In April 2011, Barnet Council identified that partnering with 2e2 could be a risky business. In an internal report, released following a Freedom of Information request, the authority outlined a string of risks associated with working with the now-fallen reseller giant.
In its Information Systems Action Plan report, it admitted a key danger was that “2e2 will pass all risk back onto the council and not deliver to their contractual arrangements”. To combat such a possibility, it proposed to “improve the relationship with 2e2 and look into terminating the 2e2 contract early and bringing services and staff… in-house, if necessary.”
On top of this, it added that “the 2e2 contract was put in place to transfer the operational management and risk of core infrastructure to a private provider” but that due to all the equipment provided reaching its end of life, 2e2 had “passed all risks back to the council”.
But despite identifying the myriad dangers two years ago, and considering pulling its data back in-house, the council stuck it out with 2e2 until the start of 2013, when the firm fell into administration, suddenly ceasing to provide the services the council had considered terminating.
A Barnet resident who blogs about local issues under the pseudonym Mr Reasonable claims the council put too much trust in 2e2, and took false confidence from the firm’s stature.
He told CRN: “I have no issues with outsourcing, so long as it is done sensibly and in a low-risk way. With 2e2, the council must have thought that big companies do not go bust and that they know what they are doing, but they do go bust. The problems this leaves when managing IT are huge.
“You just need to look around the internet – suppliers had not been getting credit insurance for 2e2 for a while, I think there were a few County Court Judgements against the company which were settled – we should be looking more closely at this. They had high debt because of its acquisition rate. They should not have stopped trading with them, but why they paid them so much upfront I just cannot understand, there was no need to.”
Barnet Council declined to comment on why exactly it continued to work with 2e2 despite the lengthy and detailed list of issues concerning the partnership.
It identified 2e2’s significant presence in the public sector has meant its demise has hit a variety of its customers in the area hard. But one firm’s demise is another’s gain, as Daisy snapped up its datacentre business and several other companies took smaller pieces of the company for themselves too.
In the case of Barnet Council, Capita rode in to the rescue to take over the operations for a short-term contract. The authority hopes the Capita partnership will evolve into an already-established long-term agreement, as part of its One Barnet outsourcing scheme. The £320m plan, which is set to come into force in May, will see Barnet outsource IT, human resources, payroll and call centre services to Capita in a 10-year deal – a move which has been met with significant opposition from residents.
One resident has taken her battle to the High Court in the form of a judicial review, meaning Capita’s 2e2 replacement contract can last for only two months – the time expected the court case will last. Maria Nash claims she fears for her life if the long-term outsourcing plans materialise, and adds that the authority did not properly consult on the issue with the public – something Barnet Council denies.
And Nash is not alone, as a swathe of opposition groups, residents and bloggers have joined her cause in campaigning against the council’s outsourcing plans with Capita.
The Barnet Alliance for Public Services (BAPS), which comprises a group of residents, local organisations and trade unions campaigning for high-quality public services in Barnet, called for public support of Nash as her battle at the Royal Courts of Justice began last week.
On its website, it urged people to back Nash and wrote: “Barnet Council is effectively selling off its public services to Capita, a private company, in a single contract for a minimum of 10 years, putting the quality of services at risk as profit becomes the overriding priority.”
On another post, it said it was “extremely worried” about the One Barnet privatisation plan because “private companies prioritise profits, hence there are risks that the quality of services delivered will suffer”.
Barnet Council told CRN when the news of Capita’s takeover of the ex-2e2 contract broke that it hopes the outcome of Nash’s judicial review will be positive for the authority, meaning the short-term Capita contract can then form part of the wider 10-year project (see Capita and One Barnet box below).
A variety of bloggers known collectively as The Barnet Bloggers also regularly write about the issues surrounding Capita and its partnership with the council.
The council told CRN that there are risks in running services both in-house and externally, but that outsourcing provides essential investment.
Cllr Daniel Thomas, cabinet member for policy and performance at Barnet Council, said: “There are risks involved in running services both in-house and out of house. What is quite clear for us is that the benefits of external investment and a skill set from outside the council can bring real benefits in terms of improvements in services to residents at a time of real financial hardship for the public sector.”
On the up
Barnet is just one example of a council embracing outsourcing, as recent figures show that such practice in the public sector is on the rise. In fact, the Information Services Group (ISG) claims that the UK now harbours the largest public sector outsourcing market outside the US.
According to data from its latest EMEA TPI Index, which covers commercial outsourcing contracts with an annual contract value (ACV) of €4m (£3.4m) or more, public sector ACV in the UK jumped by 16 per cent in 2012, with the public sector accounting for more than half of the UK’s ACV total.
ISG put the spike down to “the government embracing outsourcing as part of its focus on improving value and streamlining costs”.
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