Wednesday 29 January 2020

A Capita Stitch Up - Expect Capita to be in place till 2028

The latest supplier payments are out for December, a month when the council paid out a very substantial £86.67 million in just one month. There were some unusual large payments including £6.46 million to the GLA identified as "Levies", £8 million to Network Rail Infrastructure towards the Brent Cross Thameslink station and £5.83 million to John Graham Construction who are the Council's construction partner building the two new leisure centres.

However, there were two other payment which stood out, both of which were to Capita.  £7.75 million was paid on the CSG contract and Capita employee benefits and £3.97 million to Capita Re. This brings the running total paid to Capita since the start of the contract to £457 million, £175 million more than the contracted value.

The reason why this is particularly significant today is that tonight, Barnet councillors will be discussing the basis of the review process for both of these contracts. The CSG contract was supposed to have a review in Year 6, something which has been delayed to merge it with the Year 7 review of the Re Contract. However, the two contracts are quite different, and the contract review processes, as set out in both contracts (see at the bottom of the page), are quite different.

In the CSG contract, Barnet are supposed to identify improvements or savings they want Capita to make and then there is a defined process for Capita to come back with their proposals and once agreed and implemented a mechanism for measuring how well those changes have been delivered.

For the Re contract, the basis of the Year 7 review is focused entirely on whether or not Barnet wish to extend the contract for a further five years. If both parties agree to extend the contract till 2028, Barnet can then instigate a review which will form the basis of the partnership going forward.

Now as is often the way, Barnet don't follow the contract and the review being discussed tonight appears to have gone straight to the discussion about the contract extension and which services will continue to be provided by Barnet. The report says that: "In conducting the Review, the council will work collaboratively with Capita, with a view to presenting jointly agreed recommendations to this Committee, insofar as that is possible". The problem is that Barnet have shown over the last six and a half years that when they say 'collaboratively' it means they end up doing exactly what Capita want them to do. Capita has a catalogue of performance failures as detailed by Barnet's own internal audit team (Capita delivered services marked in RED) yet Capita still continue to provide most of these services.

Barnet are planning to spend the next 12 months jointly reviewing the services provided by Capita,  with Capita. Officers were supposed to carried out a review of the service when instructed to do so 18 months ago in July 2018. However, after 5 months of silence they came back saying that the review had been cancelled and that a secret deal had been struck with Capita following the visit of Capita's Chief Executive to Barnet. Barnet got a cheque for £4.12 million which included compensation for the colossal cock up on the implementation of the Mosaic casework system, the settlement of disputed gainshare claims and KPI failures on the Re contract and in return the whole issue of contract realignment disappeared.

My key worry about this 'collaborative' approach is that Barnet will be showing all their cards to Capita as part of this new review and that will give a massive advantage to Capita in negotiating the five year contract extension. Indeed, I wrote to every Financial Performance and Contract Committee member last week setting out my concerns, the only way a resident can raise such complex matters now that residents have been gagged. I sent the email last Thursday 23rd January and as at 3pm today 29th January not a single councillor had replied or even had the courtesy to acknowledge my email.
This is what I wrote to them:

I write to you as members of the Financial Performance and Contracts Committee as I am not allowed to address the committee in person and a single question of no more than 100 words cannot address the issues which cause me concern. You have published the proposed terms of reference for the year 6 CSG and year 7 Re contracts reviews. This differs significantly from the original definition of the Year 6 CSG review, and seems more in line with the contract definition of the Re Year 7 Contract review which is to “meet to discuss whether each party may wish to proceed with a 5 year extension to the service period”. I have attached copies of both the contract clauses. The clauses are quite different for a good reason. The CSG contract is exactly that, a contract between the two parties. As such both parties, Barnet and Capita, will be seeking to ensure that their best interests are secured in any negotiation. By contrast the Re contract is a Joint Venture and is already by its very nature, collaborative where both parties share the benefits of any financial outcome.

I am pleased that at last the service is being reviewed although this should have happened last year. The extended nature of this process means that any final decision on the CSG contract will not be completed until the contract is well into year 7, a year later than required with the consequent risk that a year’s worth of potential savings will have been lost. It also risks missing the interdependencies between service lines and the synergies that could be achieved if some were considered together.

More fundamentally this process exposes the Council’s negotiating strategy and will make it exceptionally difficult if the council wishes to retender the contract in 2023 by placing Capita at a major advantage to any other potential bidders.

This review process appears to ‘bake in’ Capita’s on-going relationship with Barnet and will automatically prejudice any other bidders or an in-house team from providing a comparator to Capita. As such I would ask you to think again and create a clear separation between the service review and the negotiation of the contract extension to protect Barnet’s negotiating position going forward and to look at consolidating the review into a more compact timeframe.

In addition, unlike previous contract reviews at year 3 on the CSG contract and year 4 on the Re contract, the general public appear to have been excluded from the process even though there was a great deal of participation in previous reviews, especially the Re contract review when many people expressed their dissatisfaction with Capita's performance.

When the two Capita contracts were let in 2013  we were promised better services for less money. All the evidence so far suggests we haven't made any savings and the service is significantly worse.

I have reached the point where I have no confidence whatsoever in Barnet Council to deliver a satisfactory service for residents and with no suitable scrutiny process to hold senior councillors to account, the ruling conservative group can do whatever they want with impunity. Today it was announce that "dissatisfaction with democracy is at an all time high" having risen from 33% in 2005 to 61% in 2019 something I suspect is closely reflected in Barnet. Barnet used to be a borough where people loved to live. Increasingly, that opinion is changing.

For your reference the contract review clauses

By contrast the Re contract review is somewhat different:

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