy with BT’s service and began dispute proceedings last September.

Forward-looking

On its website BT describes Sandwell as a “forward-looking” council. BT has used its “Transform Sandwell” partnership as a reference site for prospective outsourcing customers.

 BT’s website publicity about Transform Sandwell reads much like the statements made by other councils and their outsourcing supplier in the early years of a partnership.  

BT says the  council saw “leading edge CRM technology as crucial in enacting all elements of the Sandwell formula”. 

BT’s website continues:

“A thriving, sustainable, optimistic and forward-looking community – that’s where Sandwell Council aims to be in 2020.

“Powering that journey is one of the UK’s most exciting regeneration programmes, with well over £1 billion of inward investment. It’s a significant undertaking. Nearly 300,000 citizens give Sandwell the fourth highest population density of 34 districts in the West Midlands.

“Against that backdrop, Transform Sandwell is a 15-year strategic partnership between BT and Sandwell Council. It seeks to revolutionise how Sandwell does business and delivers public services – with a remit that includes ICT, HR, project management, finance, procurement, and customer service.

“The Transform Sandwell partnership has delivered a £45 million investment in technology, a new regional business centre, and the creation of hundreds of new jobs.

“Not only having to meet the needs of Sandwell and its citizens, Transform Sandwell also needs to fulfil government demands. One example of the latter is for councils to meet citizens’ needs as far as possible the first time they call, in pursuit of cost savings and better use of resources.

“Meanwhile the move from comprehensive performance assessment (CPA) to comprehensive area assessment (CAA) requires councils to gather more customer feedback on their performance. In both cases, the contact centre holds the key.

“The key is to ensure that more of people’s needs are met in a single interaction, while making better use of self-service and electronic channels. Similarly, gathering customer feedback means making the most of day-to-day interactions rather than labour-intensively creating new ones.”

Local government has moved on

Council leader Darren Cooper said it was in both organisations’ interests to end the Transform Sandwell partnership. He said

“The world of local government has moved on significantly since 2007. We now need a different plan.”

TechMarketView’s John O’Brien said BT will now be doing all it can to salvage the situation and the potential reputational harm.

“This case shows the complexities of managing long-term IT/BPO deals, where client requirements can change so dramatically during the course of the programme. Local government will be particularly challenging right now because of the ongoing cutbacks to public spending.

“Such large, long-term deals are increasingly out of favour in local government today. Instead councils are moving  towards smaller more select sourcing of services from a variety of suppliers, particularly as their first generation deals come up for renewal.”

Comment

Clearly Sandwell has done its sums and decided it will be better off without BT. 

Could any 15-year outsourcing deal cope with all major changes over that period? HMRC’s outsourcing deals with HP and then Capgemini have coped well over 19 years so far – with no catastrophic lapses in service and the suppliers’ being able to help handle much policy-based change. But HMRC has had the money to spend vastly more than it originally intended.  

Sandwell needs to spend as a little as it can and BT is not a charity. At the start of  big local authority outsourcing deals it is usual for both sides to gush publicly about savings,  investment in transformation, and new jobs. But at some point the supplier needs to make money.

However the contract is configured, perhaps with council staff working more efficiently on the supplier’s other contracts, the outsourcing deal needs to turn in a profit – even if the pre-contract PowerPoint graph shows costs reducing over the whole term of the deal. 

The danger with single-supplier long-term outsourcing deals is that the council, in essence, receives a loan from the supplier to enable, almost from the start, a simultaneous service transformation, cost cutting and new jobs. But the supplier must recoup the money at some point.      

A single-supplier outsourcing deal can seem to get a council out of a hole. It offers savings and transformation at a time the council most needs them. Who cares about the latter period of an outsourcing deal when none of the original participants are likely to be around to be answerable for a poor deal?

It would take an extraordinarily strong public service ethos for councillors and officers to reject a supplier’s promises that look so attractive in the early years.

It is unclear what costs Sandwell will have to pay to end the deal. Will it have to pay BT compensation for its investments in the contract, as well as exit costs? 

 

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Posted in BT, Campaign4Change, CRM, legal disputes, local government, managing outsourced services, operational issues, outsourcing, public-private partnerships

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High Court sheriffs confront Fujitsu Services

Posted on 29/07/2013 | 4 comments

By Tony Collins

BBC One’s “The Sheriffs Are Coming” shows what happens when people and companies take a civil action over money they say are owed, win their case, and don’t get payment.

Last week’s broadcast showed a car dealer, a builder, a jeweller’s shop – and Fujitsu Services – facing high court enforcement officers, who are also known as sheriffs, over unpaid debts of thousands of pounds.

After sheriffs called on a car dealer and asked him to pay a debt of about £6,000 the police were called along with tow-away trucks to carry off cars to be sold at auction to pay the debt.

After three  hours of discussions the dealer paid up.  In the same programme the sheriffs seized items worth £28,000 from a jewellery shop in Kingston. A couple had won a case over a missold engagement ring.

The appointment of the sheriffs is the final stage of a civil legal action where the debt remains unpaid.  Armed with enforcement paperwork from the High Court, the sheriffs have a legal right to seize goods there and then. Whether it’s business premises or private property they have the power to force entry.

Fujitsu staff “shaken”

Which is where Fujistu Services comes in. A unnamed company had been to court and been awarded  £149, 481.93 against Fujitsu. As Fujitsu hadn’t paid, the company asked the High Court to collect payment – and enforcement officer Lawrence Grix went with a colleague Kevin McNally to Fujitsu’s Stevenage’s offices to collect the money.

That the sheriffs were dealing with one of world’s biggest IT services companies in Europe, Middle East and Africa, which employs 14,500 people in more than 20 countries, did not faze them.

The sheriffs in a black Ford Transit van pull up at the manned security barrier at Fujitsu Stevenage where the supplier has had a presence for 43 years.

The unexpected visit  leaves Fujitsu staff “shaken” according to the broadcast.

At first Fujitsu’s security staff refuse admission to the sheriffs’ van.

Sheriff: “You can’t actually stop me.”

Fujitsu: “I can stop you.”

Sheriff: “You can’t.”

Police?

Some time later, and still without access to Fujitsu Services Stevenage, Grix warns Fujitsu that he can call the police. He tells a Fujitsu security guard:

“To be honest I don’t think we have been treated particularly professionally or courteously so far. We have done the utmost to be professional and respectful to your situation here.”

“Ok,” says a guard at the security barrier. It appears that the guard has just come on duty and is unaware that the sheriffs have been trying to gain access for some time.

The sheriff continues: “We not looking to come storming round the place and see your latest technology. That’s not what we are here for. We are here to execute a high court writ and we are asking to be treated in a courteous manner.

“We have the right to enter. If you are not going to allow me to enter I am just going to park my vehicle here (at the entrance barrier) and go in on foot and if anybody tries to stop me I will call the police because it is an arrestable offence to obstruct an enforcement officer in the execution of a writ.

“We don’t want to go down that road. We just want to be treated with some courtesy.”

Eventually the sheriffs gain access – but still don’t get payment and so they seize on paper sufficient Fujitsu goods to cover the debt.  The sheriff listed property he could remove later if the debt remained unpaid. The programme’s narrator David Reed told viewers that the sheriffs now owned just about everything at Fujitsu’s head office.

In the end Fujitsu paid the debt in full, without having any of its goods actually seized and it gave a statement to the BBC saying the delay in payment was a genuine oversight on its part and that it took immediate steps which rectified the situation.

Comment

At one level it’s a trivial incident, perhaps an amusing one.

Yet it left some Fujitsu security staff and senior managers having to deal with high court enforcement officers who felt the company had been discourteous, who had to warn that they could force entry, who said at one point that they could call police if refused entry, and who ended up listing a large quantity of Fujitsu’s goods for seizure if the debt remained unpaid.  Much of the confrontation was filmed by the BBC.

It’s surprising that a company the size of Fujitsu – a company with the legal wherewithal to sue the Department of Health for £700m and carry on negotiations and discussions over the NPfIT-related money for five years – had such an oversight.

How was it that Fujitsu’s internal controls apparently did not prevent a court-endorsed business debt of £149,000 going unpaid until high court sheriffs were called in? Not a good advert for Fujitsu Services.

Sheriffs are coming – BBC’s Fujitsu debt episode in full

 BBC:  “Sometimes writs are issued against some of the largest companies in the world. Today Lawrence and Kev are enforcing a high court writ against one of the world’s largest IT services companies – Fujitsu.

Sheriff: : “Absolutely no doubt whatsoever they [Fujitsu] have the money to pay this. At the end of the day it doesn’t matter what excuses they come up with and how big their company is. They have got a debt and we are here to collect it.”

BBC: “Fujitsu has over £30bn in revenues. Time for Lawrence to get the ball rolling.”

A black Ford Transit van with number plate smudged out pulls up to the manned entrance security barrier at Fujitsu Stevenage.

Sheriff, through an open van window: “We are here to execute a writ against Fuijitsu Services.”

Security guard says “no” – that they cannot come in until they have had the ok  from above.

Sheriff: “You can’t stop us coming in. I know what you are saying and I fully respect your position and I am quite happy for you to try and contact somebody who can deal with this but when it comes to a point of law you cannot actually stop us coming in.”

BBC: If necessary sheriffs can force entry to commercial premises but for the time being they decide to park around the corner and wait.

A sign at Fujitsu’s entrance says:

“Visitors – please report to security.

“Restrictions: Plerase declare all electrical equipment

“Please park as instructed

“All vehicles and hand baggage are liable to be searched on departure.”

BBC: “After 15 minutes at the side of the road Lawrence and Kev are finally approached by someone in authority.” A woman in dark clothing (and in the background a man in white shirt and dark trousers) talks to the sheriffs through an open passenger window.

Fujitsu: “Got any details of what this is about? Because I cannot get anybody for you unless we have more details.”

Sheriff: “They’ve have got a judgment for £149, 481.93.”

Fujitsu: “I can’t let you into the building. I am not allowed to let you into the building.”

Sheriff: “Right, unfortunately you can’t actually stop me.”

Fujitsu: “I can stop you.”

Sheriff: “You can’t.”

Fujitsu: “At the moment I can stop you coming into the building.until I get back.”

Sheriff: “You can’t. You can’t, whether you hear back – I am not trying to be awkward.”

Fujitsu: “We are not either.”

Sheriff: “We have been very cooperative at the moment. The security staff have asked us to wait here. I can understand the sensitivity of your business –”

Fujitsu: “My policy is that I don’t let you into this building. I am in control of this building and I am not allowed to let you in.”

Sheriff: “Unfortunately, as a high court officer enforcing a writ, I can force entry to a commercial premises if necessary. We do not need permission to enter your building.”

Fujitsu: “What do you need to enter the building for? Because we don’t know –”

Sheriff: “To seize goods. To seize goods. We are here to seize goods.”

Fujitsu: “Let me go and ring you back.

Fujitsu man in white shirt : “We’ll come back to you in as second …”

BBC:  “The shaken Fujitsu employees head off to talk to their superiors leaving Lawrence and Kev to continue waiting outside. After half-an-hour of sitting beside thew road, with no sign of any progress, Lawrence has had enough.”

He pulls up from a side road and stops at Fujitsu’s security barrier. A security guard comes out.

Fujitsu: “You want to come in do you?”

Sheriff: “To be honest I don’t think we have been treated particularly professionally or courteously so far. We have done the utmost to be professional and respectful to your situation here.”

Fujitsu: “Ok.”

Sheriff: “We are not looking to come storming round the place and see your latest technology. That’s not what we are here for. We are here to execute a high court writ and we are asking to be treated in a courteous manner. We have the right to enter. If you are not going to allow me to enter I am just going to park my vehicle here (at the entrance barrier) and go in on foot and if anybody tries to stop me I will call the police because it is an arrestable offence to obstruct an enforcement officer in the execution of a writ. We don’t want to go down that road. We just want to be treated with some courtesy.”

Fujitsu: “Some of us have just got here. We didn’t know you were coming.”

Sheriff: “I can appreciate that.”

Fujitsu: “Can you give me a couple of minutes?”

BBC: “Finally things seem to be happening. Lawrence is invited inside to discuss matters with someone in authority. It’s progress, but does it mean payment is on its way? … Lawrence is inside for nearly an hour before he emerges and in the chess game that is Lawrence Grix versus Fujitsu Lawrence has captured some major pieces.”

Sheriff: “He was quite insistent they were not going to pay today. So I have basically seized the entire contents of the building or as much as need be to cover the debt. If it doesn’t  get paid or resolved in a satisfactory manner we will be back and if necessary we will remove goods.”

BBC: “Lawrence has carried out a walking possession which means he has listed property he can remove at a later date if the debt isn’t paid. Thanks to Lawrence the high court now owns just about everything in Fujitsu’s head office.”

Soon after the visit Fujitsu pays the £149, 481.93.

Fujitsu gives a statement to the BBC saying that the delay in payment was a genuine oversight on its part and it took immediate steps which rectified the situation.

The sheriffs are coming.

Sheriffs set for TV stardom

The Sheriffs are coming – again.

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Posted in Fujitsu, law, legal disputes

Ban the “g” word from outsourcing lexicon?

Posted on 25/07/2013 | 2 comments

By Tony Collins

Is the word “guaranteed” as in “guaranteed savings” just spin –  perhaps the most misused word  in the lexicon of outsourcing? Should it be banned by general voluntary agreement?

It’s commonly used when suppliers are bidding for council contracts; and it is used almost as much by cabinet councillors when they are marketing an outsourcing proposal to fellow councillors and the public.

 It was used a lot by BT in its bid marketing documents that were shown to Cornwall councillors before  they signed a contract with the company. Cornwall’s ruling councillors last year, too, used the phrase “guaranteed savings” to batter their outsourcing critics. 

These are mentions of “guaranteed” from a single marketing document – BT’s Cornwall Council Briefing Strategic Partnership for Support Services, October 2012

– “£149.6m of guaranteed savings”

–  “jobs supported by formal commitments and guarantees on delivery along with clarity on the nature and type of jobs”

– “Guaranteed savings of £60.6m year Core Contract Savings Years 1-10”

– Contractual guarantees for both job creation and performance levels reached

– sales and marketing team and guarantees – £2mpa

But when “guaranteed” faces its most critical test –  in a legal dispute – it appears to mean little or nothing. It’s not a contractual word. [That’s wrong. It is a contractual word says Ali Mehmet in a comment at the end of this blog.]

Somerset County Council portrayed the lowered costs of outsourcing as guaranteed when it contracted out IT and other services to the IBM-owned “Southwest One” joint venture.

Said an IBM-sponsored article on Southwest One in 2008, a year after the joint venture was formed,

“The contract calls for guaranteed [the article’s emphasis] lower costs for service delivery. IBM knows it can lower costs for the partners’ processes, so all three government agencies come out ahead. So do citizens.”

In the end the claimed savings were not achieved, the contract between the council and IBM went into a legal dispute which was settled at a cost to the council of £5.9m, and Somerset’s Cabinet member for resources, David Huxtable, told the BBC last week:

“It was a very complex contract and lots of the savings were predicated on an ever-increasing amount of money being put into public services and we know in the last four years that has gone into reverse.”

Barnet Council uses the word “guaranteed” liberally as it prepares to outsource its New Customer Services Organisation [NCSO] to Capita in a 10-year £320m contract which is part of the One Barnet transformation programme. Says a Barnet statement on the choice of Capita as preferred supplier for NCSO: 

“The contract is worth £320 over ten years and guarantees a saving to the council of £126 million over that period.”

Guarantees are subject to …

The g word may have little meaning in a contract because it is usually tied to variables – such as level of spend – which the public and most councillors rarely ever know the detail of, because the contract is kept confidential.

And against what – subjective? – basis, and baseline, are the guaranteed savings measured? Again it is in the commercially confidential contracts.

Once in a legal dispute between outsourcing supplier and customer, lawyers will argue over the sense, meaning and purpose of contractual guarantees that are subject to an ambiguous string of variables.

 If political parties made manifesto commitments that were “guaranteed” would anyone believe them? If a double-glazing salesmen offered security and thermal insulation that was guaranteed would anyone believe them? 

So why are ruling councillors so inclined to believe outsourcing bidders when they sprinkle their documents with the “g” word? How does it come to mean so much at the pre-contract stage – and nothing afterwards?

A ban on the “g” word? 

If a voluntary ban on the “g” word, at least with reference to outsourcing and related proposals, would be a good idea, please let me know when you see it used and, most likely, abused.  tony@tonyrcollins.co.uk

2 Comments

Posted in BT, Campaign4Change, IBM, IT-related failures, jargon, legal disputes, local government, public sector, public services

BT gets termination notice on £300m outsourcing contract

Posted on 22/07/2013 | 4 comments

By Tony Collins

Sandwell Council has issued BT with a 30-day termination notice on a 15-year £300m outsourcing contract that has yet to reach its half-way point.

The metropolitan borough council says there are various defaults BT needs to resolve. Based at Oldbury, West Midlands, about five miles from Birmingham, Sandwell has been an outsourcing reference site for BT.

The company quoted Sandwell Council in its presentations that formed part of the bidding for Cornwall Council’s planned outsourcing work.

The “guaranteed” savings in Sandwell’s contract with BT appear to be based on a level of spending the council is not maintaining. One point of contention appears to be the council’s wish for BT to reduce its charges to the council in line with the authority’s lower levels of activity.

In June 2012 Sandwell submitted a change request that asked BT to recalculate the annual service charge because the service volumes delivered through the contract had reduced significantly.

The council wanted the recalculation to be based on a reduction in the workforce from around 7,400 in 2007 when the contract with BT was signed to 4,688 in mid 2012.

Government Computing quotes a council document on the dispute as saying

“A reduction in the workforce should have a corresponding reduction in volumes such as the size of the ICT estate, the payroll, HR support and budget holders. There have been volume reductions in invoices, the number of contracts administered and calls to the contact centre for some services.”

Sandwell’s 30-day termination notice to BT was issued on 16 July so it will expire around that time next month. The council says it is prepared to take back staff.

Sandwell council leader, Councillor Darren Cooper, told Government Computing: “Cabinet has approved a recommendation to start the process of ending our contract with BT. That termination will take effect in 30 days’ time unless BT puts right various defaults we have asked them to resolve.

“If we have to, I am confident we will be able to bring the services BT currently supplies to us back to the council and run them in the most effective way in future.”

Guaranteed

In 2007 BT and its joint bidder, outsourcing provider Liberata, had set out to run the council’s back-office functions at what was announced as a “guaranteed” reduced cost over the lifetime of the contract.

The deal was aimed at cutting costs and improving Sandwell’s IT infrastructure, HR, finance, payroll and customer services functions.

There was some success. The BT-led ‘Transform Sandwell’ team won the UK’s Best Customer Services Management Team at the National Customer Services Awards in December 2010.

BT built a 75,000 square foot office block for Transform Sandwell. It accommodated 400 employees of Transform Sandwell and a 300-strong customer service team working for BT.

Massive mistake?

Independent socialist councillor Mick Davies said “Someone somewhere has obviously made a massive mistake and the taxpayers of Sandwell will have to foot the bill… The writing seemed to be on the wall when BT’s partner in the project, Liberata, was dumped unceremoniously a couple of years ago.”

Sandwell Council’s deputy leader and cabinet member for strategic resources Councillor Steve Eling said: “In view of the current climate and public expenditure reductions, the council is engaging with its partner to determine services that are needed over the medium term and to reduce the overall costs in light of public spending reductions.”

Technologies used in the Transform Sandwell contact centre have included Verint Impact 360, Siebel CRM and Nortel Contact Centre 6.0.

A BT spokesman told the Halesowen News

“BT continually looks at ways to improve the service it provides to its customers. The original contract was signed in 2007 and as is normal with long-term partnerships BT constantly looks at ways to service the changing needs of both the council and citizens of Sandwell.”

BT told Government Computing it “has throughout – and remains – fully committed to delivering the commitments it made through the Transform Sandwell Partnership.”

The European Services Strategy Unit which has carried out detailed research on outsourcing contracts lists some of the terminated and reduced local authority strategic partnership contracts.

Sandwell has 72 councillors, 67 of which represent Labour.

Comment

At some point in a 10 or 15-year outsourcing contract a major dispute seems almost inevitable because a supplier’s business objectives will rarely change when the council’s priorities change.

BT’s deal with Sandwell was signed in 2007 – as was Southwest One’s deal with IBM – at a pre-austerity period.

Now that councils have been making, and continue to make, radical savings, they want the flexibility to cut their outsourcing costs too. But it may not be in the supplier’s interests to take profits that are much lower than expected.

No such thing as a free lunch

How can the business interests of outsourcing providers and their council clients ever completely align and move in time like synchronised swimmers?

The growing number of disputes in local authority outsourcing deals suggests that councils are not properly weighing up the risks when they sign deals.

Perhaps small groups of ruling councillors – such as those at Barnet – are too easily persuaded by the “guaranteed” savings on offer at the start of a contract.

There is no such thing as a free lunch. But try telling that to council Cabinet councillors who have cartoon-character pound signs in their eyes in the Disney period before a big outsourcing contract is well underway.

Let’s hope BT and Sandwell kiss and make up. It looks like the lawyers are already in the middle of them, though; and at whose expense?

Sandwell and BT consider end of strategic partnership – Government Computing

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Posted in BT, change management, efficiency savings, ERP, IT projects, IT-related failures, law, legal disputes, local government, managing outsourced services, outsourcing, private sector lessons for the public sector, public sector, public services, public-private partnerships, risk, shared services, supplier relationships

The story of Southwest One

Posted on 16/07/2013 | 2 comments

By Tony Collins

Dave Orr worked in a variety of IT and project management roles for Somerset County Council and retired in 2010. For years he has campaigned with extraordinary tenacity to bring to the surface the truth over an unusual joint venture between IBM, Somerset County Council, a local borough council and the local police force.

Now he has written an account of the joint venture and the lessons. It is published on the website of procurement expert Peter Smith.

Orr questions whether Southwest One was ever a good idea, since it was formed in 2007.

The deal has not made the savings intended, a SAP implementation went awry, the contract has been mired in political controversy and criticism, Southwest One has repeatedly lost money, and many of the transferred staff and services have returned to the county council, and some services returned to the borough council. IBM and the county council have ended up in a legal dispute that cost the county council £5.5m to settle. Southwest One was not exactly the partnership it set out to be.

The contract may show how an outsourcing deal that doesn’t have the support of the staff being transferred is flawed fundamentally from the start (which is one reason few people will be surprised if a 10-year £320m deal for Capita to run Barnet Council’s new customer service organisation [NSCSO]  ends in tears).

These are some of Orr’s points:

–  Like other light-touch regulators, the Audit Commission repeatedly gave Southwest One positive reports, without ever qualifying the accounts, even as problems with SAP implementation mounted in 2009 and procurement savings were not being made in line with forecasts.

 – The contract called for transformation based upon ‘world-class technologies’, yet all of the IT Service was placed into Southwest One with no IT expertise back in the Somerset County client (until after a poor SAP implementation in 2009). Was the lack of retained IT skills in the Somerset County client behind the formal acceptance of a badly configured SAP implementation?

– Large scale outsourcing over a long contract of 10 years or more requires an ability to foresee the future that is simply not possible to capture in a fixed contract. In a 10-year contract, there will be three changes of national government and three changes of local government. That is a great deal of unpredictable change to cope with via a fixed, long-term contract.

– Local Government will always be at a disadvantage in resources and skills, to a large multi-national contractor like IBM, when it comes to negotiating, letting and managing a complex multi-service contract.

– What was the culture of Southwest One (75% owned by IBM)? Was it private, public or a hybrid? The management culture remained firmly IBM, yet the councils and police workforces were seconded and remained equally firmly public sector rooted. There is such a thing as a public service ethos. In fact, Southwest One was run like a mini-IBM based upon global divisions, complete with IBM standard structures and processes. Southwest One seconded employees were not allowed anything like a full access to IBM internal systems, thus creating additional complexity, as “real” IBM employees relied entirely upon on-line systems.

–  Mixed teams in a single shared service were hard to amalgamate. This meant the IBM managers of Southwest One never really gained the sort of command & control of the multi-tier workforces that their bonus-oriented model needs to function. “I doubt that IBM would ever again contemplate the seconded staff model over the TUPE transfer model,” says Orr.

– Somerset County Council ran with a “thin” client management team that, in Orr’s view, did not have sufficient expertise or enough staff resources to effectively manage this complex contract with IBM. The councils relied upon definitions of “partnership” that meant one thing to the councils’ side and quite another thing to IBM, says Orr.

– In Southwest One, Somerset County Council handed their entire IT Service over lock, stock and barrel. “Can you really consider IT as wholly a ‘back office’ service? Many successful private Companies see IT as a strategic service to be kept under their own control.”

– The real savings might have been found in optimising processes in big departments (like Social Care, Education, Highways) that lay outside of Southwest One’s reach. “The focus on IT rather than service processes was another flaw in the model.”

Orr  concludes that nobody who played a major part in the Southwest deal has in any way been held to account for what has gone wrong.

Southwest One – the complete story from Dave Orr

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Posted in Campaign4Change, change management, excessive secrecy, FOI, Freedom of Information, governance, IBM, IT-related failures, legal disputes, local government, managing change, managing outsourced services, openness and transparency, Politics, private sector lessons for the public sector, procurement, project management, public-private partnerships, SAP, shared services, supplier relationships

Did officials exaggerate death of the NPfIT?

Posted on 14/06/2013 | Leave a comment

By T0ny Collins

In 2011 the Department of Health made a major announcement that implied the NHS IT programme, the NPfIT, was dead when it wasn’t.

The DH’s press release announced an “acceleration of the dismantling of the National Programme for IT, following the conclusions of a new review by the Cabinet Office’s Major Projects Authority”.

It said the Authority had concluded that the NPfIT was “not fit to provide the modern IT services that the NHS needs…” The National media took the press release to mean that the NPfIT was dead.

What the announcement didn’t mention was that at least £1.1bn had still to be spent, largely with CSC, provided that the company successfully completed all the work set out in its revised contracts, and that the projected end-of-life of some centrally-chosen NHS IT systems was 2024.

Some will say: who cares if the DH issues a press release that is misleading. Others may say that in a democracy one should be able to trust institutions of state. If the DH issues an official notice that has the effect of manipulating public perceptions – gives a false impression – can citizens trust the Department’s other official notices?

The press release in question did not say the NPfIT was closing but gave that impression. The announcement distanced the government and the Department of Health from an IT scheme, perhaps the world’s largest non-military IT programme, that was failing. This was the press release:

The government today announced an acceleration of the dismantling of the National Programme for IT.

“The government today announced an acceleration of the dismantling of the National Programme for IT, following the conclusions of a new review by the Cabinet Office’s Major Projects Authority (MPA). The programme was created in 2002 under the last government and the MPA has concluded that it is not fit to provide the modern IT services that the NHS needs…”

The press release was given added weight by those quoted in it. They included the Department of Health, Francis Maude, Minister for the Cabinet Office and Sir David Nicholson, Chief Executive of the NHS.

But the truth about the press release emerged this week at a hearing of the Public Accounts Committee.

Margaret Hodge, chair of the Public Accounts Committee, began a hearing on the NPfIT on Wednesday by asking Sir David Nicholson, the NHS chief, a canny question.

Hodge:  “There was a big announcement back in 2011 that you were closing the NPfIT programme.”

“Yes,” replied Sir David.

“That’s not true,” said Hodge. “It was a PR exercise to say you closed it.”

Nicholson: “It certainly was not a PR exercise.”

Hodge: “What changed?”

Nicholson: “The governance arrangements changed.  So there are separate senior responsible officers for each of the individual programmes [within the NPfIT].”

Hodge: “With the greatest respect, changing governance arrangements is not closing the programme.. .I think the impression you were trying to give was that you were closing the programme. All you were doing was shifting the deckchairs on the Titanic. You were shifting the way you were running it but you were keeping all that expenditure running… The impression given to the public was that you were going to get out of some of these contracts.”

On the basis of the press release the Daily Mail published a front page lead story with this headline:

£12bn NHS computer system is scrapped… and it’s all YOUR money that Labour poured down the drain

On the day of the press release the Daily Telegraph reported that the £11.4bn NHS IT programme was “to be abandoned”.  Similar reports appeared in the trade press.

But this week’s Public Accounts Committee heard that the NPfIT is very much alive:

– the estimated worth of CSC’s contracts under the NPfIT has risen from £3.1bn to £3.8bn at today’s prices.

–  officials expected to pay CSC a further £1.1bn on top of the £1.1bn it has already received, and this payment may include up to £600m for Lorenzo deployments at only 22 trusts. Hodge said: “You are going to spend another half a billion with this rotten company providing a hopeless system” – to which the DH argues that CSC has delivered thousands of (non-Lorenzo) working systems to the NHS which trusts and community health services rely on.

– About £500m of the £1.1bn still set aside for CSC will go on GP systems supplied by CSC’s subcontractor TPP Systmone.

– Further spending on the NPfIT may come as a result of Fujitsu’s legal action against the DH after it left the NPfIT in 2008, which leaves the taxpayer with a potential pay-out of £700m or more. The outcome of a formal arbitration is expected in about six months. The closing arguments are due at the end of this month.

– £31.5m has so far been spent on the DH’s legal costs in the Fujitsu case, mostly with the .law firm DLA Piper.

– DH has agreed a compensation payment to CSC of £100m. In return CSC has released the Department of Health from a contractual commitment for 160 NHS trusts to take the Lorenzo system. The DH has made a further payment to CSC of £10m in recognition of changes to its software which had been requested by the NHS but not formally agreed with CSC.

Comment

It appears there has been no deliberate deception and no deliberate manipulation of public perceptions of the NPfIT. But the fact remains that the DH made a major announcement in 2011 which gave the impression the NPfIT was dead when this was not true.

When a BBC Radio 4 journalist called me this week and we spoke briefly about the NPfIT he said: “I thought it was dead”.

Perhaps the mindset of officials was that the NPfIT was dead because everyone except the suppliers wanted it to be. But because local service provider contracts had to stay in place – the suppliers being much better equipped than the DH to handle any disputes over early termination – large payments to CSC and BT had to continue.

It’s a little like the political row over weapons of mass destruction in Iraq. It’s unlikely Blair lied over the existence of WMD. He probably convinced himself they existed. In a similar act of self-delusion officials appear to have convinced themselves the NPfIT was dead although it wasn’t.

But if we cannot believe a major DH announcement one starts to ask whether any of the department’s major announcements can be believed.

Uncoloured information on the NPfIT has always been hard to come by. So credit is due to the Public Accounts Committee and particularly its MP Richard Bacon for finding out so much about the NPfIT.  All credit to Margaret Hodge for picking up on Bacon’s concerns. Were it not for the committee, with indispensable support from the National Audit Office, the DH would have been a sieve allowing only bits of information it wanted to release to pass through.

The fall-out from the NPfIT will continue for years. We still don’t know, for example, what all the trusts with BT and CSC systems will do when the NPfIT contracts expire in the next three years. The hope is for transparency – and not of the sort characterised by the DH’s announcement in 2011 of the NPfIT’s dismantling.

This post also appears on ComputerworldUK

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Posted in BT, Campaign4Change, CSC, governance, health, health records, IT-related failures, legal disputes, Major Projects Authority, NHS, npfit, project management

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How to cost-justify the NPfIT disaster – forecast benefits a decade away

Posted on 07/06/2013 | 2 comments

By Tony Collins

To Jeremy Hunt, the Health Secretary, the NPfIT was a failure. In an interview with the FT, reported on 2 June 2013, Hunt said of the NPfIT

“It was a huge disaster . . . It was a project that was so huge in its conception but it got more and more specified and over-specified and in the end became impossible to deliver … But we musn’t let that blind us to the opportunities of technology and I think one of my jobs as health secretary is to say, look, we must learn from that and move on but we must not be scared of technology as a result.”

Now Hunt has a different approach.  “I’m not signing any big contracts from behind [my] desk; I am encouraging hospitals and clinical commissioning groups and GP practices to make their own investments in technology at the grassroots level.”

Hunt’s indictment of the NPfIT has never been accepted by some senior officials at the DH, particularly the outgoing chief executive of the NHS Sir David Nicholson. Indeed the DH is now making strenuous attempts to cost justify the NPfIT, in part by forecasting benefits for aspects of the programme to 2024.

The DH has not published its statement which attempts to cost justify the NPfIT. But the National Audit Office yesterday published its analysis of the unpublished DH statement. The NAO’s analysis “Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS” is written for the Public Accounts Committee which meets next week to question officials on the NPfIT. 

A 22 year programme?

When Tony Blair gave the NPfIT a provisional go-ahead at a meeting in Downing Street in 2002, the programme was due to last less than three years. It was due to finish by the time of the general election of 2005. Now the NPfIT  turns out to be a programme lasting up to 22 years.

Yesterday’s NAO report says the end-of-life of the North, Midlands and East of England part of the NPfIT is 2024. Says the NAO

“There is, however, very considerable uncertainty around whether the forecast benefits will be realised, not least because the end-of-life dates for the various systems extend many years into the future, to 2024 in the case of the North, Midlands and East Programme for IT.”

The DH puts the benefits of the NPfIT at £3.7bn to March 2012 – against costs of £7.3bn to March 2012.

Never mind: the DH has estimated the forecast benefits to the end-of-life of the systems at £10.7bn. This is against forecast costs of £9.8bn to the end-of-life of the systems.

The forecast end-of-life dates are between 2016 and 2024. The estimated costs of the NPfIT do not include any settlement with Fujitsu over its £700m claim against NHS Connecting for Health. The forecast costs (and potential benefits) also exclude the patient administration system Lorenzo because of uncertainties over the CSC contract.

The NAO’s auditors raise their eyebrows at forecasting of benefits so far into the future. Says the NAO report

“It is clear there is very considerable uncertainty around the benefits figures reported in the benefits statement. This arises largely because most of the benefits relate to future periods and have not yet been realised. Overall £7bn (65 per cent) of the total estimated benefits are forecast to arise after March 2012, and the proportion varies considerably across the individual programmes depending on their maturity.

“For three programmes, nearly all (98 per cent) of the total estimated benefits were still to be realised at March 2012, and for a fourth programme 86 per cent of benefits remained to be realised.

There are considerable potential risks to the realisation of future benefits, for example systems may not be deployed as planned, meaning that benefits may be realised later than expected or may not be realised at all…”

NPfIT is not dead

The report also reveals that the DH considers the NPfIT to be far from dead. Says the NAO

“From April 2013, the Department [of Health] appointed a full-time senior responsible owner accountable for the delivery of the [the NPfIT] local service provider contracts for care records systems in London, the South and the North, Midlands and East, and for planning and managing the major change programme that will result from these contracts ending.

“The senior responsible owner is supported by a local service provider programme director in the Health and Social Care Information Centre.

“In addition, from April 2013, chief executives of NHS trusts and NHS foundation trusts became responsible for the realisation and reporting of benefits on the ground. They will also be responsible for developing local business cases for the procurement of replacement systems ready for when the local service provider contracts end.”

The NAO has allowed the DH to include as a benefit of the NPfIT parts of the programme that were not included in the original programme such as PACS x-ray systems.

Officials have also assumed as a benefit quicker diagnosis from the Summary Care Record and text reminders using NHSmail which the DH says reduces the number of people who did not attend their appointment by between 30 and 50 per cent.

Comment

One of the most remarkable things about the NPfIT is the way benefits have always been – and still are – referred to in the future tense. Since the NPfIT was announced in 2002, numerous ministerial statements, DH press releases and conference announcements have all referred to what will happen with the NPfIT.

Back in June 2002, the document that launched the NPfIT, Delivering 21st Century IT for the NHS, said:

“We will quickly develop the infrastructure …”

“In 2002/03 we will seek to accelerate the pace of development …

“Phase 1 – April 2003 to December 2005 …Full National Health Record Service implemented, and accessible nationally for out of hours reference.”

In terms of the language used little has changed. Yesterday’s NAO report is evidence that the DH is still saying that the bulk of the benefits will come in future.

Next week (12 June) NHS chief Sir David Nicholson is due to appear before the Public Accounts Committee to answer questions on the NPfIT. One thing is not in doubt: he will not concede that the programme has been a failure.

Neither will he concede that a fraction of the £7.3bn spent on the programme up to March 2012 would have been needed to join up existing health records for the untold benefit of patients, especially those with complex and long-term conditions.

Isn’t it time MPs called the DH to account for living in cloud cuckoo land? Perhaps those at the DH who are still predicting the benefits of the NPfIT into the distant future should be named.

They might just as well have predicted, with no less credibility, that in 2022 the bulk of the NPfIT’s benefits would be delivered by the Flower Fairies.

It is a nonsense that the DH is permitted to waste time on this latest cost justification of the NPfIT. Indeed it is a continued waste of money for chief executives of NHS trusts and NHS foundation trusts to have been made responsible, as of April 2013, for reporting the benefits of the NPfIT.

Jeremy Hunt sums up the NPfIT when he says it has been a huge disaster. It is the UK’s biggest-ever IT disaster. Why does officialdom not accept this?

Instead of wasting more money on delving into the haystack for benefits of the NPfIT, it would be more sensible to allocate money and people to spreading the word within Whitehall and to the wider public sector on the losses of the NPfIT and the lessons that must be learnt to discourage any future administrations from embarking on a multi-billion pound folly.

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Posted in Atos, BT, BT Health, Campaign4Change, change, change management, CSC, e-health, excessive secrecy, Fujitsu, health records, IT projects, IT-related failures, legal disputes, Major Projects Authority, managing change, managing outsourced services, NHS, npfit, public sector, public services, Summary Care Record

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Somerset County Council settles IBM dispute – who wins?

Posted on 28/03/2013 | 10 comments

By Tony Collins

Somerset County Council has settled a High Court legal dispute with IBM-led Southwest One. It will bring some services back in-house.

The Conservative leader of Somerset council John Osman said, “This agreement will save Somerset residents millions of pounds and will make the contract fit for the future.”

Osman added that the agreement involves settlement of Southwest One fees, which the council had been withholding, for a mutually- agreed sum.

“Most importantly the cancelling of the gainshare agreement will save Somerset County Council residents millions of pounds in the future as those sums can now be kept by the Council,” said Osman.

But as the deal includes payment of an undisclosed sum by the council to Southwest One it is unclear which side is the beneficiary in the dispute. [See Dave Orr comment on this post.]

The council says the settlement will bring benefits for the council including securing “greater strategic control and capacity back with SCC  in terms of Procurement, Property and ICT”.

The agreement also “removes some barriers to ensure successful delivery of our Change Programme – with greater alignment to the operating model, commissioning capacity, service reviews, and technology enablers.”

And the settlement allows officers to focus on improving services rather than on a series of disputes.

Southwest One had issued a writ against the council – what the authority calls a “substantial claim” – and a date for a High Court hearing was set provisionally for November 2013.  Yesterday [March 27 2013] the council agreed to settle the High Court claim, and an unspecified number of other disputes.   

IBM, Somerset County Council, Taunton Deane Borough Council, and Avon and Somerset Police set up Southwest One as a joint venture company in 2007.  IBM  owns 75% of the company.

Somerset’s officers said in a report yesterday:

“Following a series of discussions between the Council and Southwest One we are now in a position to settle the disputes and the Procurement legal proceedings against SCC will cease.

“The agreement includes a settlement payment to SWO which is substantially lower than the claim against SCC and releases payments to SWO that were held by SCC as part of the dispute.”

Somerset County Council will take back several services and about 100 people who had been seconded to Southwest One. The council says that taking back staff and services will “reduce the potential for further disputes and align those services much closer to the operating model the Council has adopted”.

Services returning to SCC include:

• Strategic and Operational Procurement
• Property Services
• Estates Management
• ICT Strategic Management including some web management posts
• Some business support posts for the above functions

The council says there will be little change in day to day activities and no changes to locations of staff. Somerset’s staff will have their secondments terminated and revert to the council’s terms and conditions.

The High Court action was because of a disagreement  about the quality of Southwest One’s procurement service and what payments Southwest One was entitled to as a result of savings made through the joint venture.

Secrecy

Whereas a High Court hearing would have been open to the public, the sum paid by Somerset to IBM as part of the settlement,  and the risks of bringing staff and services back in-house, are being kept confidential because of what the council calls “commercial sensitivity”.

Risks

Some of the settlement’s main risks for the council are listed in yesterday’s report:

• The confidential nature of the discussions held to secure an agreement has
meant that full consultation with a wide range of officers and partners has not
been possible.
• The transfers of staff and functions will take place during the new financial
year. The proposed transfers create some risk due to SAP changes required.
• There will be some risks in the hand-over of programmes of work.
• Despite all efforts to mitigate risks to services, it is possible that some
disruption may occur. Transition workshops are planned to identify and preempt such instances, which significantly reduces the risk.
• Implications for partners have also been estimated. It is possible that partners
may take a different view of the implications for them.

Blame

Osman blamed the previous Liberal Democrat administration for the problems which he said were owing to the way the contract was worded, the actions of the previous Lib Dem administration transferring services to Southwest One that should never have transferred and the failure to clarify the savings sharing element of the agreement. Osman said this was the “equivalent of the Lib Dems writing a blank cheque”.

The 10-year joint venture, which started in 2007, will continue. 

Comment:

As the terms of the settlement and the risks associated with transferring staff and services back in-house are being kept secret nobody outside an inner circle of the council can know how bad the joint venture and the dispute have been for Somerset council’s taxpayers.

If anything is clear it is that IBM held the dominant legal hand all along. It issued a High Court claim, and now it has received a payment from the council.

It seems to be a feature of big council outsourcing deals and joint ventures that councillors are easily swayed by promises of enormous savings, often upfront savings, and are not too concerned about the risk of things going wrong because they won’t be in office when or if any mud hits the fan.

Yesterday Cornwall Council’s Interim CEO, along with the Chairman of Cornwall Partnership Foundation Trust and the Director of Finance at Peninsula Community Health signed a contract for a joint venture with BT.

As Andrew Wallis, an independent councillor in Cornwall, says

“Lets hope the Council does not regret this day.”

The Southwest One joint venture was flawed joint venture from the time a rushed contract riddled with literals was signed in the early hours of a Saturday morning in 2007.  For years afterwards, Somerset Council has been trying to dig itself out of a hole. It is now near the surface – except that yesterday’s council report says there is a potential for further disputes. 

Will other councils learn from Somerset’s experiences? Cornwall’s deal shows that any learning will be very limited.

And the secrecy that tends to go with big outsourcing deals and joint ventures means that a small group of councillors can sign joint ventures and outsourcing contracts without proper accountability  – and can settle any legal disputes later without accountability, and indeed with impunity.

Whenever a  major supplier offers a council large upfront savings from an outsourcing deal or a joint venture why would the authority’s inner circle of councillors say no?

Thank you to campaigning Somerset resident and former county council employee Dave Orr who provided the links and information that made this post possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, law, legal disputes, local government, managing change, managing outsourced services, outsourcing, public-private partnerships, SAP, supplier relationships

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Cornwall Council rushes to sign BT outsourcing deal before elections

Posted on 08/03/2013 | 2 comments

By Tony Collins

Cornwall council logoCornwall Council was a model of local democracy in the way it challenged and then rejected a large-scale outsourcing plan. Now it has gone to the other extreme.

Amid extraordinary secrecy the Council’s cabinet is rushing through plans to sign a smaller outsourcing contract with BT – a deal that will include IT – before the May council elections.

Councillors who have been given details are not allowed to discuss them. No figures are being given on the costs to the council, or the possible savings. The Council’s cabinet is not releasing information on the risks.

Councillors are being treated like children, says ThisisCornwall. Documents with details of the BT outsourcing plans have to be handed back by councillors, and cabinet papers are being printed individually with members’ names as a watermark, on every page, to guard against copying and to help identify any whistleblowers.

The council’s Single Issue Panel has a timetable for the IT outsourcing plan.

– Recommendation to Cabinet to approve release of ITT – 27 February 2013

– Evaluation of bid – March 2013

– If contract awarded, commencement of implementation work – April 2013

– Staff transfer date – July 2013

The SIP report emphasises that the timetable for signing a deal is tight. “Evidence received is that there is little room for slippage in the timetable, but that potential award of contract is achievable by the end of March 2013… It is expected that a contract could be ready to be issued as part of the ITT [invitation to tender] pack by early in the week commencing 4 March 2013.”

The SIP report concedes that the plan is “fast moving”.

In the past, the SIP group of councillors has been open and challenging in its reports on the council’s plans with BT (and CSC before the company withdrew from negotiations). Now the SIP’s latest report is vague and unchallenging. The risks are referred to in the report as a tick-box exercise. Entire paragraphs in the SIP report appear to have little meaning.

“Risk log and programme timelines are reviewed and updated on a regular basis… 

“The Council and health partners have been working on and have reached agreement on their positions in relation to commercial aspects in the contract and their expectations have been part of the dialogue with BT.”

“Previous concerns of the Panel relating to the area of new jobs have been addressed with BT in contract discussions and contract clauses have been revised to reflect this…”

It is also unclear from the SIP report why the council is outsourcing at all, only perhaps a hint that the deal will be value for money.

“The contract will be fully evaluated by the Head of Finance and her team to ensure value for money once the final bid is received. No savings have been assumed for 2013/14 budgetary purposes, although there are assumptions of savings for the indicative figures for future years,” says the SIP report.

Comment

It is a pity that Cornwall Council’s cabinet is rushing to sign a deal for which it won’t be accountable if things go wrong. In a few weeks a new council will be voted in and, if the outsourcing deal with BT ends up in a dispute or litigation, the new council will simply blame the old, as happened when Somerset County Council’s joint venture deal with IBM, Southwest One, went into dispute.

In essence, with the local elections only two months away, Cornwall Council’s cabinet has a freedom to make whatever decision it likes with impunity; and it appears to be taking that freedom to an extreme, almost to the point of sounding, in the latest SIP report, as if the council is an arms-length marketing agent of BT.

Cornwall Council’s cabinet has a mandate from the full council to move to a contract with BT. The full council has voted to “support” a deal. But that vote was a mandate to negotiate, not to sign anything BT wants to sign.

Openness has gone out of the window and BT, it seems, is no longer being rigorously  challenged – by Cornwall’s cabinet, the full council, the public or the media.

How exactly can BT guarantee jobs and make savings? We don’t know. The Cabinet isn’t saying, and its members are doing all they can to stop councillors saying.

Are BT’s promises reliant on the fact that IT is subject to constant and sometimes costly change – often unforeseen change – and that is bound to continue, at least in the form of supporting changing legislation and reorganisations?

Unforeseen changes could add unforeseen costs which the council may have to pay because IT is at the heart of business continuity.  In any dispute with the council  – and BT knows its way around the world of contested contracts – the company would have the upper hand because of its experience with litigation and the fact that the council would need undisrupted IT at a time of change and could not afford, without risk, to take the service back in-house.

We have seen how normality broke down at Mid Staffs NHS Foundation Trust amid a lack of openness and excessive defensiveness;  and we have seen, in Somerset County Council’s joint venture with IBM, Southwest One, what can happen when a contract signing is rushed.

Cornwall Council’s cabinet is doing both. It is rushing to sign a contract; and it is rushing to sign it amid excessive secrecy.

Surely Cornwall Council can do better than slip into the shadows to sign a deal with BT before the council elections in May?  If it is such a good deal, the new council will want to sign it. A new council should have the chance to do so.

For Cornwall Council to outsource now what is arguably its single most important internal resource – IT – is bad for local democracy: it is snub to anyone who holds true the idea that local councillors are accountable to local people.

Thank you to campaigner Dave Orr who drew my attention to information that made this post possible.

* Cornwall Council, by the way, has one of the best local authority websites I have seen.  If the website is a reflection of the imagination and efficiency of its IT department, Cornwall Council should be selling its IT skills to BT for a small fortune – not giving staff away.

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Posted in BT, Campaign4Change, change management, excessive secrecy, IBM, IT-related failures, legal disputes, local democracy, local government, managing outsourced services, openness and transparency, operational issues, private sector lessons for the public sector, procurement, project management, public sector, public services, public-private partnerships

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Somerset’s dispute with IBM is “escalating”.

Posted on 22/10/2012 | 3 comments

By Tony Collins

Somerset County Council says in a paper due to be discussed next week that its dispute with the IBM-led Southwest One joint venture is “escalating” and that there is a need to “restore a deteriorating relationship with a supplier”.

The poor relationship is in contrast to the mutually content position in 2008, one year after Somerset signed its unique, ground-breaking deal with IBM. At that time Somerset refused a request by Unison for a copy of the business case for Southwest One saying, “We can record, however, that all our cost and performance criteria within the business case were met or exceeded”.

Now Southwest One and the council are in a legal dispute on several fronts. The council’s paper for its cabinet meeting next week says:

“The history of Southwest One [SWo] poor performance is continuing; during 2012 the Client Team have been holding SWo to account; resulting in the serving of 8 contractual notices to SWo.

“Over the past 3 weeks SWo have commenced disputes on several other matters, issuing further financial claims and disputing Somerset County Council’s warning notices.

“With a number of escalating disputes, we need to take action to:

• Conduct proceedings

• Respond to these disputes and restore a deteriorating relationship with a strategic supplier.

• Seek to improve value for money and service performance and ensure it is fit for purpose.

• Continue to assertively manage Southwest One to ensure it meets its contractual obligations.

• Maintain Partner relationships

Somerset’s officers recommend to the cabinet that:

“The Leader of the Council authorises the Chief Executive, Deputy County Solicitor, Director of Finance & Performance and other relevant SCC officers to serve and proceed with the defence and any counterclaim, to carry out all subsequent steps in the litigation process and any engagement in connection with the disputes.”

The paper  adds:

“It is also recommended that the Leader of the Council and the Chairman of Scrutiny Committee agree urgency in respect of the above recommendation…

“The Deputy County Solicitor is authorised to institute defend or settle any legal proceedings and to lodge an appeal. This report seeks authorisation to be given to SCC officers to serve and proceed with the Defence and any Counterclaim, to carry out all subsequent steps in the litigation process and any engagement and commit to financial considerations (such as legal costs) in connection with the disputes…

“Due to the contractually binding timetable for resolving disputes SCC officers need a mandate. Risks will be reported and managed through SCC’s governance arrangements.”

A budget exists to support the council’s approach.

The report says that the council is in disagreement with Southwest One over the quality of the procurement service and what payments it is entitled to as a result of savings made by getting better deals through the joint venture. “We had hoped we would be able to settle this through negotiations, but unfortunately that has not been the case.”

Comment:

In mid-2007, about two months before Somerset signed its deal to set up Southwest One with IBM, an external consultancy report on the proposals by consultants “Maana” praised the “immense amount of research and thinking” that went into the IBM bid.

It said that the “whole of the procurement process, from market investigation to preferred bidder selection has been well planned and executed”. Maana added:

“The evaluation process has been more extensive, well thought through and executed than any we have seen before.”

And look what happened to the best laid plans. Many saw at the time that the joint venture was too complicated and put too much responsibility IBM’s way, but the council pushed aside their concerns.

Who now is responsible for the failure of Southwest One? Nobody.

Thank you to Dave Orr whose information made this article possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, legal disputes, local government, managing change, outsourcing, oversight, Politics, procurement, public services, risk, shared services