Customer Support - From 7 to 4 -- then to 1 or to zero ?

With a long-term contract worth £750million up for grabs one can expect a bit of interest as there is money to be made. Barnet doesn't seem to be universally popular though as some potential suppliers have walked away.

Staff were sent this email:

"We’ve now finished our first round of dialogue meetings and the whole dialogue team is enthused about the energy and commitment that bidders have put into the process so far.  If Mr Mustard was heading the bidding team for a contract worth £750m he would be enthused beyond belief at the prospect of a £1m bonus for bringing in the work.

Round two begins next week and will focus on financial and commercial issues. No mention of what round one focused on.

The first round of due diligence meetings also finished this week. That will probably be due diligence by providers on Barnet and could be why some left as they don't like cans of worms?

At these meetings, bidders asked James Wills-Fleming ( anyone heard of him? ) detailed questions about how the corporate programmes function is structured and run. So that they could work out how much fat they could find to chop and how much scope there is to change your terms and conditions of service.

As mentioned previously, seven bidders were invited to participate in the dialogue process. We now have four bidders because three - Avarto UK, CSC Computer Sciences UK and IBM - withdrew prior to their first meeting. The three wise men left.

The four we met with this week are BT, Capita, HCL Axon consortium and Serco. Mr Mustard shuddered when he read 3 of these names. Hand control to faceless corporations. And the fourth, HCL Axon seem to focus on SAP which we have had enough of already.

While the withdrawal of any bidder is regrettable, it is common in competitive dialogue. Bidders search out the easiest and most profitable contracts with the best organised partners. Mr Mustard thinks that there are more efficient local authorities to work with.

Their decisions were strongly influenced by the amount of time, commitment and resource that companies have to commit to the competitive dialogue process, and other competing commercial opportunities. Barnet Council admit that outsourcers are looking to maximise profit - which is at the expense of residents & employees.

Each of the three companies gave the council positive feedback about the way we have run the process." The bidders were careful to be nice to us, whether they meant it or not, as we have a lot more contracts to put on the table which they might want a share of.

---

Mr Mustard had a quick look on the internet to find out how well these companies had been doing with their outsourcing. Nothing that he found would make him want to sign a contract with any of them.

Serco 1
Serco 2
Serco 3
Serco 4
Serco 5

BT 1
BT 2
BT 3

Capita 1
Capita 2
Capita 3
Capita 4

And of course you read Private Eye and find loads of articles about outsourcing going wrong in the Rotten Boroughs column.

There are no links to articles about HCL Axon because all that could be found were some references to their work on SAP with Tfl, Birmingham CC & York CC. Do they have the ability to run the proposed contract?

Yours frugally

Mr Mustard

In the rush to outsource, little details are missed - what chance for the big ones ?

Here is the glossy brochure that was prepared to help tempt big bidders at the Development and Regulatory Services market day to put their hands in their pockets. As the services on offer are a veritable smorgasbord there is unlikely to be a shortage of suppliers who want the work especially as the bids are likely to be a on a cost plus basis i.e. you are guaranteed to make a profit. The range of service being tendered is vast and it is ridiculous to expect that one bidder can carry them all out to a high standard and some of them, like Registration & Nationality, simply should not be outsourced.

Whilst you are looking at this glossy brochure have a guess at what you think it cost to design ( most of the information is a cut and paste from other documents ) and to print 200 of them.

click click to enlarge any picture & back to return

So there we have it. A lovely glossy brochure that is one of the early steps in outsourcing many services that the council really should manage itself. 

Do we really want to outsource the one person who looks after Transport & Regeneration? or the 4 who deal with Highways Strategy?

Isn't a Highways Strategy strategy something that the council will still need and so to act as the link between the council and the outsourced provider the council will then have to employ somebody? It sounds like costs will go up not down.

So, 200 of this brochure were produced.

The design cost was £3,750 and yet pretty much all of the content would have had to be supplied by the council. So £3,750 for putting stuff in order and throwing in a few pictures.

The print cost was £1,450

So that is £5,200 that could have been spent on something else which has been thrown away. 

Now having spent all that money on design one would hope that the brochure was indeed error free but typically for Barnet Council, it isn't. Take a look at pages 34 & 36 which contain a copy of the letter sent to Soft Market Testing Participants. 

When was it sent : 6 July 2010 - Mr Mustard knows that is wrong as the decision to get rid of DRS was only taken on 29 November 2010

When did you have to return your paperwork by : 14 July 2010 - oh dear, wrong again.

Interview date : 16 July 2010. Oops

Whose name is at the bottom of this letter. Oh its Tommy, no Captain, no Craig Cooper, the £130,000 a year Director of Commercial Services. If Crapita win this contract then you'll become known in blogging circles as Crapitain Cooper (the phrase Captain Cooper is the copyright of Mrs Angry whose first rate blog you can find here. & credit to Private Eye who coined the word Crapita; only £1.50 and so much good stuff; even our very own Bwian in the latest issue on LFB matters - towards the back though - not the top billing he probably expects)

How can Barnet Council be trusted with the big issues if they can't get the little details correct.

Oh, and if you don't like what Barnet Council are doing then you need to email your councillor, or phone them or buttonhole them in their surgery.

Contact details are here.

Yours frugally

Mr Mustard

The master of outsourcing, or, mastered by outsourcing ?

Outsourcing: Overcoming the challenges and delivering more for less.

What a delight it must have been for the delegates who attended the above CIPFA conference on 29 March 2011 to find that amongst the seven speakers was our very own Andrew Traversty CPFA; undoubtedly worth the attendance fee to listen to him alone.

So let's have a look at his sensational PowerPoint presentation which was entitled "The New Localism" whatever that means ( a Markey-esque phrase ) and only 12 pages of it thank goodness. Mr Mustard has also copied any slide notes.

click to enlarge and back to return

Rising population ( Mr Mustard wondered what the red arrow was all about )

Falling resources

Falling satisfaction 

Still talking about 2009. Ignoble history.

Oh dear, wheelie & recycling bins on the pavement. That's not right now is it? Which unobservant public servant failed to spot that continuity error.

The notes
The principles underpinning One Barnet remain those that we recognised through the development of the Future Shape programme.  
At the heart of the programme is one clear aim – to become a truly citizen-centric council ensuring that our residents can lead successful and independent lives whatever their background.  
We can best do this through ensuring that we test everything we do against three key principles:
A new relationship with citizens
A relentless drive for efficiency
A one-Barnet approach.

Easy Council - pass the sick bag - That will be £5 please.

The notes - complete with spelling errors and incomplete

One Barnet is a transformation programme to deliver the changes needed to ensure that those principles are met in everything we do.  It means looking at all our services in turn and asking whether they are really focussed on their customers.  Too often we deliver services in silos reflecting professional groupings, or organisational boundaries within the council.  We expect customers to join things up.  So customers don’t get a good service and we waste a lot of their time, and taxpayers money, in the process.  

One Barnet is about our services, our internal organisation and role and our partnerships.  Its an evolving programme comprised of a number of projects, and these ill change over time as some project move to delivery phase and others come on stream.  

It aims to ensure that:
Services are delivered in ways which are focussed on customers’ needs, bundled in ways which suit their needs, not the council’s.  This means looking at how services should be brought together, as well as the best model for delivering them.  In some cases this will be through an organisation separate from the council.  But this is not a presumption and all service bundles will be tested to ensure that the eventual solution is in the best interests of

There will only be One Option in One Barnet - One External Provider.

Pledgebank is an expensive disaster with virtually no take-up ( the Royal Wedding and The Big Lunch are red herrings as they would have happened anyway ).

The Big Society Innovation Fund ( not calling it a bank any longer as it isn't a bank ) is not designed to provide services but to bring out novel extras so it will cost money and not save it.

Mr Mustard would welcome comments about Community Coaches as he knows a fortune was spent on prototyping ( a prototype is usually thrown away when a better one is developed ) and he needs to know if it was money well spent.

A map with pretty colours.

Department for Regulatory Services - the first department for the chop. Not just the nice man with the pencil behind his ear though is it ? In Mr Mustard's experience the building inspectors have been some of the hardest working, most organised and sensible employees in the whole council. Don't mess their department up please.

A picture of 5 people who don't know where Barnet is.

Too many rectangles.

In case he bored himself rigid and forgot who he was by the end of the presentation.

Now Mr Mustard hopes that Mr Travers stayed for the whole day and listened to the other speakers' valuable contributions. The organisers helpfully provided a briefing paper of the key points and here they come along with some useful extra remarks from Mr Mustard in red.

The event featured a range of high-quality speakers, who set out a range of important issues that were drawn from their own research and practical experiences of outsourcing. This briefing paper pulls together these key lessons into a checklist for any managers who may be considering undertaking similar initiatives: Please don't.

1. Take a strategic commissioning approach – think about what you are trying to achieve, and how you can get there. This means considering outsourcing alongside other options, for example a management buy-out, shared service or partnership with voluntary groups. Only outsource if you feel an external provider is likely to be more efficient and effective at delivering desirable outcomes that your organisation – don’t do it for purely ideological reasons. Or invest some effort in getting the in-house system to work properly - known in 2011 as Good Management.

2. Clarify why you might want to outsource in the first place – and consider what the ideal bid might realistically look like. You may have a lack of capacity or resources, a desire to transform the organisation, a wish to drive down costs, or a combination of the above. The reasons should shape your invitation to tender, your choice of partner, the performance indicators and service level agreements in the contract, and how the relationship is managed. Ideology is not a good answer to this question. A £900m p.a. organisation does not lack resources although it clearly lacks management capacity. There is no history of managing any business relationship properly e.g. MetPro.

3. Ask whether you should stop delivering some services altogether – and allow the market to fill the gap by itself, thus avoiding a tendering process. LB Barnet no longer provides skips, for example. Was that the best example that could be found? taken straight out of the ideas bank as submitted by a resident - Mr Mustard put so many ideas in that he can't remember if this might have been one he started - credit should have been given, with permission, to whichever resident came up with the idea. You don't stop something in order to avoid a tendering process but because it is the correct thing to do !

4. Understand the value and strength of your own organisation – its assets, resources connections, customer base, income streams and borrowing powers – and compare it to those of potential suppliers. You may be better placed to deliver the service than you might think. Alternatively, if you do decide to outsource, it will help you to market the service as a good opportunity for suppliers and thus get a better deal. You can't expect any of the consultants brought in to understand Barnet Council as many of them don't live in the borough and the council is too large to get to grips with in just a few months and so they are likely to undervalue the in-house capacity.

5. Never outsource a problem – it is much better to address perceived incompetence or failure and reap the benefits of improvement yourself before going to market, rather than allowing a supplier to pick all of the ‘low-hanging fruit’. Also, it is worth bearing in mind that if you are unable to operate a service effectively at the outset, you are unlikely to be able to manage its outsourcing properly. This is exactly what is about to happen in Barnet. Customer services has been reorganised several times and never left to settle and it is a flawed concept in any event to centralise calls about benefits, penalty charge notices, adoption & 20 other specialities. ( bold emphasis by Mr Mustard )

6. Consult with potential suppliers and other organisations that have outsourced before making a decision – this will help you to understand the market better. If the right conditions are not set for the outsourcing arrangements, there is a risk that the authority will not get genuine competition in the tender exercise. You also have to ask the right questions - the really hard ones that get to the heart of the subject - afterwards is to late.

7. Remember that outsourcing procurements can be extremely complex and lengthy due to OJEU and other requirements – so they will not deliver quick financial savings. Procurements staring now are unlikely to achieve real savings until 2013/14. The notes should have said "starting now". So the speaker aid allow 2 to 3 years before you see any benefit. The DRS timeline is to be outsourced between Jan 11 and October 12 and the budget figures shows savings in 2011/12 - why are Barnet Council so hopelessly optimistic ? when expert advice is based on experience?

8. Factor in the opportunity costs of going through an outsourcing process into the options appraisal – these may be significant and will include cost of setting up the arrangement and diverting senior staff to lead the project from normal activities. Senior staff have had their eyes off the ball since Future Shape started in May 2008 so that is 3 years of not paying 100% attention to normal activities, is it any wonder that some of them are less than perfect?

9. Avoid bundling too many services together into a single contract – especially if they have little in common with each other. This will reduce the pool and type of potential suppliers and is likely to exclude smaller organisations/ social enterprises that could provide innovative solutions. Like the following DRS bundle perhaps? 

Strategic Services:
Regeneration
Strategic Planning and Housing Strategy
Highways Transport and Regeneration
Highways Strategy
Operational Services:
Building Control and Structures
Planning Development Management
Land Charges
Highways Network Management
Highways Traffic and Development
Public Health, Consumer and Regulatory Services
Environmental Health
Trading Standards & Licensing

Cemetery & Crematorium
Registration and Nationality Service

The Big Society which Barnet Council are so fond of won't be realised in Barnet if parcels of 13 services are sold off to the highest/lowest bidder.

10. Clarify the employment status of staff – are they being seconded or transferred, and what are their terms and conditions? The Government has recently confirmed that the ‘two-tier code’ will be abolished for both central and local government, so suppliers will be able to employ new staff at reduced terms and conditions than those that have been transferred from the client. Mr Mustard understands business. The pursuit of profit is not a bad thing ( how else would Mr Mustard earn an honest crust himself ) but there will inevitably be pressure on staff terms & conditions. The only way is down, baby!

11. Consider the supplier’s situation – for example, do they have enough resources to survive in the medium-term if you try to negotiate a payment-by-results arrangement? If the contract does not deliver a profit for them, service delivery is likely to suffer. Or like 2e2 they will refuse to support the contract but are doubtless still taking the money.

12. Remember that public sector supply chains and relationships have changed out of all recognition in recent years – this makes it extremely difficult to assess all of the potential risks associated with outsourcing contracts. It is recommended that authorities consider more flexible contract terms in the future to protect the organisation from vulnerabilities and uncertainties. Given the number of contracts which One Barnet are trying to outsource at the same time some will go wrong. It's just a question of how many and how badly and whether the losses on one badly specified contract will wipe out all of the gains on the others.

13. Ensure that experts are involved in negotiating tenders and drawing up contracts – neither task should not be left to service managers. Suppliers will allocate their best people to these tasks in order to get the best deal available, and it may be worthwhile paying for outside support to ensure that you negotiate effectively. Strikethrough by Mr Mustard. Why does Mr Mustard think that the suppliers' experts who play this game all the time will be better than the expensive temporary help that One Barnet have retained?

14. Allocate sufficient resources to managing the contract – avoid the ‘let and forget’ syndrome, ensure there are regular governance meetings at both strategic and operational levels, and include contract management costs into the business case. One speaker argued that poor contract management reduces the potential benefits of a contract by 40-70%. Which, in the worst case, also known as One Barnet?, would reduce the 9 year savings from £102m to £31m and probably less once the rose-tinted optimism is also removed.

15. Clarify exactly what is expected of the supplier – include your desired outcomes in the contract and specification. Also, consider issues such as branding, data protection, intellectual property, complaints handling and any special requirements (such as whether you might need to recall transferred staff in an emergency). Search the internet, or look in Private Eye, and you will find oodles of examples of contracts being taken away from large private providers and returned to councils. The common themes are failure to deliver and huge costs to exit. 

16. Ensure that you have a ‘Plan B’ – include formal break clauses and exit triggers in the contract, and test the market from time to time ahead of its renewal. Begin planning to transfer to an alternative supplier around 18 months before the contract ends. We need a plan B because plan A "One Barnet" is going to be, in time, exposed as an empty promise.

17. Remember that your reputation will be at stake – if service quality suffers, customers are more likely to blame the public body than the contractor. Mr Mustard can see the day when many councillors, who foolishly think the electorate have short memories, will be saying that they weren't really in favour of One Barnet, that it was all the fault of consultants, the Chief Executive, basically anyone but them.

18. Consult and communicate with staff from the outset – in order to keep them updated with progress. It is highly likely that the trades unions will oppose any outsourcing initiative, and any uncertainty will have damaging effect on morale and productivity – so you should try to nip this in the bud and prevent conflict. It would seem that the process has not been managed very well as Revenues & Benefits and Parking staff are working to rule. Also, you don't have just to consult, you have to listen and act on the concerns of staff.

19. Agree exit terms at the outset – including the length of the contract, grounds for early termination or renegotiation, compensation, and who assumes ownership of intellectual property, data, assets and staff. Barnet Council seem already to be slavishly accepting the minimum of 10 years that the market is demanding. Better negotiators are need at Barnet Council. 

20. Remember that outsourcing is not a panacea – it can help you achieve your objectives, but requires a lot of hard work on both the client and supply side. Not a panacea, a lot of hard work - so One Barnet outsourcing is not a magic pill and management are still going to have to manage. It makes you wonder why they are carrying on with One Barnet - I've started so I'll finish? 

Let us hope that the emperor realises he isn't wearing any clothes before the cost of embarrassment is too high.

Yours frugally

Mr Mustard 

Laughing all the way to the recycling bank

This morning Mr Mustard is not his normal healthy yellow but red with rage. He is splutteringly mad with the overblown & incompetent management at Barnet Council. They want to negotiate extremely complex out-sourcing Contracts and yet Mr Mustard sees the mess they have made of a particularly easy one.

Now imagine you are a supplier who just has to collect a commodity from the doorsteps of residents every week and then sell it. The simplest of Contracts. The Contract sets out that you will be paid your costs of collection and then you get to share in some of the money made from selling off the collected items for which there are known markets at known market prices. What do you expect in the way of a bit of a bonus; 5% maybe or 10% would more than fairly compensate you as some £2.5m worth of goods are collected every year so even 5% would give you a bonus of £125,000 p.a..

And now Mr Mustard surmises that the negotiator for the supplier naturally started his negotiations with an unfeasibly high share fully expecting to be negotiated down to a reasonable amount ( he had after all been to Egypt on holiday and could barter with the best of them and he had also been on some training courses about negotiating ). When he named his opening figure he must have been completely shocked to find it accepted without demur.

So what is this Contract of which Mr Mustard speaks and what is the justification for the high percentage share paid to the supplier. This is what Barnet Council had to say:-

Barnet Council's Recycling Services contract with May Gurney allows for the sharing of income from the sale of recyclable materials collected from households, schools and recycling banks. This applies to all materials and not just to paper. ( It's good to share; well it is for May Gurney )

Within the contract, May Gurney retain the first £702,894.40 of income from the sale of materials. The annual contract price that the Council pays to May Gurney for providing the services is then reduced by the same amount. ( So put another way the first £702,894 of sales belongs to Barnet Council - that's us by the way - the Council Tax Payers )

50% of the income received by May Gurney for the sale of materials above this amount is paid to the Council, and May Gurney retains 50%. There are no specific tonnage targets, but the 50% share of income acts as an incentive to May Gurney to collect a greater tonnage of household materials for recycling, and to achieve the best price possible for these materials

The Council's share of income from the sale of materials in the year ending 31 March 2011 is to be finalised, but will be approximately £889,000. ( May Gurney will collect the same amount for no good reason that Mr Mustard can think of )

Now Mr Mustard is struggling with this concept. The incentive is that you get to keep 50% of what you collect above a certain amount. To incentivize you to get the best price you get free money. Paper is the most collected item and for that there is a market price which you can find at this link paper prices so May Gurney are not adding any value to what they are collecting. They should have been put under a duty in the Contract to get the best price and this should have been monitored by Barnet Council against publicly available data. It's not an incentive; it's a gift.

This Contract started on 1 September 2008 and is a 5 year Contract to 2013 with an option to extend for 2 more years. So if all 7 years have the same over generous payment to May Gurney that is £6million given away.

This Contract is one of the worst bargains for Council Tax Payers that Mr Mustard has yet seen. It is just shocking. And who signed this Contract ( it started with ECT Recycling CIC who May Gurney took over ) on behalf of Council Tax Payers. Firstly the then Mayor, Cllr John Marshall, who can be excused for relying on his Officers although I would advise the current Mayor to carefully read everything she is given because Mr Mustard thinks that with this example one shouldn't rely on the Officers.

The other signatory was Margaret Martinus, the Head of Legal who one would expect to scrutinise a Contract most carefully. I hope that she asked some difficult questions at the time but suspect that she just has to sign Contracts for which the terms have already been negotiated no matter how bad the terms are.

The trouble must have started earlier though. The proposal to award a Contract went to the Cabinet Resources Committee on 25 February 2008, although at that stage the final bidder had not been selected, and afterwards there was a challenge to the award and another meeting was held on 16 April 2008 to discuss this. Those papers are exempt from release to the public. I have put the papers for that meeting up as a page to the right of this blog.

How much blame attaches to Councillors for this bad bargain? The Chair was Mike Freer and Councillors were Finn, Hillan, Harper, Marshall & Offord. So only Cllrs. Finn, Harper & Marshall can easily be asked anything. However, unless they asked to see the background papers they would not have known what the tenders contained and would assume that the Officers could be left to drive a hard bargain.

The Officers who presented the report were :-

Mike Freestone, Director of Environment & Transport ( moved on )
Roger Jones, Chief Environmental Services Manager ( moved on )
Nicola Buck, Environmental Services Manager, Waste Strategy ( still at LBB )

and presumably they had all carefully studied the tenders but didn't think it worth mentioning in the report they presented to Council that there was this 50% bonus for one of the Contractors. Mr Mustard is going to have to do some research to see when these documents might become public as he thinks they will be very interesting.

Mr Mustard would be pleased to receive any emails from Barnet Councillors or Officers explaining why giving away 50% is such a bargain, or even equitable, for Council Tax Payers  ?

Mr Mustard also has a sinking feeling. He read the 208 pages that make up the agenda pack for the Cabinet Resources Committee Meeting which took place at 7pm on 29 June when the Councillors nodded the proposals through in 22 minutes flat. The "Business Case" includes the following line at 8.4 Payment Mechanisms "gain-share for increased level of savings" so the plan is to give away to the supplier some of the profit share from outsourcing.

It's funny ( except that it is quite serious ) but Mr Mustard thought that the whole point of going out to private contractors was to save his money and not to give it away.

Come on Councillors, start rocking the boat and asking really well targeted and difficult questions. Please don't just vote these proposals through when they come back to a future committee without giving them a good workout.

And soon would be a good time to decide not to extend the Contract by 2 years unless the 50% gift gets replaced by something much more modest and to go back out to tender for a new supplier to start in September 2013.

Yours frugally

Mr Mustard