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 - The Programme that Keeps on Costing

I must be slipping. I read through the the papers for last week's Cabinet Resources Committee and missed a very interesting statement tucked away on page 144. (Page 16 of this download section). At 9.17.8 it says,

"To ensure the adequate funding of this enhanced programme of change, £10m is being added to the Transformation Reserve. Cabinet Resources Committee are asked to approve the expenditure of £6.140m of this within 2012/13, to fund the initiatives described above. The table below provides a breakdown of the predicted use of this money. The requested sum includes the totality of funding required for the three enabling projects and the Health Integration and Demand Management project. It also includes the funding for the development of Outline Business Cases for the other projects, and the funding of the programme management office through the year".

Put simply, what it appears to be saying is that Barnet need another £10 million to fund "an enhanced change programme". Interestingly the table below suggests that actually they need another £11 million of which £6.14 million needs to be drawn down this financial year. Personally I find this pretty scary. The One Barnet implementation budget was forecast at £9.4 million. They are now asking for another £10 or £11 million over the next three years. We don't know what that  money is going to be spent on. It just has to be authorised for senior officers to spend. Will a large chunk of this be spent on consultants and lawyers - probably!

Having watched the Barnet Bugle's video of the CRC meeting it appears that Cllr Harper refers to page 143 of the report and asks an officer to spell out the savings which are stated as £16 million.  He fails to draw attention to the additonal £10 million requirement on the next page, a very convenient oversight.

The reality is that One Barnet is in fact a load of smoke an mirrors. Most of the savings that have been made so far are simply old fashioned cuts. Staff made redundant, services reduced, the vulnerable made to pay more. Not one penny has been saved by the One Barnet Outsourcing project yet because it is almost a year overdue and will not come into force until the next financial year.

I would love to have a debate with Councillors about the One Barnet programme. I would love to see some of the details behind all of these figures. I would like to see a breakdown of the costs so far. Not in the secret state of Barnet where the citizens cannot be trusted with any of this information.

BT and Capita (oh and EC Harris) must be laughing their socks off.

Thanks to anonymous for the tip off!

Barnet Council - a case study in Hubris

I did think about writing up the Audit committee on Thursday night but as ever Mrs Angry has done a much more effective and entertaining job. I asked a couple of questions and I gave a speech about what I see is an enormous gap in the internal audit plan that will leave the council very exposed when, in 8 months time, Barnet hands over the operation of most of the council’s key administration to a private company.

However, what continues to shock me is the level of hubris Barnet Council exhibits. I had to look up a definition of hubris to make sure I wasn’t talking nonsense and I found this one that sum up what it means to me: “extreme pride or arrogance often indicating a loss of contact with reality and an overestimation of one's own competence or capabilities, especially when the person exhibiting it is in a position of power”.

The senior officers and cabinet members have taken us down the route of One Barnet Outsourcing, a high risk strategy. At the Audit Committee I raised a number of issues which I believe the committee members should have been asking about One Barnet. I got a sense that Cllr Palmer and perhaps Cllr Schama understand the risks, but the attitude of the Council as exhibited by the rest of the committee and all of the officers is so arrogant that I fear it will only lead to disaster.

We were told by yet another new consultant that they would be sorting out procurement. Back in June last year they put forward an action plan to sort out procurement that at the time I said would not work. We had a consultant then (Mick Stokes) who was going to sort it out. At the time I made the point that giving responsibility to a consultant on a six months contract would not provide the continuity needed to drive through the changes required in procurement. Sadly I was proved right and now we have another consultant on another six month contract starting all over again.

Last year I also said that there was a fundamental cultural problem at Barnet with an excessive level of self belief that One Barnet would solve all of the council’s problems. The arrogance of senior officers that they know the answer coupled with their loss of grip on reality has meant that the day to day functions of the council have slipped right down the priorities list.

I have worked with many large organisations and one of the phrases I use sometimes is “stop drinking your own bathwater”. I have seen organisations where ‘consultant speak’ has become the common language and the more it is repeated the more people believe it to be true. Sadly this often ends badly when reality kicks in and suddenly the organisation is plunged into chaos as all their reference points of belief are suddenly found to be false.
From my perspective this is exactly what I see happening in Barnet and this situation is perpetuated by the hubris demonstrated by the senior management team and a few dogma driven members of the cabinet. Their self belief and arrogance will ultimately bring about their downfall but sadly it will have dramatic consequences of all of the citizens of Barnet.

It is still not too late for the Council to change, but only just. Someone needs to get a grip on reality and get back to what they are supposed to do, deliver good services for local people fairly and cost effectively. Failure to do will only end in disaster.

Barnet - a Council out of touch with its electorate

We all know how unhappy people are about the parking by phone system that was imposed without consultation or discussion. I had a card registered but it expired and since then I have had huge problems registering the new card. Yesterday morning I tried to buy some 30 minute scratchcard on line. I wonder how long they will take to arrive? We see the old ticket machines still languishing on the streets covered in black bin bags. If they had kept the machines but created incentives for people to use pay by phone I am sure over time many people would have gradually moved over to pay by phone. Barnet council say that the machines were always breaking down and that is why they had to be replaced but I had a look at the figures given in an FOI on this very subject and while there were a number that were problematic, the majority had only occasional failures. Yes, there were some occasion when a lot of machines went wrong but when I looked in detail at the dates it coincided with days when we had the snow last winter (which I think stopped the solar panels on top of the machines from working).

Another topic where the Council seems to be out of touch with residents is the proposal to let out the parks to private groups. In my local Oakhill Park there is an area by the cafe which has been designated for use by private parties. It also happens to be the cricket square during the summer and is an area widely used because it is flat and close to the cafe. At tonight’s council meeting a question has been asked about the consultation on this subject. Interestingly the reply states that:

“As of the 12th January 2012 the Council has received over 650 response to the consultation of those 464 have been analysed thus far, the breakdown is as follows 428 are against the policy, 9 are in favour and 47 have taken a neutral position”.

So that’s 92% opposed and just 1.9% in favour. Pretty clear cut in anybody’s terms but will the council listen or will they plough on regardless like they do on every other topic like selling the Church Farmhouse Museum and pushing through this mad outsourcing programme.

Barnet Council continues to distance itself from the people it is supposed to represent. This cannot continue much longer before something snaps. Either someone will try and stage a coup within the Council or the residents will start a revolt. Either way, the current approach of the cabinet doing what they want and arrogantly ignoring any public views is untenable.

Barnet Council - please start listening!