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.

Barnet Council stick up two fingers to residents at Planning & Environment Committee

Sadly, last night, after  a passionate speech by Cllr Jack Cohen, Conservative Councillors nodded through yet another erosion of democracy in Barnet. I have to yet again thank the Barnet Bugle for their excellent coverage of the decision which you can see here. I got the distinct impression that some Conservative Councillors were uncomfortable with the proposal especially Cllr Maureen Braun who seemed to agree with just about everything Cllr Cohen had said. We were promised that this is a trial and that it can be reversed in six months time. However as Cllr Rawlings pointed out, reducing the number of meetings from three to two was supposed to be a trial and not attempt has been made to reverse that decision. I would also point out that in 6 months time the planning service will be privatised to either EC Harris (not likely) or Capita (very likely) and getting them to change the procedure will be virtually impossible because it will mean an increase in contract cost.

Planning has many similarities to the parking fiasco we have experienced over the last 12 months. This will affect all residents alike including many Conservative voters. I suspect there will be some very difficult Councillor surgeries coming up when residents are told they no longer have a right to speak at meetings by the very same Conservative Councillors who voted in favour of this change.

Watching the video of last night's meeting it became quite clear to me that the person running the meeting was the Senior Officer and that Councillors had to do as they were told. The Senior Officer had the cheek to say that because some other authorities are less democratic than Barnet (but he wasn't allowed to say which ones because the benchmarking was 'confidential') that was a good reason for Barnet to be less democratic. That is the logic of the madhouse!

The officer also said that reducing democracy was necessary to make the service "fit for purpose". Frankly I think that Barnet Councillors who voted for this decision are not fit for purpose and I sincerely hope they get voted out at the next election.

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.