Yesterday, the Barnet Eye revealed that Barnet Council was late releasing the much awaited review of Capita contracts. We have now obtained this report and it is posted on the Council website. I must confess that I was verbally tipped off by one of my moles as to what to expect. It is clear that the council has 'sanitised' the report from what I was orginally informed would be in there, although with my Inspector Clouseau hat on it is pretty appalling.
Lets start with the recommendations.
That the Financial Performance and Contracts Committee:
1. Notes the current position in respect of the contract extension proposals, as set out in section 2 of this report;
2. Agrees that further work is required to inform recommendations on the future delivery of services; and
3. Notes the next stages of activity, as set out in section 4 of this report.
In short, there only real recommendation is that the Council does 'more work' on the reviw.
So what does it say in Section 2 of the report?
2.1 Capita’s extension proposals were received by the council at the end of October 2021. As reported to this Committee in November 2021, whilst this is not a procurement exercise in the usual sense, a rigorous evaluation process had been developed that is consistent with normal tender evaluation procedures. The process involved colleagues from the commercial and financial teams, as well as client leads, and was based on the criteria previously applied during the 2018/19 review of the contracts:
Strategic control 20%
Value for money 35%
Social value 10%
2.2 In accordance with good practice, each officer involved evaluated the proposals independently and then a series of moderation panels were held, where individual views were discussed and an agreed score and commentary were recorded.
2.3 The evaluation process envisaged a two-stage approach, with feedback being provided to Capita following the first stage to enable modifications to provide a “best and final offer”. The council reserved the right to reject the proposals at any point.
2.4 As anticipated by the two-stage process, the initial proposals did not meet the council’s expectations to the extent that they could be considered to be acceptable. In particular, the proposals fell short of expectations in relation to the value for money criteria that had been set.
2.5 Detailed feedback on the evaluation outcomes was provided to Capita and they submitted a document titled “Update to Proposal for Extension of Services” on 17th December 2021. This Update acknowledged that further dialogue would be required, before a “best and final” offer could be formulated.
2.6 The Update has been evaluated using the same process as was applied to the initial proposals. In some areas, the Update has addressed evaluating officers’ feedback to the extent that the proposals are now considered to be acceptable. However, in other areas, whilst the Update has demonstrated some movement in the right direction, it has not fully addressed the feedback to the satisfaction of the evaluating officers, so has not yet reached the necessary threshold to be considered acceptable.
2.7 In respect of the value for money criteria, additional information was provided in the Update document to explain the financial aspects of the proposal, but no significant amendments were made to them. The financial and commercial elements of the proposal are complex, which also means that further work is required to fully understand the relationship between the proposals and the current budget envelope. As a result, it is not yet possible to confirm that the proposal meets the council’s expectations in respect of value for money.
2.8 It has, therefore, been concluded that officers are not yet in a position to make firm recommendations regarding the extension of the contracts and there will need to be further dialogue to reach that position.
2.9 Alongside the evaluation process, the council has received details from Capita of the current costs of providing these services. This information is essential to inform our assessment of the potential cost of bringing any services back in-house. At this stage, it is not possible to provide a definitive view of the cost of running services in-house, due to the complexities referenced above. Further information and clarification is being sought from Capita in order to fully understand the position.
2.10 Under the terms of the two contracts, the council is required to make a decision on any extensions and notify Capita of its intentions no later than 1st September 2022. Capita has indicated its willingness to continue to work with the council to resolve the concerns relating to the extension proposals and ensure that the final proposals are acceptable to both parties. At this stage it is considered that such an agreement should be achievable.
2.11 Officers are also investigating the viability of further alternative options that could be affordable in the context of the current budget envelope, if agreement is not reached.
So lets look at a few points here. From 2.4 "In particular, the proposals fell short of expectations in relation to the value for money criteria that had been set."
It would come as no surprise to anyone who has followed this saga, that Capita's proposals were not deemed value for money.
In 2.6, it was noted, in respect to the amended proposals by Capita "in other areas, whilst the Update has demonstrated some movement in the right direction, it has not fully addressed the feedback to the satisfaction of the evaluating officers, so has not yet reached the necessary threshold to be considered acceptable."
In plain English, this means that the proposals were still completely unacceptable.
Which takes us on to section 2.8 which states "It has, therefore, been concluded that officers are not yet in a position to make firm recommendations regarding the extension of the contracts and there will need to be further dialogue to reach that position. "
In plain English, Capita have not made viable proposals, upon which the Council could make a proper decision. I find this quite disturbing. Capita have been involved with Barnet Council for many years now. The concept that Council officers do not have the information to make a decision is ridiculous. It is not 'further dialogue' that is needed. What is needed is either substancial amendments to what Capita are offering, to deliver value for money, or a decision to move away to an in house solution or a more cost effective supplier.
Even more disturbing is the information in section 2.9. It is clear that Capita are not providing the information required by Barnet Council to make proper cost comparisons to support a move back to an in house service. The only conclusion that a fair minded observer can make is that the Council's biggest supplier is being unco-operative. It would appear to us that the reason for this is because Capita are aware that an In house service is likely to offer better value for money.
Section 2.11 states that "Officers are also investigating the viability of further alternative options that could be affordable in the context of the current budget envelope, if agreement is not reached."
In plain English, we assume they are working on a plan B, if they have to boot Capita out and trying to see if this can be met within the constraints of the existing budget. I have been privately informed that the issue is not that an In House solution will be more expensive over the lifetime of the contract. It won't and everyone within Barnet Council knows this. The issue is that there will be a huge spike in costs as services are moved back, before the savings can be realised. The issue for Barnet Council is that whilst the changeover is going on, it will be very painful for the council finances. It is not clear whether the reserves support this (as I understand).
Anyway on to section 4. This says
4 POST DECISION IMPLEMENTATION
4.1 Dialogue will continue with Capita with a view to shaping the proposals to ensure that they meet the needs of both parties.
4.2 Work will also be carried out to investigate and assess the viability of the alternative options for each service. This will include further work on understanding the likely cost and other implications of returning services inhouse, as well as the potential for re-procuring services.
4.3 The outcomes of this work will be reported to the first meeting of the Financial Performance and Contracts Committee after the May elections.
The really disturbing thing is the statement "4.3 The outcomes of this work will be reported to the first meeting of the Financial Performance and Contracts Committee after the May elections."
If, as is looking increasingly likely, the Barnet Conservatives lose control of Barnet Council, an incoming regime will be left with a complete mess. It strikes me as highly likely that this update will be very bleak and impose huge stress on the Council budget. The Conservatives, having created the mess, will blame the incoming regime for the problems and wash their hands of the mismanagement that caused the problems. In the unlikely event that they hang on, I suspect that we will see a ruthless cutting of everything that the council are not legally obliged to provide. They have deliberately pushed this into the long grass, before the Election, to hoodwink the electors of Barnet.
As far as I am concerned, it is disgusting behaviour. It's there in black and white, so don't be surprised.
I have a question for the Committee next week. It was not the question that I expected to be asking, I have to admit. The quesion is this.
"In light of the statement "Officers are also investigating the viability of further alternative options that could be affordable in the context of the current budget envelope, if agreement is not reached." laid out in section 2.11 of the Capita Contract review, does the council have sufficient financial resources to manage a transition from Capita, whilst maintaing the current level of services, in the event that Barnet Council cannot agree an extension to the Capita contract and what is the likely impact this will have on Council tax and existing provision of services?"