Before the CSG contract with Capita was signed, Councillor Hugh Rayner made a very insightful observation which, thanks to the sadly missed, Dan Hope, we can still see below. Cllr Rayner made the observation that in many contracts the profit is made in the "extras".
As part of my inspection of Barnet's accounts, I have analysed all of the invoices and the supporting data to compile a list of all the extras, contract variations and special projects which Barnet have paid Capita to carry out on their behalf.
In terms of contract variations and extras there have been a number including routing library calls through the Capita call centre. Apparently this was omitted from the original contract so as a result we were charged £453,580 for that service in the first two years of the contract. I did some analysis of call volumes and by my reckoning it worked out at a charge of just over £8 per call.
In the most recent contract variations schedule Barnet agreed to move the Single Fraud Investigation Service (SFIS) from the council's own staff in the Corporate Anti Fraud Team (CAFT) to Capita's CSG Revenues and Benefits team. That means an additional charge by Capita of £112,291. Whether we will save £112k of salaries by reducing the CAFT is a moot point. Also Capita have been given the task of administering the Barnet Crisis Fund. Again this will be undertaken by the CSG Revenues and Benefits (Revs & Bens) team as a cost of £449,166.67. (You can read them both here at page 85).
I have received an email today to say that the SFIS was moved from CAFT to the DWP some time ago. In which case why are we paying Capita to carry out this service? Unfortunately the Performance and Contract Management Committee where this was documented was cancelled in January but I will make sure it is raised at the next meeting in February.
One might suspect that the Revs & Bens team have got plenty of spare time on their hands to be able to take on this extra work. Yet trawling through the Capita invoices for 2016-17 I see that Capita charged Barnet an extra £330,228 for the extra workload above the agreed contract thresholds plus an extra £98,039 for "face to face" support.
We also had to pay an extra £14,400 for 12 executive coaching sessions provided by a subsidiary of Capita to senior council officers. One invoice mentions the name of the recipient of 6 of those coaching sessions but I will spare their blushes here. However, paying Capita £1,200 per coaching session seems quite lucrative to me.
So now we move on to special projects. These are items that weren't included in the original contract and for which we pay Capita at pre agreed consultancy day rates. We don't know what those day rates are because this is one of the items Barnet/Capita want to remain secret even though both parties agreed in the contract they would be disclosed after three years (see my previous blog).
To be clear, these charges are just for Capita's input at pre-agreed consultancy rates. While some of the projects may have always required external support, there are some which in the past may have been able to be carried out by council officers within their normal duties. This was confirmed by an officer when I asked the question a a committee meeting.
The list is long so apologies if it looks a bit boring. The key issue here is that there are so many projects and in total they add up to over £16.8 million. Have we had value for money? Certain Conservative councillors will says yes, we have had value for money because the day rates charged are similar to other consultants. Grant Thornton were commissioned to carry out a review of the Re special projects of which they said,
"In addition to the core contract, there is substantial expenditure on projects and the Review brief anticipated that the Review would pay some attention to this aspect. However, timelines have not permitted detailed reviews of individual projects, so the focus has been on value for money. Despite the use of external support, it has proved difficult to obtain sufficient information to conclude whether or not overall project costs represent good value for money and it is proposed that officers should explore this further".
Grant Thornton also commented, "Our benchmarking identified that a clearer understanding would be achieved if margins and costs were considered in relation to prices charged for service delivery". So the answer is we don't know.
A few highlights from special projects list below include: £248,000 for Family Services Recruitment, £1.4 million for work on the libraries downsizing, £1.52 million on project managers, £895,000 for Greenspaces support. Some, many or all may be perfectly legitimate but without a doubt this is a significant money earner for Capita.
So my question is are we being ripped off on any of these projects and are they really saving us money? I think Cllr Rayner was right on this one.