Tuesday, 19 June 2012

Pulling out at the last minute: Strategic partnerships, and how to avoid unwanted consequences

No: this is not another guide to married love. Or, heaven forbid, unmarried love. This is the third installment of Mrs Angry's soon to be published 'Outsourcing for Dummies', dedicated, with a sense of quiet desperation, to the Tory councillors of Broken Barnet.

We could continue ad infinitum in these installments with further examples of disastrous strategic partnerships forged in the heady passion of outsourcing fervour. We might mention, for instance, a few of the many authorities who were obliged to address not a complete termination of contract, or a major reduction in scope of contracts, but otherwise significant problems of serious failure or disatisfaction.

If we were to indulge in such depressing activity, we would no doubt refer to the case of Liverpool City Council, and our old friends BT, with whom Barnet has enjoyed a particularly intimate relationship for some years now.

We would perhaps want to read this report in the Liverpool Echo in 2010, referring to the problems incurred in the course of the BT contract, which obliged the new Labour administration to fight for a renegotiation of the agreement:


BT overcharging Liverpool council by £10m a year, report claims

Sep 27 2010 by David Bartlett, Liverpool Echo

LIVERPOOL council is being overcharged £10m a year by BT for its hugely controversial IT and call handling operation, according to a damning investigation.

The council probe, which has cost more than £250,000, also found if officials terminated the contract, it could save £23m a year.

The bleak assessment of the Liverpool Direct Ltd (LDL) contract also stated BT has been “excessively marking up” the cost of equipment not specified in the original deal, which was signed in 2001.

The top secret report, seen exclusively by the ECHO, also lifted the lid on a huge row between the council and the telecoms giant about how much was invested in IT since the deal started.

BT today said it had not had the opportunity to correct “any alleged errors” in the report and said it provided an excellent service and value to the city.

A council spokesman said the authority had not had a chance to fully evaluate the report compiled with the help of consultants, and until that time it did not represent the council’s view.

Council leader Joe Anderson declined to comment.

The revelations came at a time when the council is preparing to commit to continue using the LDL service until 2017 – albeit in exchange for a better deal.

The report, written in June, stated its purpose was to improve the £70m-a-year contract and squeeze better value out of the contract.

But it also made clear “significant savings” could be achieved by terminating the deal in 2012 and bringing the services back in house.

If the council finished the contract in 2012, it would save £82m over the next four years and £23m annually thereafter, the report stated.

Its verdict was clearly at odds with previous assertions from the council that the city would be left £20m out of pocket if it ended the deal.

But let's not bother. Nor should we feel obliged to look at the case of Birmingham City Council, whose unholy union with Capita, currently sniffing around the rear end of our own proffered outsourcing opportunities, has been dogged, if that is the appropriate term, by controversy, such as problems with a SAP e procurement system, leaving a backlog of 18,000 unpaid invoices, and, according to one report here, resulting in allegations of a serious impact on residents and staff:


"Baliffs have been called to at least one Birmingham City Council site, some suppliers have withdrawn goods and services, and employees claim that staff have used their own money to buy food and other supplies for children in their care."

There are now controversial plans to offshore council jobs to India:


Barnet bloggers know that outsourcing companies based in India have been very interested in the competitive dialogue currently underway in the One Barnet programme.

If you have a problem with your rubbish collection, or if you are overcharged on your council tax, or have been bereaved and need to talk to someone responsible for the local crematorium - do you want to speak to someone in Barnet or Bangalore? Think about it, even if you are not bothered about the loss of some council worker's livelihood and the effect of more redundancies on the local economy. Or: no, let's not.

Let's think about an alternative. Of course the outsourcing companies and the senior management of Broken Barnet want us to think there is no alternative. This is rubbish.

Tory councillors, ask yourselves why they want you to think this. Ask why no in house solutions have been sought. Why is there such an unseemly rush to proceed with the dialogues even while we have been uncovering more and more gaping holes in the management of procurement and contracting? Does that make sense to you?

Once this council delegates its functions to BT or Capita, your own ability to influence the administration of this borough will be negligable.

The accountability of the running of local services will be taken out of the reach of the democratic process and given over to a private sector company, and the senior officers currently promoting the One Barnet agenda. Once outsourced, control of these services and the ability properly to scrutinise and assess the success of the arrangement will be lost in a haze of conveniently sensitive commercial anonymity.

What happens to those services will be subject to the whim of the market economy, and tax payers money will be diverted away from the needs of frontline services into the game of commercial procurement and the needs of profit hungry shareholders. All those promised savings, as we know from all the other cases you don't want to hear about, will become impossible to produce, and in all probability we will lose money, and find ourselves not back where we started, but struggling to return to the level of services we currently provide.

Is this the best outcome for the residents of this borough? Really?

Mrs Angry knows that there are many councillors, yes even amongst otherwise loyal Tory councillors, who have deep concerns about the scale of commitment that the One Barnet agenda is going to require. They probably, in their usual way, are shrugging their shoulders now, and thinking that whatever their doubts, there is nothing they can do about it.

They are wrong. It's not too late to call a halt.

Let's take a trip to Edinburgh.

The city council here made a courageous decision earlier this year.

It announced, right at the end of a very long process of negotiation, that it was not going to go ahead with its own outsourcing proposals.

The City council had chosen two companies to compete for the award of services: funnily enough the same two now vying for the delights on offer here in Barnet, ie BT and Capita. Capita was finally identified as the best option, funnily enough, just as, rumour has it, will happen here.

But oh dear: look what happened, as explained in a report published on the 19th of January: Edinburgh City Council dared to change its mind.

My emphasis in bold.

4.7 Following detailed appraisal of the proposals from Capita, the full business case concludes that there is not a compelling business case for the establishment of a strategic partnership. This recommendation is based on the following factors:

  • Savings in the core operational services are not compelling without procurement savings in the early years of a partnership being used to underwrite Capita’s proposals.
  • A framework for the delivery and sharing of procurement savings is proposed which has potential to expose the Council to significant risks and potential unforeseen consequences, both financially and operationally.
  • The proposed contract from Capita would not be considered viable to the Council without material amendment.
The report tells us that in contrast to the way things have been done here in Broken Barnet, stakeholders affected by the outsourcing plans were involved in extensive consultation:

4.15 Consultation has also taken place with EVOC, Edinburgh Equalities Network, Scottish Government, Improvement Service for Scotland, Lothian & Borders Police, Lothian & Borders Fire and Rescue Service along with neighbouring authorities. Consultation with the use of a survey questionnaire has also been undertaken with local interest groups.

4.16 Capita also consulted with approximately 1000 Edinburgh city residents as part of the development of their proposals.

Imagine that: actually asking residents their opinion! Wouldn't happen here, would it, citizens? Far too risky, and smelling horribly of democracy in action. Ah: talking of risk, and bad smells:

5.3 "In preparing the business case, KPMG were commissioned to assess the deliverability and associated risks and benefits of the internal improvement plan or public sector comparator. The review concluded that, whilst the public sector comparator provided a legitimate comparison for the purposes of the procurement process, that further work was required to develop the vision into a robust design and deliverable plan."

And finally, the council came to a sensible conclusion, saying that it ...

"... agrees that the Director of Corporate Governance should develop the vision set out within the public sector comparator and immediately implement a programme of improvement of the services included within the Corporate & Transactional Services workstream."

In other words, an in house solution. Full circle.

No doubt poor Capita, the rejected partner, was left feeling deeply disappointed. Such a prolonged courtship, and then oops - all over in a flash. Being obliged to pull out at the last minute is a deeply unsatisfactory conclusion, of course, for both parties: but in this case, at least, the only responsible thing to do, in the circumstances.

As the MP for Hendon so fondly imagines, the purpose of marriage is apparently for procreation: but there are other forms of union, of course.

Outsourcing is a strategic partnership, rather than a marriage, but in this sort of arrangement, there is an unequal balance of power, and in One Barnet, only one partner gets screwed.

That doesn't have to happen to us.

Let's fight back, say no: and mean - no.

This is not One Barnet: it is OUR Barnet.

1 comment:

Mrs Angry said...

grrr my blog feed thing appears not to have updated the last two posts: baarnett - help