Sunday, 25 September 2011

The problem with contracts – Lessons to be learned for One Barnet

On Tuesday there is a Cabinet Resources Committee which will deal with a number of subjects. Item 15 on the agenda relates to the leisure services contract with Greenwich Leisure Limited (GLL).Back in 2003 the Council entered into a 15 year contract with GLL. Move on 8 years and the Council is now under pressure to cut the budget. It is also losing sites that are attached to the academies like the leisure centre at QE Girls school.

What Barnet want to do is cut the £1.7 million per annum contract by £733,000 this financial year and by £467,000 next financial year. The council have been informed by their legal advisors, Bevan Brittan, that “alteration of the contract, in the manner proposed, would, for the purposes of European procurement law, constitute a material change to the content and nature of the original opportunity such as to amount to a ‘new’ contract”. What this means is that Barnet will have to terminate the contract with GLL 7 years early.

I suspect that GLL will be seeking a significant compensation package for having such a long contract cut short.

So what, you may say. Well I suppose what this illustrates to me are three things

1. Nothing stays constant and the longer the contract the more likely events are to change;

2. When you contract out a service you lose all the flexibility you have with an in house service;

3. Contracts and EU rules are tricky and if you get it wrong you can be sued.

One Barnet is a huge and complex outsourcing project. The two contracts currently being tendered are worth £1 billion and will be let for between 10 and 15 years. Now let’s skip forward five years and things in Barnet are changing again. I wonder how easy it will be for Barnet to escape one of these new contracts. Will a major change mean the contract has to be retendered all over again at huge expense. Will it be possible to get out of the contract?

The current Conservatives in Barnet seem more wedded than ever to this highly risky One Barnet strategy. There were hopes that when Cllr Cornelius was elected leader he might see sense and call a halt to this madness. However he and Cllr Coleman seem keener than ever to embrace what many people see as a massive multi-million gamble. I think it was Churchill who said “Those that fail to learn from history, are doomed to repeat it". Tragically political dogma seems to trump commonsense in Barnet.


  1. I queried whether the change to the Lighting PFi contract - from new lampposts to energy saving nodes was a material change requiring a new tender and Barnet Council legal department said not. Perhaps they need expert advice on that contract also although its a bit late as they have signed it.

  2. One suspects they make it up as they go along!