Why have Barnet paid Capita £30 million in "management fees"

In July, Barnet Council paid Capita £14.7 million for "management fees". This was supposed to be a management fee to last until the end of the year, assuming the Judicial Review appeal would take months to be heard and settled. Almost immediately after that payment the court case was brought forward and the contract was awarded to Capita. I was waiting to see whether and when most of this money would be repaid.

Today the supplier payments for August have been published and low and behold Capita have been paid another £15,223,862 for "management fees". Bear in mind that Capita took over the NSCSO contract on 1 September so none of this £30 million relates to the contract. So in two months Capita have been paid just shy of £30 million in management fees which represents the anticipated savings for the first two and a half years of this contract.

Something here is very very wrong.

Barnet's Bailiffs Contract Part 2

Following up on the bailiffs fiasco I blogged about on Friday, I have been ploughing my way through the Capita contract. As a result I sent the following email to Cllr Richard Cornelius, Andrew Travers Barnet CEO, and the two opposition leaders on Sunday. So far I have had only one response and that was from Cllr Jack Cohen who is in no way responsible for this mess. I would have been happy to keep my email private but given that neither Mr Travers nor Mr Cornelius have had the courtesy to respond I have set out my email below for everyone to share:

I am aware that the Council has received a solicitor’s letter alleging a breach of contract with the Council’s bailiffs. These bailiffs were appointed through a framework agreement via the Eastern Shires Procurement Organisation and, according to the DPR, the contract was due to run until December. Following a request to novate the contract, it appears that Capita have summarily terminated the contract and appointed their own bailiffs. What particularly concerns me is that Capita have appointed Equita, a wholly owned subsidiary of Capita without any formal tendering procedure, DPR or any other open or transparent notification.

Having reviewed the CSG contract documentation which you published on Thursday, it appears you were complicit in this appointment as set out the Payment  Mechanism Appendix 2 Pricing Assumptions (5) where it states:

“That the Service Provider can deploy its own Bailiff Service as the exclusive provider of Bailiff services for Revenue and Benefits in order to facilitate more effective collection strategies.”

Frankly I find it shocking that your advisors, and councillors who assured me they had read this contract, could have condoned a matter which appears to fly in the face of contract procedure rules, encourages a breach of contract and raises massive conflict of interest issues. Indeed, it could be suggested that as the decision to appoint Capita’s own bailiffs was made in April 2013 there was never any intention to novate the contract and that all along a breach was anticipated.

I asked repeatedly for someone to independently review the contract but you failed to do so. I asked if Capita would be subject to the same procurement rules and I was reassured they would. I repeatedly asked about conflicts of interest and you reassured me this was covered in the contract. Perhaps you now understand why I was so concerned.

I would be grateful if you could tell me how this unfortunate and potentially expensive situation will be resolved or is this how the Council will be run now under Capita.

Subsequent to this email I have found in another of the contract documents, a further reference to Equita being appointed by Capita as their bailiffs. Indeed, the document is dated March 2013 which predates the contract signed with Newlyns and Phoenix on 16 April 2013. This simply reinforces the impression that there was no intention to fulfil the contract and which I suspect will undermine Barnet's case if/when this goes to court.

This is not going to end well.

Threat of legal action just two weeks into Capita Contract

The Capita contract does not appear to have got off to a good start. I heard earlier in the summer that the bailiffs contract has been torn up even though it was mid term and that Capita had appointed Equita, their own bailiff company.  The original contract was with two companies, Newlyn Collections Services Ltd
and Phoenix Commercial Collections Ltd and you can read the authorisation of that contract here.

Today I have received news that, unsurprisingly, Newlyn and Phoenix are not very happy about the situation and they have issued a lawyers letter to the council employee who gave  notice of the termination, the chief executive of the council and every councillor. It is a four page letter which make some pretty serious points including the threat of injunctive relief if Barnet/Capita pass any further bailiff instructions to Equita - see below:

The lawyers not only allege that the council has breached the contract but they call into question the probity with which the contract has been handed on a plate to Equita. The letter goes on to state:

This is the real issue here. We have Capita who are administering Council Tax collection through the NSCSO contract  (now called Customer and Support Group or CSG) and if people fail to pay they send the demand straight to their own firm of bailiffs, Equita, who will also make money by receiving the instruction. Whereas in the past there may have been some attempt to come to an arrangement with late payers, there is now a massive incentive for Capita to pass all such problems straight to Equita.

Over the last two years I have asked many questions about procurement procedures that Capita will have to assume and about potential conflicts of interest. Ultimately it is our money they are spending therefore they should maintain exactly the some openness and transparency. In this case Capita seem to have fallen at the first hurdle.

Councillors cannot ignore this as it has been sent to every one of them and when  lawyers get involved it gets expensive. Barnet may have published the contract yesterday, albeit with many redactions, but who is actually checking to see if it is being properly administered.

IBM throw in the towel at Southwest One - Are you watching Barnet

IBM who were the major shareholder of the Council outsourcing group Southwest One have sold their outsourcing business to the American Synnex Corporation. I am indebited to Conservative MP Ian Liddell-Grainger for alerting me to the demise of Southwest One on his blog.

Southwest One has been a problem from the start Not only has it run up liabilities of £45 million but is has only delivered a small fraction of the intended savings. As always it there is lots of talk about future/forecast savings but actual savings delivered are small.

The latest accounts show that the company is only remaining solvent because of IBM's support.

 So now that IBM's shareholding has been sold to Synnex, what will happen to the on-going business? Mr Liddell-Grainger reproduces an email sent to staff this week which says:

"We are currently working through exactly what this might mean for Southwest One.  As soon as we are in a position to give you any more information about this situation, and any impact it may have on Southwest One, we will update you as soon as we can."

So the poor staff are left in limbo but what about the services they are supposed to be delivering? Synnexx will use their wholly own subsidiary Concentrix to run the business and let's hope for everyone's sake they can sort out this mess.

 What really worries me is Barnet have entered a similar style joint venture contract with Capita for the DRS contract. Could we in Barnet be exposed to the same sorts of risks that have befallen Southwest One? We don't know because we aren't allowed to see the contract or any of the legal advice Barnet have been given. We just have to hope and prey that Capita make a better job of running things than IBM did at Southwest One.

£120,000 to find out Barnet residents' views - Just try talking to them!

Today Barnet have published a decision made back in July regarding the Residents' Perception Survey. This survey used to be undertaken once every two years but the Council have now decided to undertake this survey twice a year for the next two years. This will cost £120,000, a not insignificant sum. Now I'm not against the residents' perception survey, in fact I'm a great believer in research. However, I find it quite ironic that a council which seems so antipathetic towards residents should want to spend £120k finding out our views. Perhaps if the council made residents more welcome at meetings and some Councillors weren't so contemptuous they might find out some useful information. Perhaps if the council hadn't run residents forums into the ground by barring most subjects from discussion they might have learned more about which issues are important to residents - they have changed the rules again to allow residents to ask any question at residents forums but only if they submit them on line by 10am, 2 days in advance.

At the June residents forum I asked if the Barnet Council have a resident engagement strategy, something which many other council have implemented. The answer is, no they don't. The council are consulting on changes to the way the council is run but they won't be holding a public meeting until after councillors have made the decisions.

Perhaps the council would be more effective if they kept the residents perception survey to once every two years (£30k) and spent the other £90,000 on setting up resident engagement events where they actually listen to what residents have to say. There is a strong network of residents associations, try tapping in to them. Get our well paid Councillors to hold ward meetings on a range of themes that are important to people in that ward. £90,000 would facilitate a heck of a lot of dialogue. In fact they could spend £40,000 on hosting meetings in every ward keep the £50,000 they intend to plunder from reserves in the reserves. For a council that talks a lot about saving money they certainly know how to waste money.

Lots of new recycling bins but nowhere to recycle the waste

Just published on the Council's website is  an urgent decision that will be taken at the Cabinet Meeting on 24 September. This decision is exempt from call in meaning that no one can challenge it.

Description: The council requires a reprocessing outlet for the recyclable materials to be collected from households and recycling banks from 7 October 2013, in readiness for the launch of new in-house waste and recycling collection services from 14 October 2013. A recent procurement exercise has not delivered the expected cost-effective options, and the report seeks agreement for the council to work with the North London Waste Authority to put in place arrangements for the reprocessing of recyclable materials.

So the Council have spent £3.7 million on new recycling bins yet the contract to process all the recycled waste they will generate is not in place because it doesn't save enough money. I did question the savings at the Chipping Residents Forum back in June but on that occasion mine and other residents's concerns were simply swept aside.

What a mess!

Barnet DRS joint employment contracts - are they legal?

Tomorrow is the General Functions Committee at Barnet Council. The agenda and meeting reports can be viewed here.

Right from the outset there has been a concern about outsourcing development and regulatory services because some of these duties are statutory responsibilities which cannot be delegated. The way Capita have wiggled round the problem is to set up joint contracts. These contracts mean that for part of the officers' duties they are an employee of the Joint Venture which then can mysteriously morph into a Council employment contract as they for example walk through a door or step into a witness box

On 5th August Capita wrote to the Council stating on the joint employment contracts:
"Due to the specialist nature of this situation, Capita Symonds & LBB are currently working through the practicalities of this model and therefore future measures will be confirmed in respect of the Joint Employees once both parties have had further discussions".

So what they are saying is this is a one off and they are not sure if Joint Employment contracts will work - and this is just one day before the contract with Capita was signed by Richard Cornelius. John Burgess from Barnet Unison has written to the GFC which includes the following:

I want to draw your attention to the GFC report section 4 Risk Management Issue No 3 states:
“Staff currently carrying out non-delegable statutory functions may choose not to sign the joint employment contract to allow them to carry out these activities post transfer.”
I can report that following the joint attendance workshops many staff were even more confused and concerned about the credibility of this as an option to enable staff to carry out their non delegable statutory duties or functions. It is now six weeks since these workshops took place and staff have still not seen any answers to the questions they raised.

The presentation included practical examples of how the proposes joint employment contract would work. This presentation was flawed as staff quickly spotted false assumptions about decision making. What didn’t help was that on each example it said “ILLUSTRATION ONLY - NOT FACTUALLY CORRECT”
This led staff to ask if legal advisors Trowers had been asked to give a legal view of something that was factually incorrect. 

A number of staff have said

“All it will take is for a clever lawyer acting on behalf of a business or resident to start to challenge whether the officer made the enforcement decision as a employee of the Council or Capita. If a challenge is successful then joint employment option will no longer be able to be used to carry out non delegable statutory duties or functions, and this would put the Council at risk of not being able to discharge its statutory duties and functions”

So there you have it. Richard Cornelius has rushed headlong to sign a contract which legally may be virtually impossible to operate or may be subject to legal challenge the first time staff try and enforce their statutory duties. The legal advice is unclear and untested. What a complete and utter mess. I shall be there tomorrow evening to see how the loyal but unwhipped Councillors try and talk their way out of this one.