Wednesday, 17 February 2016

Contract Variations - The One Barnet moneyspinner predicted by by so many including a Tory Councillor

Back in 2012 I remember attending a critical meeting in the run up to the decision to award the CSG contract to Capita. What was so memorable was how Cllr Hugh Rayner actually vocalised what everyone was thinking - when you have a contract how do you avoid being ripped off by the supplier with contract variations.

"I let out contracts myself to various customers and what I learnt in the contract is the word change or variance, because I know they are tied into me for the contract and this where I make all my profit and make up for the low price at the beginning"

A response was given saying we have to be robust.... blah blah blah, yet everyone at the time knew that this is exactly what was going to happen.

Thanks to the Barnet Bugle who recorded the meeting and this particular statement from Cllr Rayner

Since the start of the contract there have been a number of variations but buried in the papers of the latest Performance and Contract Monitoring committee there is a schedule of the contract variations to date. The report notes that nine contract variations were approved during the quarter. Six have a financial impact accounting for an increased cost of £1,933,025. 

But look a bit closer in a separate appendix  (p69) and that is a net figure offset by some savings. One of the largest contract variations  was as follows:

Contractual third party contracts true up in line with clause 7 of the contract and update Schedule 24 with final list of suppliers and the charges paid Financial impact of the life of the contract £9.7 million

Well that's fine you may say they are making savings as well but actually some of these are savings linked to fewer staff having to be made redundant at the time of handover because so many had already left the council and from reduced pension contributions. Indeed the largest offset was an amendment to schedule 1 and 4 to reflect the return of the Repairs and Maintenance budget for the Civic Estate to the Council in line with all other managed budgets which amounted to £6.5 million.

You may recall but back in 2014 I drew attention to one such contract variation to do with calls for libraries being directed to the Coventry call centre instead of direct to the libraries at a cost of £453,000 for the first two years of the contract. I estimated that this worked out at just over £8 per call which seems pretty expensive to me especially as so many of the calls were unresolved.

The rights and wrong of the various contract amendments is almost irrelevant. The key issue is that this contract is proving more expensive than originally envisaged because of contract variations and that extra money we now have to pay could have funded other services such as the meals on wheels or reduced the cuts to the library service. As I keep saying "Show me the savings"

1 comment:

  1. Wouldn't trust them as far as you can throw them! Keep up your good work!