Arrogance, Overspend, Complacency and the Audit Trail that Leads Nowhere

Imagine the scene. You want a loft extension for your house. You employ a builder but to safeguard your interests you also employ a project manager. “How much will this extension cost me” you ask the builder. “Approximately £20,000” says the builder. “OK”, you say knowing that the project manager will be keeping an eye on the bills. Eight weeks later the loft extension is still only half built and you are presented with a bill for £40,000 on account. Turning to your project manager you say," Hang on a minute, I thought it would be approximately £20,000 but it’s double that and it’s still not finished". “Yes”, says the project manager “but it wasn’t a fixed quote and they are lovely people”. You leaf through the invoices and there are bills for gardening work, resurfacing the driveway and hosting a barbeque for your neighbours. “Hang on a minute,” you say, “what is all this for”. "Well" says the project manager “it didn't cost that much and it needed doing so while they were here I thought I would just get them to do the work ”. 

Now I know this sounds like an implausible story but is very similar to the one being played out in Barnet right now on the One Barnet project.

Back in July 2010, Councillor Dan Thomas signed a Delegated Powers Report awarding the Implementation Partner Contract for a three year period to Agilisys working with iMPOWER. The value of this contract was in excess of £500,000 in the first year of delivery with circa £2,000,000 identified as potential contract delivery cost over a three year period.

In the last two years Agilisys have billed over £3.5 million and, at the current run rate of £275,000 a month, is likely to hit £6 million by the end of the contract next year. So Councillors were told it would cost "circa" £2 million it is already almost double that figure and by the end of the contract period will possibly be treble the figure agreed.

To his credit, Councillor Jack Cohen queried this contract at the Business Management Overview and Scrutiny Sub Committee in September2010  and as a result (and if I recall correctly, with the key vote of Councillor Mark Shooter) the Committee referred back the contract “to the Cabinet Member for Resources & Performance (Councillor Thomas) for reconsideration with particular reference to the precise role of the contractor and overall cost of the contract”.

Councillor Thomas subsequently decided to “retain the original decision without amendment”. In other words P*** Off!

I keep a watchful eye over the council’s spending and when I had the opportunity to query the accounts in July with Barnet’s external auditors, Grant Thornton, this contract was one of the particular issues I raised. I had two concerns:

1. That councillors had been led to believe this contract was going to cost around £2 million and that it looked like on present spending it was going to cost £6 million. As such, were officers legally allowed to exceed this budget by so much without getting further approval for the spending by Councillors and did this make that spending ultra vires; and
2. Part of the money paid to Agilisys was to develop the Council’s new website which was outside the scope of the original contract and therefore potentially in breach of EU procurement rules.

 Now, I’m not sure what I expected in reply from the auditor but it certainly wasn’t the response I received.

On the first point the auditor said, 

“With regard to your point on the level of spend, it is clear that the £2 million figure is an indicative one.  The Council's 2010/11 budget estimates costs of setting up the programme and projects at £3 million. The spend to date on the contract is approaching £4 million. Although ongoing spend and value for money is monitored by the Council's Corporate Directors' Group, there is nothing in the Council's constitution that requires the reporting back to members for this contract on the basis that there is no maximum contract value set. From the review of working papers, I am satisfied that there is no need for me to take formal legal advice as to the legality of the £4 million contract as I have not seen evidence that the council has acted outside of its powers. Based on these findings, I have concluded that the Council has followed its own rules in terms of the nature and level of spend under this contract and that there is no legality issue that would impact on my ability to certify the 2011/12 audit closed.”

So Councillors, there you have it. By adding the word “circa” to the estimate of costs it means that officers can spend what they like and they have no constitutional requirement to report back to you when it goes massively over budget. I wonder how the members of the Business Management Overview and Scrutiny Committee feel about this statement. They queried a contract that they were led to believe would be “circa” £2 million. Maybe an overspend of £100,000 or £200,000 might be acceptable within the term “circa” but given this contract may end up costing £6 million, I do not think that could be reasonably viewed as circa £2 million by any normal person. But the auditor says it’s OK, so tough luck.

Obviously this has made certain people at Barnet Council very uncomfortable so the auditor has added that:

 “I have discussed your second point around the governance of the level of spend on the contract and the Council agrees that it would be good practice to take an update report to the Cabinet Resources Committee. The Council is drafting this report which will update members on the level of spend to date, revised projections for level of spend over the three year period of the contract, value for money considerations (including an update on improved terms negotiated by the Council this year) and plans for the procurement of further support when the current contract ends next year. The report is planned to go to Cabinet Resources Committee at the end of September.”

So how comes it takes an ordinary member of the public to get the auditor to talk to officers to draft a report updating councillors that a contract is millions of pounds overspent? Is it something the 63 councillors paid just under £1.1 million a year should be doing? Is it something the Chief Executive paid £200,000 a year should be on top of? Either way it shouldn’t be down to me.

On the second point about Agilisys being given work to develop the council’s new website the auditor was, in my personal opinion, equally dismissive. I set out quite clearly that the Implementation Partner was awarded the contract on something called a framework agreement. This is a central government agreement with a number of suppliers for specific services and alleviates the need for councils like Barnet to go to a full open tender. The implementation partner contract was let on a framework for BusinessConsultancy Services  for which Agilisys is an approved supplier. I know it was let on a framework agreement because back in 2010 I specifically asked a question about it. There is a completely different framework agreement for Website Development  lot 6, for which Agilisys is not an approved supplier.

The auditor’s response was as follows:

“The element of spend that is with Agilysis is on business consultancy associated with the customer services transformation which is clearly a wider project than just website redesign. It makes sense that consideration of the website be dealt with as an integral part of the wider customer services project. I note that the technical element relating to pure web design included in the business case document is a small proportion of the overall project budget.

We therefore propose to take no further action in respect of your contention that this arrangement breaks EU procurement law. We remain of the view that no compelling evidence exists to suggest that this transaction represents expenditure which is outside the Council’s powers and for which we would seek legal advice”.

Given that Agilisys have been paid more than £300,000 specifically for the website development and this is above the EU procurement threshold, then in my humble opinion the fact that it is a “small proportion” of the £3.5 million paid to Agilisys to date is irrelevant.

I have reached an impasse in my dealings with Grant Thornton and I really wonder whose side they are on? I do not do this for political motives as I am not a member of any political party. I do this because I am a resident of Barnet and am utterly fed up with the cavalier way residents’ money is being spent without adequate regard for the checks and balances that I would expect to be in place.

As a disillusioned resident I have no confidence in the officers and the way they spend our money, I have no confidence in councillors keeping the officers’ spending in check and I am rapidly losing confidence in our external auditor to take issues like this one seriously. Something is deeply wrong in Barnet and if this attitude is replicated with the One Barnet contract, I can see the residents being right royally ripped off with absolutely no comeback.

One Barnet Joint Venture - "There is a risk that the focus on commercial goals and development of new business can be at the cost of service delivery".

Someone kindly reminded me of a report published back in September 2010 when Barnet Council asked their expensive consultants to look at what would be the best structure for the One Barnet (FutureShape as it was still called then) project. You can read the report here. This is what they said about Joint Ventures which, on Friday, became the chosen option for Barnet:

Private Sector Joint Venture:

Price: Whilst capable of delivering a low price this would be a costly option to implement ‐ the joint
venture procurement being more complex than a straightforward partnering arrangement. Joint
ventures are best suited to situations where there is significant potential and appetite to develop
third party business.

Flexibility & risk: Where third party business is a more secondary goal it may be possible to build
many of the benefits that a JV can provide, such as gain sharing and a reasonable degree of flexibility,
into a more conventional partnership contract. It is likely to provide a good degree of flexibility due
to the control the Council could retain.

Performance: Whilst performance can be high in joint ventures there is a risk that the focus on
commercial goals and development of new business can be at the cost of service delivery.
Citizens & stakeholders: JVs have the potential to enshrine old operating assumptions, which can
limit the scope for transformation and therefore more radical change is less likely.

Pace: Due to the complexity in developing the arrangement this option is likely to take a relatively long time to implement.

Here is the Scoring Matrix they included in the report:

Note that Joint Venture scores lower than Strategic partnership or Incremental Partnership and only just ahead of a management buyout or consulting led solution.

It is also interesting to note that the outsourcing programme is now running 14 months behind schedule and has gone more than £1 million over budget on the consultancy costs.

The One Barnet programme is dead and the sooner Councillors accept it and start running the day to day services of the council cost effectively and efficiently the better for every single resident.

One Barnet - Is it deliverable. Perhaps the bidders are starting to have doubts?

Today was a very significant milestone in the One Barnet programme  and one that may spell the end of the entire project. In an email to council staff, Pam Wharfe slipped into the note that Barnet now intend to enter into Joint Venture with the successful bidder of the massive outsourcing tender exercise.

You may say so what? Well, when the business case for outsourcing was made, the Council's consultants actually identified that "the costs and risks associated with a JV model are judged at this stage to be higher than for a Strategic Partnership". Yet today the council have committed us to higher risks and greater costs.

Experience suggests that one of the key reasons why the bidders are keen to enter into a Joint Venture is to shed risk they would experience in a standard  contractual relationship. In Ms Wharfe's email she suggests that the bidders are entering into a JV so they can share all the new commercial opportunities. Ha Ha Ha. who are you kidding! Further savings sufficient to justify their massive management fee looks increasingly difficult to achieve.

So what are the risks of the Council entering into a Joint Venture?

Barnet will have to pick up their share of losses should the outsourcing project be a disaster - and please don't say it can't go wrong. Just talk to the former Conservative leader of Somerset County Council and their problems with SouthWest One. At no stage anywhere during the outsourcing process has there been any indication that Barnet will pick up financial liabilities but suddenly that has been agreed. My question is by whom and with whose authority? I asked specific questions about financial liability to Councillor Thomas at Cabinet and I was told "all the risk is with the contractor". Well not anymore.

It is also much more complex, time consuming and expensive to set up a JV and also a lot more difficult to dissolve because the relationship is different to a straightforward contractor/client relationship. 

Suddenly Barnet Council are drawn into potential conflicts of interest for example on issues of health and  safety where traditionally the responsibility would have rested entirely with the contractor. Council directors/ Councillors who sit on the JV board may become personally liable for any financial shortcomings.

A JV will inevitably lead to compromises being made by Barnet because it is now their money at stake as well as the contractor’s.   I have seen it time and time again where the contractor says, fine if you insist on pursuing this policy you will have to fund half the losses. It changes the whole management relationship and will draw Barnet into day to day management decisions that they will no longer be able to resource. 

There may be tax or VAT issues and it will lead to concerns around the valuation of assets in the JV at the points of establishment and dissolution.

What really worries me is the glib way in which a massive financial risk has suddenly be increased for the council and with it the risk to every single council tax payer without any public debate, without any transparent financial advice and apparently in contradiction to the recommendations of the business case 18 months ago. 

Based on Pam Wharfe's statement today I think the credibility of Barnet is in tatters. Councillor Cornelius, I am not sure if you are clear what this has committed the council to but it is exceptionally risky. I cannot believe that you have made such a massive shift in position without taking independent professional advice but at the minute that's the way it looks. 

Is this the beginning of the end for One Barnet. I sincerely hope so!

  

One Barnet Costs Out of Control

Back in  August 2010 Barnet Council issued a Delegated Powers Report, 1134,  for the award of the Implementation Partner Contract for the One Barnet project and was awarded to Agilisys/iMPOWER. (Mysteriously that report is now missing from the Council's website).  In that report the value of the contract was estimated to be in excess of £500,000. I raised this contract award at Business Management Overview and Scrutiny Committee on 13 September 2010 and it was also picked up by Cllr Jack Cohen who asked for the report to be called in. At the meeting Cllr Cohen asked for the maximum value of the contract but because this was declared to be exempt information, the public were forced to leave the meeting.

Subsequently the Barnet Bugle submitted a Freedom of Information request to ascertain this maximum value. Following an initial refusal and a request for an internal review, the response which came back eventually stated:

"The establishment of an Implementation Partner contract enables the provision of consultants for specific assignments based on end to end process of phased delivery requirements. This means that the forecast cost of  the contract cannot be fully predicted it will be in excess of £500,000 [in the first year of delivery with circa £2,000,000 identified as potential contract delivery cost over a three year period.]" The section in brackets is the important information which was originally withheld.

The call in was reviewed by Cllr Dan Thomas who had originally signed off the DPR and he said he had decided to retain the contract without amendment - so from his point of view Cllr Thomas was happy with the contract as it stood.

Now just two years on, the bill for Agilisys at at 31 May 2012 is a shade under £3 million  (£2,972,667.37) £1 million more than forecast and there is still a year to run on the contract.

I don't know who is keeping tabs on this spending (other than me) but if I had signed off a contract that was running 50% over total budget with a third of the contract term still to run, I would be kicking up merry hell asking what on earth was going on.

During the Inspection of Accounts I did try and review the details on the invoices submitted by Agilisys and reconcile them to the contract but according to Barnet Council that information is commercially sensitive so both invoices and contract were excessively redacted to the point that I could not see how many days they have billed or what daily rate they have applied.

I have raised this matter with Grant Thornton, the Council's external auditor, as I wonder if this additonal £1 million should have been spent on this contract without any subsequent authorisation or if any further spending with Agilisys is ultra vires. I will have to await a response from Mr Hughes but irrespective of the outcome it illustrates that the Council's "relentless desire for efficiency" doesn't appear to extend to monitoring supplier payments.

Barnet bloggers look forward to meeting Cllr Thomas to discuss Barnet council’s priorities

Dear Councillor Thomas,

We, bloggers of Barnet, are most pleased that in your recent YouTube broadcast you express yourself keen to engage with local residents and discuss ways to improve Barnet.

As you are no doubt aware, the Secretary of State for Communities and Local Government Eric Pickles recently commended the bloggers of Barnet for their great work exposing the MetPro scandal. The subsequent investigation has highlighted all manner of problems with Barnet Council's procurement procedures which we are promised will now be rectified.

Since we are all motivated by the desire to help you improve Barnet still further, we are pleased to invite you for a live, televised discussion, to be broadcast on www.GotSeeN.com, at a time to suit you.

We are sure that there are many subjects about which we could have an interesting and informative discussion.

As public spirited citizens we are willing to meet all the costs of staging this event and broadcasting it live on the internet. We also guarantee to afford it maximum publicity and coverage through our blogs.

We are happy to discuss any topic and suggest that if you let us know in advance the topics you want to cover, we will do our homework so as to ensure a fruitful discussion.

We would be happy to broadcast either from the Barnet Council offices at North London Business Park or a venue chosen by us.

Subjects we think you might be interested to discuss are: One Barnet, Cabinet Members’ allowances, executive pay, waste within the council, the number of highly paid contractors working for Barnet, cost overruns on projects such as Aerodrome Road, CPZ charges, Icelandic investments, overdevelopment and the strain it puts on infrastructure.

We look forward to hearing your response.

Best wishes,

Derek Dishman
John Dix
Vicki Morris
Theresa Musgrove
Roger Tichborne

Barnet’ s budget consultation – A lottery of the future?

Good old Barnet Council. They really must be worried if the latest consultation wheeze is anything to go by. First of all you have to find the consultation page on the Council’s website not an easy thing to do so I have embedded a link here ensure readers can take a look at this wonder.

First we have Councillor Thomas with a professionally made video with lots of lovely chart telling like Private Fraser in Dad’s Army, “We’re all doomed,”. Take a careful look at the chart they show. The first one shows spending on Overseas Aid rising and Barnet spending falling. What’s the subtle message there Cllr Thomas? He then shows us another graph which seems to suggest that by 2022/23 adult social care and children's services will be consuming the entire council budget. Well I’m sorry but I simply don’t buy this one. Frankly I think this government will have been kicked out long before that happens. Also I don’t believe that council tax will not rise over the next ten years. It one of those clever little chart that are meant to frighten people without actually conveying any sense of reality.

So now we move on to the survey. Although I would absolutely not claim to be an expert I have carried out a few consumer surveys in my time. My golden rule is don’t ask a question unless you can do something with the results. What we are presented with is a list of 28 activities and then asked

Which of the following services are most important to YOU?
Which services do you think are the most important for the council and it partners to focus on FOR BARNET AS A WHOLE?

You are only allowed to pick 8 out of the 28 listed. It's a bit like picking your lottery numbers and hoping they come up. The list of activities is set out below.

1. Community safety services (tackling anti-social behaviour & crime)
2. Council owned leisure facilities
3. Doorstep recycling
4. Environmental health service
5. Fostering, adoption and children in care
6. Housing advice and housing benefits
7. Keeping vulnerable adults safe
8. Library service
9. Nursery and early years services
10. Parking services
11. Parks, playgrounds and open spaces
12. Planning and building control
13. Primary education (5- 11 yrs)
14. Provision for public space CCTV
15. Recycling facilities
16. Refuse collection
17. Repair of roads and pavements
18. Secondary education (11 - 18 yrs)
19. Street cleaning
20. Street lighting
21. Support for adults with a learning disability
22. Support for adults with a physical disability
23. Support for adults with mental health problems
24. Support for children with disabilities and special needs
25. Support to family carers of adults
26. Support to older people with care needs
27. Trading standards, consumer advice & licensing
28. Youth activities

Now let me see which ones are important to me? How do you prioritise secondary education over environmental health for example or how about fostering or refuse collection. And where do I think the "council’s focus for Barnet as a whole" should be? Support for adults with a learning disability, or repairs of roads and pavements.

The next question asks if there are any service areas you think the Council need to improve on.

The last question asks if you have used any of the services. Interestingly it appears to omit provision of public space CCTV, refuse collection, repairs of roads and maintenance, street cleaning and street lighting.

Now my question is what are earth are they going to do with this data. Are they seriously suggesting that if not enough people identify support to older people with care needs that they will stop providing it.

Perhaps if the council spent a lot less money on expensive lawyers and consultants dreaming yet more bizarre ways to “re-engineer the council”, hugely expensive IT systems, over paid senior officers on consultancy contracts and focused on running all of these services better we wouldn’t need to be answering such ridiculous questions.

If Barnet want to consult then let’s do it properly and based on informed decisions not some harebrained, petty, little on line survey.

Take it seriously Barnet and host open discussion sessions around the borough. If you can spend £30k of the pledgebank website (success 1 pledge)then surely you should invest a little in some decent consultation.

The Art of Rubber Stamping - A Barnet Masterclass

Last night at the Cabinet Resources Committee we saw world class exponents of rubber stamping in action. With 17 items on the agenda and 155 pages of papers the sense of urgency was apparent from the start. Councillor Coleman shifted uneasily looking at his watch. I couldn’t sure but was he whispering “agreed” over and over again?

The meeting kicked off at a very brisk pace, Cllr Thomas using all his efforts to break the previous record of finishing the meeting in 22 minutes or less.

Oh Oh! First problem. Awkward resident wants to ask some questions. I appreciated Cllr Coleman’s genuine comments concerning my injuries as I hobbled to the microphone. Now Cllr Thomas runs a tight ship at CRC, so with good planning they had prepared answers in advance, alleviating the need to read out either the questions or the answers. Any supplementary questions? Mr Reasonable also likes to plan in advance so I duly read out my supplementaries. Not much point though. A slightly indignant Cllr Cornelius denying that the £1.7 million being spent at Hendon Cemetery was because of three years inaction. Well you commissioned consultants to undertake an option appraisal in 2008 so that looks like three years inaction to me. Leisure contract supplementary questions sidestepped by Cllr Rams.

Well that had caused a slight delay in proceedings. The 22 minute deadline looked lost. Ok next target looked like 30 minutes. Off they set running through the agenda items. 1 minute for each and they could all be out by 7.30pm.

Allotments was dealt with by Cllr Coleman, dismissing Cllr Thomas’s request to include fences to the responsibility of allotment holders. Mill Hill sports ground pinched to be used for new schools; Agreed! Cllr Harper spoke for at least 2 minutes on the new school places that will be created. Could he be jeopardising the chances of hitting the 30 minute barrier. Agreed Agreed!

Cllr Harper talked about early intervention and prevention commissioned contracts. Cllr Cornelius said that he could now understand what he was voting for but that the papers should have been written in plain English. Another couple of minutes closer to the deadline.

When we get to the item on Hendon cemetery Cllr Thomas had barely paused for breath before Cllr Coleman was shouting agreed, agreed. Three seconds for that agenda item. Could this be a personal best for Cllr Coleman!

Leisure contract item and Cllr Rams was about to start talking but the scowls from other committee members cut him dead. Any questions? No. Agreed!

We came to an item introduced by Cllr Rajput. He started talking but Cllr Coleman was still gently mouthing agreed, agreed. The 30 minute deadline was now starting to look tight. A couple of items now seemed to get Cllr Coleman to speak up. Clearly the 30 minute target was a goner.

Disabled and vulnerable people’s transport met with Cllr Coleman’s disapproval. If he had his way he would change the law so that Barnet wouldn’t have to provide transport for any of them. He definitely didn’t like the thought of working with London Boroughs of Brent and Hounslow.

Well that was it; the 30 minute deadline missed and still an item to go. A discussion around treasury management. Cllr Thomas reiterates that they have to be ultra careful. Yes we don’t want another Iceland. A question about whether the council has any money in Santander bank – No. What do they know that we don’t.
Time to exclude the public so we are finished and it just coming up to 7.35pm. Definitely missed the qualifying time for the Rubber Stamping Olympics - must be quicker next time.