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South West One "too complex", audit committee finds

03/03/14

The sheer scale and complexity of Somerset County Council's pioneering South West One outsourcing is unlikely to be repeated if a report by the council's audit committee is acted upon.

A report on "lessons learnt to inform future commissioning" says an "incredibly complicated" 3,000-page contract was one reason behind early trouble. It also finds that contract monitoring was under-resourced.

South West One is a joint venture between three public bodies led by the country council and IBM. It provides IT and other back office services. After a change in leadership and a near breakdown in relationships, the company attempted to sue the authority for £25m but the dispute was settled out of court. The was renegotiated in 2013 and is due to run until 2017.

The audit committee report finds that the partnership between the provider and the three clients "has at times been adversarial and at times worked well". Success depends upon having similar incentives and an understanding of each partner's requirements, it says. However it notes that the nature of local government had changed "considerably" since the contract was drafted. Meanwhile, the provider had "well-documented financial difficulties" early in the contract life.

"The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur."

Monitoring the contract proved difficult as performance issues with enterprise resource planning systems became evident, the report finds. "With hindsight the additional team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team."

"It is regrettable and gain with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and the council was positive. "Perhaps the regime was too onerous for both sides to administer."

Behind many of the complexities was the number of partner organisations. When it came to staff secondment, it was the first time that the arrangement had been used for staff from three separate organisations. The report notes: "It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided."

It concludes: "In summary, this was a very ambitious venture. The service provided in some cases got off to an unfortunate start... The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind."

http://www1.somerset.gov.uk/council/board9%5C2014%20February%2013%20-%20Item%2011%20SWO%20Lessons%20Learnt%20report.pdf

 

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