Category Archives: local democracy

Do some councils serve their own officials and councillors better than they serve the public?

Posted on 10/01/2019 | 3 comments

By Tony Collins

Increasing numbers of local government and NHS officials are paying themselves salaries of £100,000 upwards, and some more than £500,000, but competence in handling public money appears to be diminishing.

Today, the outgoing head of the National Audit Office Amyas Morse expresses “shock”. He said,

“I am shocked by the persistent high level of qualified audit reports at local public bodies.

“A qualification is a judgement that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards.

“Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job, but you weren’t listening’.

“This is not good enough; local bodies need to address their weaknesses, and departments across government should ensure they are challenging local bodies to demonstrate how they are responding.”

Today’s National Audit Office report “Local auditor reporting in England 2018″ says that the number of NHS and local government bodies with significant weaknesses in their arrangements for delivering value for money for taxpayers is “unacceptably high and increasing”.

The report makes no comparison between how well or badly NHS and council organisations are run in comparison with the salaries paid but it makes a point of saying that there are no consequences for councils and other public bodies of having a poor grip on how they spend public money.

Says the National Audit Office,

“There is no direct consequence of receiving a ‘non-standard’ report from a local auditor.

“While departments responsible for the oversight of local bodies may intervene in connection with an issue, such as failure to meet expenditure limits, there are no formal processes for reporting publicly whether bodies are tackling these issues.

“Departments use information from local auditors’ reports to differing extents to inform their understanding of the issues local bodies are facing, but they also need to be able to challenge local bodies to demonstrate that they are taking appropriate action where necessary.

“Given increasing financial and demand pressures on local bodies, they need to take prompt and effective action to strengthen their arrangements and improve their performance when issues are raised.

“The proportion of bodies with insufficient plans for keeping spending within budget or who have significant weaknesses in their governance, is too high.

“This is a risk to public money and undermines confidence in how well local services are managed. Local auditors need to exercise the full range of their additional reporting powers, especially where they consider that local bodies are not taking sufficient action.”

Comment

Anyone who reads the National Audit Office latest findings together with the numerous reports about poorly-run council IT-based outsourcing deals, including ones at Somerset County Council and Barnet Council, and an IT-related fraud involving Barnet council that was spotted by chance,  is entitled to ask: are some council officers and councillors serving themselves better than local communities?

Alongside amounting evidence of poor decision-making – or worse – in local government and the corporate NHS, there is a general lack of openness and, as the National Audit Office points out, widespread failures to act diligently on auditor findings.

Council taxes are rising, spending on important local services is diminishing yet the amounts paid to layers of senior management at councils and within the NHS and NHS England are rising without any link to competent decision-making.

For the most part, top officials cannot be fired. Their jobs are not appraised or at risk as they would be in the private sector.   Indeed some councils change senior job titles regularly and increase the salaries they pay themselves.

There is no sign of austerity when it comes to the pay of departmental leaders in local government.

Published figures indicate that at least 2,500 council officials were paid more than £100,000 each last year — and about 500 of them grossed in excess of £150,000, more than the prime minister earns.

The number whose total remuneration was in six figures has also risen. A report by the Taxpayers’ Alliance found that 16 local government CEOs received more than £300,000 and four grossed in excess of £500,000 in 2016-17.

All of which raises the question in the headline of this post: do some councils serve their own officials and councillors better than the public?

Local government officers defend their pay levels by saying that if you pay peanuts you get monkeys.

But some primates with large brains work remarkably well in their local communities. Do council departmental chiefs on unjustifiably large salaries always work well for their local communities? Or do they serve their own interests rather better than they serve the public?

Local auditor reporting in England – NAO report

 

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Posted in Campaign4Change, excessive secrecy, local democracy, local government, National Audit Office, NHS, NHS England

Are you happy paying to help with problem Capita contract?

Posted on 01/05/2018 | 4 comments

By Tony Collins

This week, as Barnet residents go to the polls, how many will be influenced by the continuing national and local media coverage of the council’s mass outsourcing deal with Capita?

Barnet’s Capita contracts are a local election issue. The council’s conservatives and Capita say the outsourcing contracts have saved money and are performing as expected “in many areas”.

But a former local Tory councillor Sury Khatri , who has been deselected after criticising the Capita contract, described the deal as “disastrous”. Barnet has paid Capita £327m since the deals were signed in 2013. Capita runs council services that range from cemeteries to IT.

Councillor Khatri said,  “My time at the council has been overshadowed by the disastrous Capita contract that is falling apart at the seams. Four years on, issues still keep rolling out of the woodwork. This contract represents poor value for money, and the residents are being fleeced.”

Another critic of the Capita contracts is John Dix who blogs as “Mr Reasonable” and is one of several highly respected local bloggers. He has been studying the council’s accounts for some years. He runs a small business and is comfortable with accounts and balance sheets.

He writes,

“I have no problem with outsourcing so long as it is being done for the right reasons. Typically this is where it involves very specialist, non core activities where technical expertise may be difficult to secure and retain in house.

“In Barnet’s case this outsourcing programme covered so many services which were core to the running of the council and which in 2010 were rated as 4 star (good). Barnet has been an experiment in mass outsourcing and almost five years in, it appears to be a failure.

“Last night’s [19 April 2018] audit committee was a litany of service problems, system failures, lack of controls, under performance, a major fraud. Internal audit saying issues were a problem, Capita saying they weren’t.”

Shadow Chancellor John McDonnell has entered the debate. He has applauded Barnet’s Unison branch for its enduring, close scrutiny of the Capita contracts. Unison this week published a report on the deal.

Capita’s share price rises

Earlier this month the national press reported extensively on concerns that Capita would follow Carillion into liquidation.

Since the bad publicity, the company’s announcement of a pre-tax loss of £535m, up from £90m the previous year, £1.2bn of debt and a rights issue to raise £662m after fees by selling new shares at a discount, Capita’s share price has risen steadily, from a low a month ago of about 130p to about 191 yesterday.

Could it be that investors sense that Capita’s long-term future is secure: the company has a wide range of complex and impenetrable public sector contracts where history shows that public sector clients – ruling politicians and officials – will defend Capita more enthusiastically than Capita itself, whatever the facts?

A list of some of Capita’s problem contracts is below the comment.

Comment

Carillion, a facilities management and construction company, collapsed in part because the effects of its failures were usually obvious: it was desperately short of money and new roads and hospitals were left unfinished.

When IT-based outsourcing deals go wrong, the effects are usually more nuanced. Losses can be hidden in balance sheets that can be interpreted in different ways; and when clients’ employees go unpaid, or the army’s Defence Recruiting System has glitches or medical records are lost, the problems will almost always be officially described as teething even if, as in Capita’s NHS contracts, they last for years.

It is spin that rules and protects IT outsourcing contracts in the public sector. Spin hides what’s really going on. It is as integral as projected savings and key performance indicators.

When Somerset County Council signed a mass outsourcing deal with IBM, its ruling councillors boasted of huge savings. When the deal went wrong and was ended early after a legal dispute with IBM the council announced that bringing the deal in-house would bring large savings: savings either way. Liverpool council said the same thing when it outsourced to BT – setting up a joint venture called Liverpool Direct – and brought services back-in house: savings each time.

Barnet Council is still claiming savings while the council’s auditors are struggling to find them.

Spinmeisters know there is rarely any such thing as a failed public sector IT contract: the worst failures are simply in transition from failure to success. Barnet’s council taxpayers will never know the full truth, whoever is in power.

Even when a council goes bust, the truth is disputed. Critics of spending at Northamptonshire County Council, which has gone bust, blame secretive and dysfunctional management. Officials, ruling councillors and even the National Audit Office blame underfunding.

In March The Times reported that Northamptonshire had paid almost £1m to a consultancy owned by its former chief executive. It also reported that the council’s former director of people, transformation and transactions for services, was re-hired on a one-year contract that made her company £185,000 within days of being made redundant in 2016.  Her firm was awarded a £650-a-day IT contract that was not advertised.

In the same month, the National Audit Office put Northamptonshire’s difficulties down to underfunding. It conceded that the “precise causes of Northamptonshire’s financial difficulties are not as yet clear”.

Perhaps it’s only investors in Capita who will really know the truth: that the full truth on complex public sector contracts in which IT is central will rarely, if ever, emerge; and although Capita has internal accountability for failures – bonuses, the share price and jobs can be affected – there is no reason for anyone in the public sector to fear failure. No jobs are ever affected. Why not sign a few more big outsourcing deals, for good or ill?

Thank you to FOI campaigners David Orr and Andrew Rowson for information that helped me write this post.

Some of Capita’s problem contracts

There is no definitive list of Capita’s problem contracts. Indeed the Institute for Government’s Associate Director Nick Davies says that poor quality of contract data means the government “doesn’t have a clear picture of who it is buying from and what it is buying”. Here, nevertheless, is a list of some of Capita’s problem contracts in the public sector:

Barnet Council

A Capita spokesperson said: “The partnership between Capita and Barnet Council is performing as expected in many areas. We continue to work closely with the council to make service enhancements as required.”

Birmingham City Council

“The new deal will deliver a mix of services currently provided under the joint venture, plus project based work aimed at providing extra savings, with forecasts of £10 million of savings in the current financial year and £43 million by 2020-21.”

West Sussex County Council

A spokesman said, “Whatever your concerns and small hiccups along the way, I believe this contract has been and will continue to be of great benefit to this county council.”

Hounslow Council

A Capita spokesperson said: “We are working closely with the London Borough of Hounslow to ensure a smooth transition of the pensions administration service to a new provider.”

Breckland Council

“They concluded that planning officers, working for outsourcing company Capita, had misinterpreted a policy, known as DC11, which dictates the amount of outdoor playing space required for a development..”

Army

Mark Francois, a Conservative former defence minister,  said Capita was known “universally in the army as Crapita”. But Capita said in a statement,

“Capita is trusted by multiple private and public clients to deliver technology-led customer and business process services, as demonstrated by recent wins and contract extensions from clients including British Gas, Royal Mail, BBC, TfL Networks, M&S and VW.”

Electronic tagging

(but it’s alright now)

A Ministry of Justice spokeswoman said: “As the National Audit Office makes clear, there were challenges in the delivery of the electronic monitoring programme between 2010 and 2015…

“As a direct result, we fundamentally changed our approach in 2015, expanding and strengthening our commercial teams and bringing responsibility for oversight of the programme in-house.

“We are now in a strong position to continue improving confidence in the new service and providing better value for money for the taxpayer.”

Disability benefits

A spokesperson for the Department for Work and Pensions said, “Assessments work for the majority of people, with 83 per cent of ESA claimants and 76 per cent of PIP claimants telling us that they’re happy with their overall experience…”

Miners

A Capita spokesperson said: “This issue has been resolved and all members affected will shortly receive letters to advise that they do not need to take any action. We sincerely apologise for any concern and inconvenience this has caused.”

NHS

Opticians

Dentists

BBC licence fee

Windrush

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Posted in Barnet Council, Birmingham City Council, Campaign4Change, Capita, DWP, excessive secrecy, Freedom of Information, Government IT, IBM, Institute for Government, local democracy, local government, managing outsourced services, National Audit Office, NHS, NHS England, operational issues, outsourcing, PCSE, Politics

Is Barnet Council up to the job of managing its suppliers – including Capita?

Posted on 27/07/2017 | 6 comments

By Tony Collins

Tonight (27 July 2017) Barnet Council’s audit committee meets to discuss the interim year-end findings of BDO, its external auditor.

BDO identifies a “significant risk” in relation to the council’s contract management and monitoring. There are “numerous issues”, says BDO.

Barnet is well known in the local government community for having adopted a “commissioning council” concept. This means it has outsourced the vast majority of its services, leaving officers and the ruling Conservative group to set policy and monitor suppliers.

Capita is a main supplier. Its responsibilities include cemeteries, ICT and collecting council tax.

BDO’s report for tonight’s council meeting says that, with the council’s services now being delivered through various outsourcing arrangements, “it is important to establish strong contract management and monitoring controls”.

It adds that such controls “allow the Council to ascertain whether or not it is receiving value for money from the use of its contractors, and to take remedial action where issues are identified”.

On this point – contract management and monitoring –  BDO says,

“During the course of 2016/17 we have noted a number of internal audit reports which have raised significant findings in this area.

“In addition, further concerns have been identified through our own audit work. As such, we have recognised a significant risk to our use of resources [value for money] opinion.”

BDO’s findings are interim. It cannot finalise its final statutory report until many questions are answered and errors, financial misstatements and lapses in disclosure are corrected in Barnet’s draft financial accounts.

The auditors comment in their report on the “number and value of errors found” and the “level of misstatement in the current year accounts”.

These are some of BDO’s findings so far:

  • Large advance payments (about £44m in prepayments) as part of the Customer Service Group contracts with Capita. Not all of the payments were set out in the payments profile of the original contract. Significant payments were made at the start of the contract (and in subsequent years) to cover capital investment and transformational expenditure. The financial profile of the contract anticipates the advance payments being used by 2023. One advance payment of £19.1m in December 2016 covers service charge payments relating to the first three quarters of 2017/18. The council receives a £0.5m discount for paying in advance. The council also paid for some projects in advance. BDO finds that there was proper council scrutiny of the decision to make the payments.
  • Barnet overspent on services in 2016/2017 by £8.3m.
  • There’s a budget gap prior to identified savings of £53.9m over the three years to 2020.
  • There’s a substantial depletion in the council’s financial reserves.
  • Will claimed savings materialise? “Savings targets remain significant and achievement of these will be inherently challenging, as evidenced by the overspend in 2016/17.”
  • Net spending on the Customer and Support Group contracts with Capita increased to £34.4m in 2016/17 from £26.9m the previous year.
  • More than 100 officials at Barnet receive at least £60,000 a year and twelve at least £100,000.
  • Some councillors have failed to make formal declarations. A “poor response rate as compared to other authorities” says BDO’s report.

Comment:

You’d think a “commissioning council” – one that outsources the delivery of most of its services – would, above all, have a firm grip on what its main suppliers are doing and what they’re charging for.

In fact BDO’s report for tonight council meeting rates the council’s contract management and monitoring at “red”. BDO has identified “numerous” issues.

It’s easy for Barnet Council to issue press releases on the tens of millions it claims to have saved on its contracts with Capita.

But BDO possesses the facts and figures; and it questions the council’s “use of resources” – in other words “value for money”.

At the outset of its joint venture with IBM, officials at Somerset County Council spoke of planned savings of £180m over 10 years. In fact the deal ended up losing at least £69m.

Barnet blogger “Mr Reasonable” who has long kept a close eye on payments made by Barnet to Capita doubts that the council is up to the job of properly scrutinising Capita. We agree.

It was clear to many in 2013 when Barnet signed contracts with Capita that the council was unlikely to find the money to acquire adequate contract monitoring expertise and resources, given that its suppliers were required to deliver such a wide range of complex services.

Barnet Council’s most adept scrutineers, rather than local councillors, have proved to be its dogged local bloggers who include Derek Dishman (Mr Mustard), John Dix (Mr Reasonable), Theresa Musgrove (Mrs Angry) and Roger Tichborne (The Barnet Eye).

Had ruling councillors taken local blogger warnings more seriously, would they have specifically avoided becoming a “commissioning council”?

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Posted in Campaign4Change, Capita, local democracy, local government, outsourcing, oversight, public sector, public services, public-private partnerships, supplier relationships

Tagged

Why are councils hiding exit costs of outsourcing deals – embarrassment perhaps?

Posted on 26/06/2017 | 4 comments

Tony Collins

Excerpt from Taunton Deane council’s confidential “pink pages”.
The last sentence contains a warning that IBM-owned SWO – Southwest One – may try to “maximise revenues” on exiting its joint venture with the council.

Somerset County Council has refused a Freedom of Information request for the costs of exiting its joint venture with IBM.

But a secret report written last year by officers at Taunton Deane Borough Council – which was a party to the IBM-owned joint venture company Southwest One  – warned that the supplier could attempt to “maximise revenues on exit”.

It said,

“… from experience anything slightly ambiguous within the contract is likely to be challenged by SWO [Southwest One] in order to push it into the chargeable category as they attempt to maximise revenues on exit”.

A separate section of the confidential report said,

“disaggregating from the SWO [Southwest One] contract will be complex and expensive …”

Taunton Deane Borough Council did not tell councillors what the exit turned out to be. The figures are also being kept secret by Somerset County Council which signed the “transformative” SWO joint venture deal with IBM in 2007.

Both councils have now brought back services in-house.

Secrecy over the exit costs is in contrast to Somerset’s willingness to talk in public about the potential savings when local television news covered the setting up of Southwest One in 2007.

The silence will fuel some local suspicions that exit costs have proved considerable and will have contributed to the justifications for Somerset’s large council tax rise this year.

£69m losses?

David Orr, a former Somerset County Council IT employee, has followed closely the costs of the joint venture, and particularly its SAP-based “transformation.

It was his FOI request for details of the exit costs that the council refused.

Orr says that Somerset has lost money as a result of the Southwest One deal. Instead of saving £180m, the joint venture has cost the council £69m, he says.

FOI

Under the Freedom of Information Act, Orr asked Somerset for the “total contract termination costs” including legal, consultancy, negotiation, asset valuations, audit and extra staffing.

He also asked whether IBM was paid compensation for early termination of the Southwest One contract. In replying, the council said,

“The Authority exited from a significant contract with Southwest One early, and the services delivered through this contract were brought back in-house in November 2016.

“The Authority expects the costs to fall significantly now it has regained control of those services.

“Somerset County Council made payment under the ‘Termination for Convenience’ provisions of the original contract. We do hold further information but will not be releasing it at this point as we believe to do so would damage the commercial interests of the County Council, in that it would prejudice the our negotiating position in future contract termination agreements in that it would give contractors details on what terms the Council was willing to settle …”

Orr will appeal. He says the Information Commissioner has already established a principle with Suffolk Coastal District Council that the termination costs of a contract with a third party should be disclosed. The commissioner told Suffolk Coastal council that, in opting out of FOI,

“there is no exemption for embarrassment”

Hidden costs

Taunton’s pink pages paper said that the Southwest One contract’s Exit Management Plan provided for a smooth transfer of services and data, and for access to staff to assess skills and do due diligence.

In practice, though, there were many exit-related complications and costs – potential and actual. The paper warned that Taunton would need to find the money for:

  • Exit programme and project management costs
  • Early termination fees
  • Contingency
  • ICT infrastructure disaggregation
  • Service transition and accommodation costs
  • Disaggregating SAP from Southwest One. Also the council would need to exit its SAP-based shared services with Somerset County Council because the estimated costs were lower when run on a non shared services basis. SAP covered finance, procurement, HR, payroll, website and customer relationship management.
  • Costs involved in a “soft” or “hard” (adversarial) exit.
  • Estimating council exit costs when IBM was keeping secret its own Southwest One running costs.
  • Staff transfer issues.

Comment

So much for open government. It tends to apply when disclosures will not embarrass local government officials.

In 2007 Somerset County Council enjoyed local TV, radio and newspaper coverage of the new joint venture with IBM. Officials spoke proudly on camera of the benefits for local taxpayers, particularly the huge savings.

Now, ten years later, the losses are stacking up. Former Somerset IT employee and FOI campaigner Dave Orr puts the losses at £69m. And local officials are keeping secret the further exit costs.

Suffolk Coastal District Council lost an FOI case to withhold details of how much it paid in compensation to a third party contractor to terminate a contract. But at least it had published its other exit costs.

Somerset is more secretive. It is withholding details of the sums it paid to IBM in compensation for ending the joint venture early; it also refuses to publish its other exit costs.

Trust?

Can anything said by councils such as Somerset or Barnet in support of major outsourcing/joint venture deals be trusted if the claimed savings figures are not audited and the other side of the story – the hidden costs – are, well, hidden?

In local elections, residents choose councillors but they have no say over the appointment of the permanent officials. It’s the officials who decide when to refuse FOI requests; and they usually decide whether the council will tell only one side of the story when public statements are made on outsourcing/joint ventures.

Across the UK, local councils employed 3,400 press and communications staff –  about double the total number in central government – in part to promote the authorities’ services and activities.

What’s the point if they publicise only one side of the story – the benefits and not the costs?

Somerset’s decision to refuse Orr’s reasonable FOI request makes, in its own small way, a mockery of open government.

It also gives just cause for Somerset residents to be sceptical about any council statement on the benefits of its services and activities.

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Posted in Campaign4Change, excessive secrecy, FOI, Freedom of Information, IBM, IT-related failures, joint ventures, local democracy, local government, managing outsourced services, outsourcing, public-private partnerships, SAP, shared services, supplier relationships

Barnet Council claims £31m savings with Capita – and not an auditor in sight.

Posted on 01/12/2016 | 6 comments

By Tony Collins

capita

It’s commendable that Barnet Council has published much material on its three-year review of a £322m 10-year outsourcing contract with Capita.

More than a dozen council reports and appendices cover every aspect of the contract.

The quantity of material seems, on the face of it, to answer critics of the outsourcing deal, among them local bloggers, who have pointed to the lack of reliable evidence of the savings achieved. The suspicion is that costs have increased and council services including ICT have deteriorated since Capita took over in 2013.

Now the council has ostensibly proved that the opposite is the case. Barnet’s press release says,

“ Barnet Council and Capita contract delivers £31m savings

“A review of a contract between Barnet Council and Capita has demonstrated it is delivering significant benefits to the borough with overall savings of £31 million achieved alongside increased resident satisfaction…

“In terms of satisfaction with services provided, the review, showed 76 per cent of residents were satisfied with the outward-facing customer services, up from 52 per cent before the contract was established.

“This increase was even more significant in respect of face to face services, as 96 per cent of residents who engaged with the council in this way said they were satisfied compared with a previous 35 per cent.

“The review also showed that the cost of delivering the bundle of services provided in the contract is now £6m a year less than before the contract was signed and that 90 per cent of the contract’s key performance indicators being met or exceeded.”

The press release quotes two leaders of the council saying how pleased they were with the contract. Capita calls it a “positive review”.

The review has various mentions of items of additional spending including £9m on ICT and it’s not clear whether the extra sums are taken into account in the savings figures.

Among the review’s suggestions is that the council pay Capita’s annual management fee of £25m up front – a year in advance – instead of every quarter in return for extra savings.

The review also raises the possibility of extending the contract beyond the 10 years in return for additional savings. Capita is “keen” to explore this suggestion (though it could tie the hands of a future council administration).

The review reports were compiled by council officers who reported to a working group of Tory and Labour councillors, under a much-respected Tory chairman. By a small margin, Conservatives run the council.

Lack of independent challenge?

It’s unclear why the council did not commission its audit committee, or auditors, to review the contract. In the past the audit committee has been critical of some aspects of the contract.

For this reason the reports are unlikely to silence critics of Barnet’s outsourcing deal. Council officers compiled the review’s findings, not auditors.

As a result, despite the volume of published written material, there is no evidence that the figures for savings have been independently verified as accurate.

Neither is there independent verification of the methods used by officers for obtaining the figures.

Further, some observers may question the positive tone of the review findings. The “good news” tone may be said to be at odds with the factual neutrality of, say, reports of the National Audit Office.

There are also questions about whether the council is providing enough effective challenge to Capita’s decisions and figures.

At a council committee meeting in November 2016 to discuss the review reports, the most informed challenges to the findings appear to have come not from Barnet councillors but two local bloggers, Mrs Angry and Mr Reasonable, who questioned whether the claimed savings could be more than wiped out by additional spending – including an extra £9m on ICT. They appear to have received no clear answers.

Concerns of some officials

The body of the review reports outline some of the concerns of staff and directors. Mrs Angry quotes some of the concerns from the review reports:

“Transparency of costs, additional charges and project spend were raised as key concerns. It was felt that CSG [Barnet’s Customer and Support Group, for which Capita is responsible] are often reluctant to go above and beyond the requirements of the contract without additional charges.

“Directors reported that the council needs to be more confident that solutions suggested by CSG, particularly for projects and capital spend are best value.

“Concerns were raised that CSG has a disproportionate focus on the delivery of process and KPIs over outcomes, creating a more contractual rather than partnership relationship between CSG and the council. Directors noted that many KPIs are not relevant and their reporting does not reflect actual service performance.”

The Capita contract began in September 2013, under which it provides finance, ICT, HR, Customer Services, Revenues and Benefits, Procurement, Estates and Corporate Programmes.

Comment

On the face of it, Barnet Council’s review of the Capita contract looks comprehensive and impressively detailed.

Looked at closely it’s disappointing – a wasted opportunity.

Had the council wanted the review’s findings to be widely believed, it would have made it uncompromisingly independent, in line with reports by the National Audit Office.

As it is, the review was carried out by council officers who reported to a working group of councillors. The working group comprised Labour as well as Tory councillors but the facts and figures were compiled by officers.

Nearly every page of every Barnet review report has a “good news” feel. There’s an impression that negative findings are played down.

Example:

“It should be noted that the failure to meet the target for KPI 30 related to one quarter only [my italics] and discussions are continuing regarding the application of the above service credit.”

Some negative findings are immediately countered by positive statements:

“CIPFA benchmarking data shows that the cost of the ICT service is slightly above the median, but below upper quartile in terms of the cost of the service as a percentage of organisational running costs.”

Another example of a negative finding immediately countered by a positive one, which may be said to be one hallmark of a non-independent report:

“One key area of concern in terms of overall performance is internal customer satisfaction… Survey results in respect of the financial year 2015/16 were universally poor, with all services failing to meet the target of upper quartile customer satisfaction. As a result, service credits to a total value of £116k have been applied in respect of these KPIs.

“To some extent, a degree of dissatisfaction amongst internal service users is to be expected, given the fact that cost reductions have been achieved to a large extent through increased self-service for both managers and staff, along with more restrictive processes and controls over things like the payment of invoices and the appointment of staff.

“Despite the survey outcomes indicating a low level of satisfaction, the interviews conducted with staff and managers as part of this Review suggest that services are generally considered to be improving.”

Integra ERP financial system a “success” – ?

The review report describes Capita’s introduction of the Integra financial system as “successful”. Elsewhere, however, it says,

“Many users raised issues with the Integra finance system, describing it as clunky and not user-friendly or intuitive.”

Double counting?

There’s no evidence that savings figures have been checked for possible inadvertent double counting on overlapping services. Double counting of savings is regularly found in National Audit Office reports.

“There are no standardised way for departments to evidence the reductions in ongoing expenditure,” said the National Audit Office in a report on Cabinet Office savings in July 2014. “Departments provided poor evidence, and double counting was highly likely as projects reduced staff or estates requirements.”

In a separate report on claimed savings in central government, the National Audit Office quoted the findings of an internal audit …

“A number of errors (instances where the evidence did not support the assertion) were found during our review and total adjusted accordingly … In addition, a number of savings were double counted with other savings categories and these have now been removed…

“We assessed some £200m of other savings as Red because they were double counted due to the same savings having been claimed by different units or, for example, because savings on staff were also claimed through reductions in average case costs.”

Omitted costs?

The omission of relevant costs could skew savings figures. It’s unclear from Barnet’s review reports whether extra spending of millions of pounds on, for example, ICT have been taken into account. Barnet blogger Mr Reasonable, who has a business background, raises the question of whether £65m of additional spending has been taken into account in the savings figures.

Reverse Sir Humphrey phenomenon?

The biggest single flaw in the review reports is that they appear worded to please the councillors who made the decision to outsource – the reverse of the “Sir Humphrey” caricature. The positive tone of Barnet’s reports implies that officers are – naturally – deferring to their political leaders.

In a BBC Radio 4 documentary on Whitehall, former minister Peter Lilley talked about how some officials spend part of their working lives trying to please their political leaders.

“Officials are trying to work out how to interpret and apply policy in line with what the minister’s views on the policy is …. They can only take their minister’s written or spoken word for it and that has a ripple effect on the department far greater than you imagine… Making speeches is the official policy of the department and that creates action.”

Another former minister Francis Maude told the BBC he found that too few officials were willing to say anything the minister did not want to hear.

“The way it should work is for civil servants give very candid well informed advice to ministers about what it is ministers want to do – the risks and difficulties,” said Maude. “My experience this time round in government, 20 years on from when I was previously government, is that the civil service was much less ready to do that.

“There were brilliant civil servants who were perfectly ready to tell you things that they thought you might not want to hear but there were too few of them.”

Barnet’s reviewing officers might have been dispassionately independent in reporting their findings and double checking the supplied figures – but who can tell without any expert independent assessment of the review?

The US Sabanes-Oxley Act, which the Bush administration introduced after a series of financial scandals, defines what is meant by an “independent” audit. The Act prohibits auditing by anyone who has been involved in a management function or provided expert services for the organisation being audited.

That would disqualify every Barnet officer from being involved in an independent audit of their own council’s contract with Capita.

The Act also says that the auditor must not have been an employee of the organisation being audited. Again that would disqualify every Barnet officer from an independent audit of their own council’s contract.

Review a waste of time and money?

It would be wrong to imply that the review is a pointless exercise. It identifies what works well and what doesn’t. It will help officers negotiate changes to the contract and to key performance indicators. For example it’s of little value having a KPI to answer phone calls within 60 seconds if the operator is unable to help the caller.

What the review does not provide is proof of the claimed savings. Barnet’s press release announcing savings of £31m is just that – a press release. It does not pretend to be politically neutral.

But without independent evidence of the claimed savings, it’s impossible for the disinterested observer to say that the Capita contract so far has been a success. Neither does evidence exist it has failed.

Capita share price at 10-year low

What is clear is that fixing some of the more serious problems identified in the report, such as obsolescent IT, will not be easy given the conflict between the continuing need for savings and Capita’s pressing need to improve the value of its business for shareholders, against a backdrop of difficulties on a number of its major contracts [Transport for London, Co-op Bank, NHS] and a share price that was yesterday [30 November 2016] at a ten-year low.

The review also raises a wider question: are most of a council’s busy councillors who come to council meetings in their free time equipped to read through and digest a succession of detailed reports on the three-year interim results of a complex outsourcing contract?

If they do glance through them, will they have enough of a close interest in the subject, and a good understanding of it,  to provide effective challenge to council officers and their political leaders?

If nothing else, the Barnet review shows that councillors in general cannot provide proper accountability on an outsourcing contract as complex as Capita’s deal with Barnet.

Either council tax payers have to put their faith in officers, irrespective of the obvious pressure for officialdom to tell its political leaders what they want to hear, or council taxpayers can put their faith in an independent audit.

Barnet Council has not given its residents any choice.

It’s a pity that when it comes to claimed savings of £31m there’s not an auditor in sight.

Barnet declares its contract a success – Barnet and Whetstone Press

Mr Reasonable – important questions on the Capita review

Mrs Angry – who writes compellingly on the council meeting where the review reports were discussed.

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Posted in Campaign4Change, Capita, local democracy, local government, managing change, managing outsourced services, National Audit Office, operational issues, public sector, public services, public-private partnerships

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Days from taking back outsourced IT, Somerset Council is unsure what it’ll find

Posted on 22/11/2016 | 6 comments

By Tony Collins

Facing the TV cameras, officials at Somerset County Council spoke with confidence about the new joint venture company they had set up with the “world-class” IT supplier IBM.

“The contract has to succeed; we will make it succeed, ” a senior official said at the time. Greater choice for residents, more control, sustained improvement of services, improved efficiency, tens of millions in savings and enhanced job prospects for staff.

These were some of the promises in 2007.

Since then, Somerset County Council has been through a costly legal dispute with IBM; projected savings have become losses, and Somerset is days away from taking back the service early.

Now the council faces new IT-related risks to its reputation and finances, warns a team of auditors.

In several audit reports on the exit arrangements, auditors warn of a series of uncertainties about:

  •  what exactly IT assets the council will own as of 1 December 2016, when the joint venture hands back IT and staff.
  • how much software may not be licensed, therefore being used illicitly.
  • how much software is being paid for without being needed or used, wasting council tax money.
  • whether thousands of pieces of hardware have been disposed of securely over the years of the contract, or whether confidential data could later turn up in the public domain.
  • the accuracy of some supplied information. “… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four” said auditors.

Comment

That Somerset County Council laments setting up the Southwest One joint venture with IBM is not new. What continues to surprise is the extent of the difficulties of ending the joint venture cleanly – despite months, indeed more than a year – of preparatory work.

The realty is that uncertainties and risks abound.

When IT journalists ask leading councillors and officers at the start of outsourcing/joint venture deals whether all the most potentially serious risks have been given proper consideration, the spokespeople inevitably sound supremely confident.

If things go wrong, they are sure the council will be able to take back the service under secure arrangements that have been properly planned and written into the contract.

Yet today some of the most potentially serious risks to Somerset’s finances and reputation come from continuing threats such as the possibility confidential data being found on old hardware not securely disposed of.

Or the council may be paying for unneeded software licences.

In short Somerset County Council is taking back the IT service on 1 December 2016 without being certain what it will find.

In future, therefore, when councillors and officials across the country talk with supreme confidence at the start of an outsourcing deal or joint venture about large savings, sustained efficiencies, and a step-change improvement in services that comes with the benefits of collaborating with a world-class private-sector partner, local residents will have every right to be deeply sceptical.

For the reality is more likely to be that the council and its world-class supplier are about to embark on a journey into the unknown.

Thank you to campaigner Dave Orr for alerting me to the council audit reports that made this post possible.

TV broadcast in 2007 days after the council and IBM signed the Southwest One joint venture deal.

**

Excerpts from reports due to be considered by Somerset County Council’s Audit Committee next week (29 November 2016):

“… laptops, servers, storage devices, networking equipment, etc.) have been disposed of without the correct documentation historically, throughout the term with SWO [Southwest One]. There is a high likelihood that without the documentation to show that SWO were meant to have previously disposed of any specific data baring assets in a compliant manner then subsequent fines and loss of reputation will need to be dealt with by the Council.

“This is being addressed as part of the exit works but initial investigations show an expected lack of documentation.

**

“The quality of asset management and therefore exposure to risk (over and above this inherited risk) is expected to improve significantly once asset management returns to SCC [Somerset County Council).”

**

“Asset locations have been updated and improved though there are still issues regarding all asset details not being recorded accurately in the Asset Register. There is a risk that if wrong details are recorded against an asset then incorrect decisions could be made regarding these assets which may in turn cause the Council financial loss and/or loss of reputation.”

**

“… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four.”

**

“Software assets are now included in the monthly asset register report though the information collected and lack of correlation to meaningful license information means the original risk is not fully mitigated.

“This continued lack of software asset usage information against licensing proof of entitlement as well as the obvious risk of illegally using non licensed software there is also a risk that the Council is wasting public funds and Council officer’s time to manage unnecessary software. This means the Council will not be able to show “Best Value” in these purchases which could lead to fines being imposed by Central Government and loss of reputation by the inefficiencies being reported in the media.”

**

“I cannot though see evidence of the warranty & support arrangements being recorded or accurate recording of end of life assets. Due to a lack of or incorrect detail on the asset information there is the risk of incorrect decisions being made regarding an asset’s usage which could then lead to loss of money or reputation for the Council.”

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Posted in Campaign4Change, IBM, IT-related failures, joint ventures, legal disputes, local democracy, local government, outsourcing, procurement, project management, public sector, public services, public-private partnerships, supplier relationships

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Capita to lose part of £1bn+ Service Birmingham contract?

Posted on 17/11/2016 | 2 comments

By Tony Collins

Birmingham City Council is set to take back the “Revenues” – council tax – element of its Service Birmingham contract with Capita.

A report which went before a cabinet meeting on Tuesday said that decisions on the “proposed termination of the revenues element of the Service Birmingham contract” with Capita would be taken in the “private” – secret – part of the meeting.

One reason the discussions are in private is that even though the contract allows the council to take back services “at will”, this may still involve paying compensation to Capita,

In the open part of the meeting, the deputy leader said that bringing the revenues service back in-house will allow the council “greater flexibility” – which appears to mean lower costs.

It will require a change to the wider Service Birmingham contract under which Capita delivers Birmingham’s ICT services.

In particular, said the deputy leader, taking back the revenues service will avoid any need to invoke a formal “change control” within the contract. He didn’t say why the council was keen to avoid invoking the change control clause.

Taking back revenue services could mean up to 150 Capita staff returning to the direct employment of the council, according to theBusinessDesk.com.

Service Birmingham is a joint venture company run by Capita since 2006 in which the council owns a minority of shares. The contract, which mainly covers ICT services, ends in 2021.

In the first few years Capita received about £120m a year from the joint venture but the figure has come down to about £90m-£100m a year after much criticism of the cost of the contract.

Between 2006 and 2012, Service Birmingham paid Capita £994m. It’s unclear whether the payments have represented value for money for Birmingham’s residents.

The report for this week’s cabinet meeting said that since Capita took over revenue collection the government has introduced a number of local welfare reforms [related to Universal Credit] “which have resulted in the council wishing to deal with Revenues matters differently”.

Keen to retain the revenues work, Capita had suggested a revised service to the council but the report said, “These were considered and it was concluded that they did not meet the current requirements of the council.”

Taking back revenue collection could result in “savings” worth £10.5m between next year and 2020, according to theBusinessDesk.com.

The gradual introduction of Universal Credit means that the Department for Work and Pensions, rather than the council, will eventually handle housing benefit payments.

This would mean less work for the council and Service Birmingham.

Councillors were expected at yesterday’s meeting to confirm officer recommendations on terminating the revenues collection part of the Service Birmingham contract. The new arrangements are likely to come into effect from February 1, 2017

Capita says on the Service Birmingham website that it has transformed services and “realised savings of approximately £1bn”. Capita had introduced SMS texting to prompt council tax payments and reduce the need to issue paper reminders.

Overspend

Birmingham council has a serious overspend for 2016/17, estimated to be around £49m.

The Birmingham Independent Improvement Panel says, “The Council faces a mammoth task to prepare a balanced budget for 2017/18.  With very limited general reserves available, this potentially places at risk its future success.”

Lessons

In 2012 a “high-level” review of Service Birmingham by the Best Practice Group suggested that the deal had its successes but that trust and relationships might have been breaking down in some areas.

It said,

“BCC [Birmingham City Council] and SB [Service Birmingham] seemed to overcome early challenges in their relationship by having a ‘great common cause’. The Council entered into this relationship in 2006 because it had the foresight to realise it had to fundamentally transform how it operated in order to improve social outcomes for its population…

“Now the transformation has largely been successful and the initiatives are almost complete, the level of innovation seems to have stalled and the relationship has deteriorated. Somewhere in the fire-fighting, both BCC and SB have lost sight of the next ‘great common cause’ – the fact that the Council needs to further reduce the cost of ICT service delivery by £20m per annum. This will require some significant ‘outside the box’ thinking about how to achieve from both BCC and SB.”

The report said that some individuals within the council needed to understand better that Service Birmingham was not a social enterprise, a public sector mutual, or a charity, and needed “to make a significant return on its capital for its shareholders” amid a “significantly deteriorating financial position due to Government cutbacks.”

Best Practice Group also said that Capita reduced its charges when challenged

“There have been statements made by a number of the officers in the Council that SB drops its prices when challenged, especially when the Council has investigated alternative industry offerings. SB have suggested that it is only when the challenge arises that initial data is clarified and therefore, more focused pricing can be provided.”

Trust

There was – at that time – a “general lack of commercial trust between the parties and the fact that BCC have shown that SB have reported some data incorrectly (after discussion around interpretation), means that the KPIs are not fully aligned to the business outcomes BCC now needs to achieve in the current financial climate”.

The report reached no firm conclusions on value for money but questioned whether Service Birmingham was “significantly more expensive” in some technology areas.

Comment

Birmingham City Council expects to make “savings” by bringing the revenues collection service back in-house.

If the new savings are added to the claimed £1bn savings originally predicted for the Service Birmingham joint venture, are the actual savings more or less what the council could have saved if it carried on supplying ICT in-house, without helping to keep Caita’s shareholders happy?

In fact the word “savings” has been largely discredited when used in connection with large council outsourcing deals and joint ventures.

In the absence of published and audited savings figures, council reports can interpret the word “savings” to mean almost anything.

The unfortunate truth, as observers of Barnet Council’s deal with Capita have discovered, is that local residents who fund joint ventures and outsourcing deals, have no idea whether their councillors end up paying far too much for IT and other services.

Hide

Birmingham Council this week discussed a major revision to the Service Birmingham contract in secret, which raises a wider point.

Commercial confidentiality means that councils and suppliers can hide behind the contract when things go wrong. Indeed all parties to the contract have an interest in not telling the public about anything that goes wrong.

Exactly what is going on with Service Birmingham nobody knows – outside the council’s inner circle of officers and ruling councillors.  Could the contract be costing too much but the cancellation fees are too high to make cancellation worthwhile?

How many of the councillors who were involved in the signing of the original deal will care if it ends up costing a fortune?

The ruling councillors in 2006 are highly unlikely to be the ruling councillors in 2016.

Councils have the power to make the wrong decisions in private and local residents have no options but to pay for those decisions; and when, many years later, councillors want to discuss a major revision to the contract, which could involve paying compensation on the basis of further promised savings, they have the power to go into private session again.

Those who have no right to know what’s going wrong are the captive council tax payers – those who fund the council’s decisions on the basis of never-ending promises of “savings” – savings that are rarely if ever independently verified as having been achieved.

The system could work well if big decisions were taken in public view.

ICT suppliers are not always obsessed with secrecy. They tend to want only very specific details kept secret. Ian Watmore, former head of Accenture, later government chief information officer and the first Civil Service Commissioner, has been a notable advocate of public sector openness.

But council officers and ruling councillors usually want to have all discussions about outsourcing deals in private – largely because life is simpler without accountability.

It’s not a political matter. Birmingham council is staunchly labour but it was a coalition of Conservatives and Lib-dems that set up Service Birmingham in 2006.

In the same way as the government imposed openness on local councils, so new laws or government guidelines could force councils to be open on big decision and major revisions to contracts.

There again, if council tax payers knew in advance the whole truth about the likely full-term costs and speculative benefits of a major IT-based outsourcing deal or joint venture, would such a public-private partnership deal ever be signed?

Update 11.05 17 November 2016

Barnet Council has this week published a report on “£31” savings from its contract with Capita, alongside “increased resident satisfaction”. Barnet outsourced IT,  HR, a call centre and other services in 2013 in a 10-year contract. The Barnet report will be the subject of a separate post on Campaign4Change.

Birmingham set to pull out of [part of] Capita joint venture in revenues collection overhaul.

 

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Posted in Campaign4Change, Capita, excessive secrecy, local democracy, local government, managing outsourced services, public sector, public-private partnerships, Universal Credit

Well done to Unite for challenging council’s joint venture “savings” claim

Posted on 04/11/2016 | 4 comments

By Tony Collins

When councils make unexplained (and self-congratulatory) claims that they have made savings at the end of a joint venture, it will usually raise a series of questions.

So well done to Nigel Behan of the Unite union for putting a series of FOI questions to Taunton Deane Borough Council about its joint venture with IBM, as part of Southwest One.

In an “Efficiency Plan” published on its website last month, Taunton Deane
Borough Council announced that it was “part of the ground-breaking Southwest
One shared services joint venture partnership, between Somerset County
Council, Avon and Somerset Police and IBM”.

“This ten year partnership, which is now drawing to a close, has delivered significant savings to the Council and has made an important contribution to our finances.”

Unite is not so sure. Its officials believe the joint venture has, for Taunton Deane,  broken even at best. Its FOI questions to the council:

  • Please will you provide the unitary charge payable by TDBC to
    Southwest One/IBM for each financial year from 2007-2008 to date?
  •  For each financial year since 2007-2008 what was the cost of
    letting and managing the contract – including legal costs, procurement costs etc. etc.?
  • Re IT – software, hardware and peripherals. What was the value in 2007 of all IT (Hardware, software, peripherals and infrastructure) and what is the value of these assets now, ie what has been the depreciation on this asset class since 2007? What will cost of replacing these?
  • What are the net savings achieved by Southwest One for Taunton Deane Borough Council for each financial year since 2007-2008? Will you define “significant savings” (provide a measurable test)?

 Comment:

Taunton Deane Borough Council’s claim of savings was imperious, self-serving and unexplained. The council’s Efficiency Plan looks like a glossy commercial brochure that local residents have had no option but to pay for.

Were a newspaper to make a controversial claim without any explanation or justification, its readers would be entitled to question the article’s veracity.

Taunton Deane’s joint venture peripherally involved a costly legal action between the two main parties to the joint venture: IBM and Somerset County Council.

To make a claim of savings in such circumstances is like officials claiming a mission to space was a success even though the spacecraft blew up.

No rational judgement can be made without a detailed weighing up of the costs and benefits.

Even then the costs and benefits may be subjective. What costs have been excluded from the “savings” figure? What were the baseline costs on which the savings have been measured? And were those baseline figures audited as accurate  – or were they intelligent guesses? Have any benefits been double-counted? Are the benefits audited?

Without people like Nigel Behan and Somerset campaigner Dave Orr, and organisations like Unite, councils would get used to saying publicly whatever they liked, possibly without challenge.

 

 

 

4 Comments

Posted in Campaign4Change, FOI, Freedom of Information, joint ventures, legal disputes, local democracy, local government, outsourcing

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Avon and Somerset Police to end outsourcing deal after years of proclaiming its success

Posted on 20/06/2016 | 4 comments

avon and somerset police logoBy Tony Collins

Avon and Somerset Police has been consistent in its good news statements on the force’s “innovative” outsourcing deal with IBM-owned Southwest One.

These announcements and similar FOI responses have a clear message: that savings from the deal are more than expected.

But the statements have differed in tone and substance from those of Somerset County Council which ended up in a legal action with Southwest One.

Somerset’s losses on its Southwest One deal could leave the casual observer wondering why and how Avon and Somerset Police had made a success of its deal with Southwest One, whereas the county council has had a disastrous experience.

Now the BBC reports that Avon and Somerset will not be renewing its contract with Southwest One when the deal expires in 2018.

Southwest One is 75% owned by IBM and carries out administrative, IT and human resources tasks for the force.

Avon and Somerset Police’s “new” chief constable Andy Marsh – who took up the post in February 2016 – confirmed he has “given notice” that the Southwest On contract will not be renewed.

Andy Marsh, chief constable, Avon and Somerset.

Andy Marsh, chief constable, Avon and Somerset.

Instead he said he wants to work with neighbouring police and fire services. Marsh said,

“We will be finding a new way of providing those services. It is my intention to collaborate with other forces. I do believe I can save some money and I want to protect frontline numbers.”

Marsh came to Avon and Somerset with a reputation for making value for money a priority.

These are some of the statements made by Avon and Somerset Police on the progress of the Southwest One contract before Marsh joined the force:

  • “I am delighted with the level of procurement savings Southwest One is delivering for us, particularly as it is our local communities who will benefit most as front-line services are protected. “
  • “Using Southwest One’s innovative approach, we have been able to exceed our expected savings level.”
  • “I am looking forward to building on our close working relationship with Southwest One to deliver even greater savings in the future.”

FOI campaigner David Orr says of the police’s decision not to renew its contract with Southwest One,

“This controversial contract with IBM for Southwest One was signed in 2007 with the County Council, the Police and Taunton Deane Borough Council.

“We were promised £180m of cash savings, an iconic building in Taunton at Firepool, as well as new jobs and a boost to the economy. None of that ever materialised. “

Comment

If Avon and Somerset Police is happy with its outsourcing deal with Southwest One, why is it not renewing or extending the contract?

It’s clear the “new” chief constable Andy Marsh believes he can save money by finding a new way of delivering services, including IT. This sounds sensible given that the client organisation will at some point have to contribute to the supplier’s profits, usually in the later years of the contract.

Savings by ending outsourcing

Public authorities, particularly councils, when they announce the end of an outsourcing contract, will often say they plan to make substantial savings by doing something different in future – Somerset County Council and Liverpool Council among them.

Liverpool Council announced it would save £30m over three years  by ending its outsourcing deal.

Dexter Whitfield of the European Services Strategy Unit which monitors the success or otherwise of major outsourcing deals, is quoted in a House of Commons briefing paper last month entitled “Local government – alternative models of service delivery” as saying,

“Councils have spent £14.2bn on 65 strategic public-private partnership contracts, but there is scant evidence of full costs and savings”.

According to Whitfield, this is due to “the lack of transparent financial audits of contracts, secretive joint council-contractor governance arrangements, poor monitoring, undisclosed procurement costs, a lack of rigorous scrutiny and political fear of admitting failure”.

If it’s so obvious that outsourcing suppliers will eventually try to make up later for any losses in the early stages of a contract – suppliers are not registered charities – why are such deals signed in the first place?

Do officials and councillors not realise that  their successors will probably seek to save money by jettisoning the same outsourcing deal?

The problem, perhaps, is that those who preside over the early years of an outsourcing contract are unlikely to be around in the later years. For them, there is no effective accountability.

Hence the enthusiastic public announcements of savings and new investments in IT and other facilities in the early stages of an outsourcing  contract.

It’s likely things will go quiet in the later years of the contract when the supplier may be trying to recoup losses incurred in the early years.

Then, suddenly, the public authority will announce it is ending its outsourcing deal. Outsiders are left wondering why.

Good news?

Given Avon and Somerset’s determination to end its relationship with Southwest One, can we trust all the good news statements by the force’s officials in past years?

With facts in any outsourcing deal so hard to come by, even for FOI campaigners, selective statements by public servants or ruling councillors about how successful their deal is, and how many tens of millions of pounds they are saving, are best taken with a pinch of salt.

Especially if the announcements were at an early stage of the contract and things have now gone quiet.

Thank you to David Orr for alerting me to the BBC story and providing links to much of the material that went into this post.

From hubris to the High Court (almost) – the story of Southwest One.

Too easy for councils to make up savings figures for outsourcing deals?

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Posted in Campaign4Change, culture, excessive secrecy, Freedom of Information, IT-related failures, legal disputes, local democracy, local government, NHS, outsourcing, public services, public-private partnerships, supplier relationships

Can all councils open up like this please – even Barnet?

Posted on 17/05/2016 | 2 comments

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”.

somerset county council2One contract costing more than £10m a year had no performance indicators that were being actively monitored, said SWAP.

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.”

Report withdrawn

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.

Comment

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.

Somerset Council’s (withdrawn) Audit Committee report

Southwest One – the complete story by Dave Orr

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Posted in Campaign4Change, FOI, Freedom of Information, governance, IBM, IT-related failures, legal disputes, local democracy, local government, openness and transparency, outsourcing, public sector, public services, SAP

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