G4S - A lesson for BT and Capita

This morning it was announced that G4S's share price has continued to plummet. The companies share price has lost £700 million as a result of the Olympics fiasco. There is an important lesson for the bidders involved in the One Barnet program from all of this. G4S will not loose £700 million as a result of the Olympics cock up. As I understand it, they will still get their £50 million management fee. The reason the share price has dropped through the floor is because they now have a national reputation of non delivery.

If you are working for any organisation and G4S are bidding for the contract, would you hire them now? It may well be that they would do a fine job, are far cheaper than the competition and have put the best bid in, but they have lost trust. If we analyse why, the reasons are fairly obvious. They were blinded by the glow of a large contract and didn't think through whether they had the skills or resources to meet the needs of it.

You may ask, where are the similarities between the Olympic security and the One Barnet program. They are clear to see. Barnet is now the largest London Borough. The CEO Nick Walkley has committed the Council to be the first to become "a commissioning council". In other words the scale of what is being attempted in Barnet is way beyond any other outsourcing. The complexity of the contract is such that they've already spent £9 million on consultants reports and want another £10 million to finish the work. That is £19 million pounds just to figure out how to do it. The project has ground on for four years, delivering nothing,.

The money spent so far could have saved every shut library, day care centre and paid for the continuation of sheltered housing wardens. In short, all of the cuts in Barnet have simply paid the fees for One Barnet consultants. What have they produced? Reports recommending more reports, done by themselves. The fact that this wasteful project has gobbled up £9 million so far is a scandal in itself, but merely shows the difficulty of what is being attempted. Mr Walkley and Conservative cabinet member such as Councillor Robert Rams claim there is "no alternative", but their quiet clearly is. The Association of Public Service Excellence have demonstrated this. Mr Rams tried to describe  APSE as a "left wing organisation", without actually bothering to check what they are and who they work for. They have delivered real savings to councils of all political flavours up and down the country.

Anyone who has bothered to look (and trust me, Barnet bloggers have), know that Barnet Council is riddled with inefficiency. Yesterday, three Barnet bloggers went to see the Borough auditor to discuss concerns regarding the procurement process in Barnet and to discuss specific contracts. The response of the auditor? He sent one home, because he could only cope with two people at a time.

Yesterday evening, at the Cabinet resources committee, Councillor Jack Cohen gave an impressive speech detailing how Barnet Council had rejected a bid for Hendon Football Club's old ground of £3.5 million in favour of a lower £2.8 million bid from a property developer. Councillor Cohen rightly asked why the council, in a time of desperate financial need, was not trying toa chieve the highest price?  He also detailed all manner of shenanigans going on with the property company which is buying the ground.

This is yet another example of waste in Barnet, which the council clearly lacks the organisational abilities to deal with. So lets sum up the situation. BT and Capita are bidding (as G4S) did, for huge contracts, of great complexity, on a previously unprecedented scale. Barnet Council (as it is now clear with the London Olympics) do not have the track record or the management skills to successfully administer the project. This has been demonstrated in Barnet by Metpro, Aerodrome Road, the SAP fiasco, RM Countrysides to name but a few. Perhaps the one thing which BT and Capita think may be different is the level of public interest in Barnet Council compared to the Olympics. If this is the premise they are working under, they should think again. The list of national, regional and local TV, Radio and press coverage of various Barnet issues is endless. I have personally been involved with the following over the last few months, the BBC One Show interview, ITV Tonight used my film footage, I wrote an article for th Gaurdian, I was interviewed by the Evening Standard, and have been featured in a weekly basis in the local press (so much so that when I wasn't in the paper a few weeks ago, my aunty rang to see if I was alright).

If BT and Capita think "well that's only a few stroppy local bloggers", think again. Every major news organisation has offices in London, as well as hundreds of independent documentary makers and other freelance journalists. More live in Barnet than anywhere else in the UK. The power of such people can be demonstrated by the Stephen Lawrence case. Stephen's father Neville knew the editor of the Daily Mail. As a  result Stephens case was kept in the public eye until justice was done. If BT and Capita think that a massive story on the doorstep of the worlds media will be ignored, think again. The first cock up which hits a major news producer or editor in the pocket, or affects their parents, children or friends, will result in a media frenzy, which will make G4S look tame.

I produced this graph to help illustrate the possible effect on the shareprice of BT and Capita if OneBarnet goes TU.

Having seen £700 million wiped off G4S shares as a result of the Olympics cock up, I do wonder if I was a tad optimistic? Still I don't own shares in BT or Capita anymore, so what do I care?