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Massive outsourcing deal was 'perhaps too ambitious'

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One of local government’s largest shared back office services operations was “perhaps” too difficult to run and too ambitious in scope, a Somerset CC report has found.

The report, written for the authority’s audit committee by its finance director Kevin Nacey, concluded the controversial South West One joint venture should not have been set up to handle nine services for 10 years, as each proved to have evolved at a different pace.

South West One was established in 2007 by Somerset, Taunton Deane BC and Avon and Somerset Police, with technology firm IBM as its majority shareholder.

It was intended to provide back office services for its founders and win contracts elsewhere in the public sector. However, the venture’s website makes no mention of it having won external contracts.

Somerset’s then chief executive Alan Jones (pictured) predicted on its formation that South West One would go “beyond excellence”.

But South West One was beset by difficulties, including an episode in which it sued Somerset over the distribution of procurement savings.

In 2013 Somerset took back about 100 staff seconded to the joint venture together with its strategic and operational procurement, estates management, strategic management of IT and some aspects of facilities management services.

Somerset’s then leader Ken Maddock (Con) in 2012 complained about South West One posting “staggering losses”, though its financial position later improved.

The audit committee’s report on lessons learnt said the 3,000-page contract that underpinned South West One had proven “incredibly complicated”.

Service contract periods should have differed “as the pace of change is different”, and the level of complexity that resulted from the single contract term “was perhaps too ambitious for all parties”.

It found: “This was a very ambitious venture. All parties have been working very hard to keep good relationships and to fix service issues as they arise.

“The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.”

Somerset’s initial client side management team was too small, meaning “performance issues were not resolved quickly enough”, it found.

The contract’s early years saw numerous meetings to try to establish how to measure performance.

“It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive,” the report said, adding: “Perhaps the regime was too onerous for both sides to administer.”

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Readers' comments (1)

  • Are we going to get an article on why nearly every big outsourcing deal of the last decade went sour? One rather suspects that, in those that have not blown up, the contractor has the council over a barrel.

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