Another Barnet Outsourcing cockup rears it's ugly head

A very interesting DPR has emerged on the Barnet Council website. It appears that Barnet are in the soup again, with another outsourcing cock up. Before we get into that though, I noticed another interesting little detail on the report. It appears that Jeff Lustig is no longer in charge of Barnet Legal, as the report is signed off by "Sheila Saunders, acting head of Legal". Has Lustig been pushed out? It is public knowledge that he has not been too happy with Nick Walkleys proposal to flog Barnet legal services off to Harrow's Labour council. 

Anyway, enough of that. The DPR details how Barnet Council have had to appoint a specialist legal firm "Addleshaw Goddard Solicitors" to handle a forthcoming legal challenge against the way the street lighting contract was tendered. The e deal with the legal firm is not expected to exceed £74,999 (presumably the figure at which they'd have to tender this contract as well). Given the way previous legal challenges etc have gone, I will be most interested to see how this goes. It is worth noting that Barnet spent nearly a million pounds on legal fees surrounding the reopening of Partingdale Lane and a similar amount on the enquiry into the sale of Underhill Football ground to Barnet FC. I will bet a years supply of pot noodles that the figure of £74,999 is nowhere near the amount these services will ultimately cost. 


Even if I am completely wrong on this and it comes in well under the figure, this is still a huge sum. It is nearly enough to have run Friern Barnet Library for a year. Why are we in this pickle (yet again)? Because yet again Barnet Council have cocked up a procurement process. This is the council which wants us to believe that they have the expertise to outsource the whole caboodle. Rather bizarrely, they are commissioning this firm of solicitors to advise them, even though it appears from section 8.7 that they were the original advisers, whose advice has landed us with this challenge. Rather oddly section 8.6 states that the circumstances require appointment of this particular firm of solicitors and no other firm. There are many obvious questions about these two paragraphs. Perhaps the most obvious of the lot is this "wouldn't  a fresh pair of eyes be appropriate in this case". But then I'm not a lawyer, so I clearly haven't got a clue how these things should be handled, have I. 


As with all outsourcing contracts there is a huge hidden cost, that appears in no business case. This is the cost of all the legal fees arising from when the contracts get cocked up. Many of these we never see, because they are dealt with by the in house legal team.

So my question is this. It is one Dexter Whitfield asks in the film "A Tale of Two Barnets". It is "If Barnet can't manage outsourcing contracts of several million pounds properly, how can they expect to manage outsourcing contracts of fifty times that value?".

If you want to see the full details, click this link. I've put the extracted highlights below.

http://barnet.moderngov.co.uk/documents/s4608/1654%20-%20Appointment%20of%20Addleshaw%20Goddard%20for%20Street%20Lighting%20PFI%20Contract%20Energy%20Saving%20Measures%20-%20Infraction%20Process.pdf

5.2 The estimated contract value is not expected to exceed £74,999. 

8. BACKGROUND INFORMATION  

8.1 DPR 1330 identified and authorised the measures  required to vary the Street Lighting PFI Contract, by deferring the installation of a number of Core Installation Programme assets, in order to fund the commencement of the installation of a Central Management System (CMS). 

8.2 The Council received an e-mail, dated 3rd  April 2012, from Martin Leverington, Procurement Policy Division, Energy Reform Group (ERG), informing the Council that his department was acting on an infraction process notice from the European Commission in respect of the procurement of the energy saving measures. 

8.3 The EU Infraction Pilot file states a complaint has been received regarding the procurement of energy saving measures and alleges that the London Borough of Barnet has infringed EU public procurement 

legislation  by not tendering the ‘contract’. 

8.4 The Council have been provided with a Timeline for the Infraction Pilot Response and it must adhere to this timeline.  A draft response to the complaint has been submitted to the Cabinet Office ERG.  It is important to urgently appoint legal advisers to provide legal input into the process on behalf of the council. 

8.5 The Director of Commercial Services has been consulted and has confirmed that the circumstances requiring the appointment of Addleshaw Goddard solicitors are urgent such as to justify the direct appointment of those solicitors. 

8.7. The decision to appoint Addleshaw Goddard Solicitors is being made based on urgency, on their expertise in the specific field and in light of their significant, previous, input and advice as Legal Advisors to the Council with respect to the original Street Lighting PFI Contract.   

As ever, with these cock ups, the question is "who picks up the bill". As ever, the answer is "we, the taxpayer do". The truth is that this is chickenfeed compared to the legal bills which will be racked up by the One Barnet project. At a recent cabinet meeting, Councillor Richard Cornelius stated that Barnet should learn to walk before they can run. Mrs Angry asked a question which agreed with this. She stated that surely this appoach applied to One Barnet. Deputy Leader Dan Thomas reassured her that the council was getting the finest possible advice to ensure that no further cock ups will happen. In light of this DPR, do you have any confidence in his statement?

If there is nothing to hide, why are the One Barnet Procurement Principles a secret document?

Yesterday, five Barnet bloggers sent the following communication to Barnet Councillors to draw their attention to a secret council document, with a restricted viewing list, which details the One Barnet Procurement Principles. We did this so that at the very least, our local Councillors are taking this huge punt, with your money, with their eyes open and no excuse that they didn't know about the risks. The time has come for these councillors to stop burying their heads in the sand and to start doing the job they get paid to do. Here is the letter we sent :-
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The One Barnet Programme: a high stakes gamble

Dear Councillor,

As you know the Council is embarked on a massive outsourcing project, the One Barnet Programme. This programme has never been put before the borough’s residents for their comments let alone their approval. It was not in the manifesto of the winning party at the local government elections.

No Conservative councillor or senior Council officer has ever appeared in a public forum to defend the programme. It has been left to concerned residents such as ourselves to make their own investigations into the scope and implications of the planned changes.

We have recently seen a copy of the procurement principles adopted by senior council officers in March 2011, early in the process of beginning the outsourcing. They would alarm any resident who cares about the state of the borough. You can read the document here: http://barnetfutureshape.blogspot.com/

We do not know whether these principles have been modified in the course of the process. The fact that that we do not know is in itself a matter for deep concern and only highlights the problem that residents are being kept in the dark about what the Council is doing with their services and their money. We must insist on residents’ right to know more about One Barnet.

It might well be that councillors themselves are also in the dark about what the Council is doing. Yet you have a duty to represent your constituents and we think you should therefore seek out and share information about One Barnet with them. You should feed back any concerns residents have to the Council Cabinet and senior officers.

The document was produced before the MetPro and other existing procurement failures came to light. Nevertheless and in spite of this, we think that the principles we have seen probably are those along which the One Barnet Programme is proceeding. Those aspects of them that alarm us most and which we think particularly need public discussion are detailed below.

One Barnet is likely to cost jobs in the borough

The Council appears to have decided that there will be no requirement on the companies awarded contracts to create new jobs within the borough. Moreover, they have decided that services do not have to be delivered locally: that is, staff currently employed by Barnet Council could be made redundant and their jobs done by people in another part of the county or even overseas, most probably in a call centre.

Staff made redundant will be offered basic TUPE terms, which, as we have already seen with outsourced services in Barnet, usually means that sooner or later staff will be re-employed on worse terms. That is bound to affect the quality of the service to residents.

There is a high risk that residents will foot the bill if One Barnet fails

The document is shot through with anxiety about who will bear risks, including financial risks. For example, the Council is looking into taking out insurance against contract failure, and it is worried about the implications of outsourcing for paying the pensions of transferred staff. Here is one particularly startling quotation regarding the pension fund:

“At the end of the contract period, there are risks of potential large deficits being built up by the new employer during the contract period. A recovery plan will need to be put in place well before contract ceases.”

The ostensible reason for going down the outsourcing path is to save money, but if contracts fail in any way, it will cost us money and disruption in our services. Other areas of provision will wind up needing to be cut to make up gaps in the Council’s budget.

The quality of our services is in jeopardy

In the document senior officers acknowledge that contractors are interested in the One Barnet Programme for one reason alone: to make money. Take this, for example:

“There are... many examples of long-term partnerships where the commitment and enthusiasm of the provider has waned over the duration of the contract. Major... organisations will generally resource extensively during the first year, or two, of a new contract but this level of resourcing diminishes as the contract moves to a more stable business as usual position.”

Residents, however, care about the quality of their services, and councillors should too.

***
We believe that councillors have a duty to inform themselves about these issues as a matter of urgency so that they can discuss them with constituents.

The One Barnet Programme has major implications for the future of the Borough’s services and finances and for the way it is governed. One day the discussions behind closed doors must spill out onto the streets, as residents feel the impact of the changes to their services. That will be too late for them and you suddenly to be involved in the debate.

We therefore urge you to take an active interest in One Barnet now. Speaking for ourselves, we oppose the programme; we believe One Barnet will jeopardise local finances, the quality of services and democratic control over them.

You must act now.


Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne

2nd November 2011