Essex to sign off outsourcing deal without confirming costs

27 Oct 09
Essex County Council has authorised its Cabinet to sign off an outsourcing deal with IBM that could be worth up to £5.4bn – but public documents do not outline either the scope or likely price of the contract
By Tash Shifrin

23 October 2009

Essex County Council has authorised its Cabinet to sign off an outsourcing deal with IBM that could be worth up to £5.4bn – but public documents do not outline either the scope or likely price of the contract.

Papers prepared for the council’s October meeting said an annual funding gap first estimated at £200m – due to increased future demand for services and a tighter financial climate – was now ‘likely to be closer to £300m’ by 2013.

The Essex Works transformation programme, for which IBM is the preferred bidder, is aimed at reshaping services and diverting £300m ‘away from processes, property and procurement into frontline services’, the documents said.

In November last year, a tender notice issued to potential private sector partners said the council could contract out ‘any or all’ of its services in an eight-year deal worth between £2.3bn and £5.4bn.

Outsourced areas would ‘include but are not limited to corporate and back-office functions, environmental services, social care and school-related services’.

In May, suggestions that the council might drastically scale down the plan emerged, with a spokeswoman saying the scheme was ‘more than likely going to be a small area, like IT or [back-office] processes’.

The council meeting papers outline the scope of an ‘early works’ project already carried out with IBM. This examined: procurement; purchasing systems; applying ‘lean’ methodology to pothole repairs and payroll processes; control of human resources and finance data; and mobile working.

But the scope of the contract was not stated in the council papers, which cited commercial confidentiality.

Nick Bell, executive director for finance, would not put a figure on the contract price, but told Public Finance: ‘The initial focus of the contract would be around procurement, customer services, process changes across the council and new ways of working.

‘This is an incremental contract so the initial value would be likely to be relatively low but would be likely to increase significantly in the future.’

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