Tuesday 25 June 2013

Barnet Cabinet - Just Not Listening

Last night was the Cabinet meeting to rubber stamp the award of the DRS contract. Possibly having learned their lesson from the previous NSCSO contract, Richard Cornelius took lots of questions and allowed several speakers. However, asking a question is not the same as getting an answer and those were in short supply. In fact the whole event was stage managed with the illusion of councillors listening and then asking their set questions. It was quite clear that they just were not listening.

Although the evening was generally a disappointment the one highlight was when Mrs Angry got rather cross with naughty councillor Robert Rams and told him off for sniggering and tweeting while she was talking. Well done Mrs Angry!

I would love to have included a link to all the questions and answers but the Council has not yet published them. However, in a self indulgent moment I have included the speech I gave below. 

As I have stated many times, I have no ideological issue with outsourcing per se, so I come at this contract from a perspective of: will it work, will it deliver the promised results and do the risks outweigh the rewards? And risk is my biggest worry with this contract.

Risk number one - are you going to be able to manage this contractual relationship once the contract is signed? I am gravely concerned that over the last two years you have been deskilling the council with interims and/or Agilisys fulfilling so many key roles. When this and the NSCSO contract start there is going to be a massive skills vacuum on the council’s side and that will place you in an incredibly weak position in the JV. You only have to read through the council’s accounts to see how many senior posts are filled by interims. I have been going through Agilisys invoices as part of the inspection of accounts and their reach within the council is shocking. You have created a consultancy dependent culture in the council and you are going to pay for that dearly when this contract kicks into gear.

Risk number two – will entering into a joint venture force you, directly or indirectly, into making unpalatable decision. The shareholders’ agreement will set out rights and obligations on both parties. We have heard a great deal about Capita’s obligations but I have not as yet heard a single council obligation. Do you think there aren’t any? If there aren’t then I doubt very much it is a JV because by the very nature of the agreement both parties have responsibilities and obligations. Whilst you as a shareholder may insist on certain actions being taken or not taken, your directors on the JV board through which you decisions can be enacted have a fiduciary responsibility to the JV and that is where the problems will arise. I have a horrible feeling that when certain services are deemed unviable or when income streams don’t materialise your directors who sit on the board of the JV will be obligated to make some pretty difficult decisions which you as councillors may disagree with but you will be powerless as they are your representatives.

Risk number three  - will there be a cultural fit? There will be a massive cultural difference between Barnet and Capita. You are a not for profit organisation focused on delivering services and for want of a better phrase doing the right thing. Capita is a FTSE 100 company focused on shareholder return. That cultural mismatch can work satisfactorily in a straight contract but when you form a JV it becomes much more difficult because you have to adapt to your partner’s culture and that I fear will be a massive shock for Barnet. No mention of cultural fit has been made at any stage of this contract and that suggests it has been either overlooked or ignored.

There are many more risks that I could mention but sadly there is no time. However, the one thing that you could at least do to test these risks is undertake independent due diligence. I simply cannot understand why you have refused to bring in an independent expert to carry out financial and commercial due diligence. You have had only one set of opinions, those of your expensive advisors. All the way through they have been advising you to continue with this process – well they would wouldn’t they because this project is generating millions of pounds in fees for them.

Any sensible, rational person would have said, “before I make this massive decision I need a second opinion, I need to double check the thinking and what is on offer”. If you had had a second opinion on the Catalyst contract perhaps you wouldn’t have been landed with a £10 million bill. If you had had a second opinion on the Your Choice Contract perhaps it wouldn’t be in financial crisis.

Three weeks and £40,000 would give you at least some comfort that you were doing the right thing. But you have resolutely refused to take a second opinion. Well that, in my opinion is probably the biggest risk of all; it is arrogant and it is reckless. You still have time – think again - get an independent second opinion.

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