Why bother having KPI if you don't enforce them?

KPI review meeting in full swing

Sharp eyed readers will have noticed Barnet getting a mention in the Standard again yesterday in an article about targets for the issue of parking tickets. Barnet doesn't have an explicit target for an absolute number of PCN but the contract does include KPI (Key Performance Indicators) which are likely to drive up the number of PCNs issued, such as (these are extracts from the contract)

KPI.2 : effectiveness will be assessed by ... PCNs issued.

KPI.11 : The service provider will maintain....the industry average for the recovery of a PCN at £45 and work to increase the value of this recovery rate for the duration of this contract.

Mr Mustard raised objections to the Accounts of Barnet Council for both of these somewhat doubtful KPI to the external auditor Paul Hughes of Grant Thornton. His reply, which for Mr Mustard's four objections about parking, ran to 8 pages which actually said very little apart from some little gems hidden away, was that everything was cushty (Mr Mustard may be paraphrasing the champion pen twiddler's reply here, you'll doubtless be familiar with Mrs Angry's descriptions on the Broken Barnet blog of the high esteem in which the external auditor is held by Barnet's Bloggers) and that he wouldn't be doing anything, apart from giving us a hefty extra invoice (actually this last bit Mr Mustard gleaned from the agenda for the Audit Committee meeting of 28 January when Mr Mustard had a snooker team to captain, which won 7-5 since you are asking, and to be fair to Mr Hughes he is at some future date when everyone has forgotten what happened going to have a closer look in the council's records at what Mr Mustard had to say, although he'd probably be well advised to sub-contract it to Mr Mustard and his fellow bloggers to ensure a thorough job does actually get done).

Mr Mustard supposes we should be grateful. When it came to paying MetPro over a million pounds, there wasn't a contract. Was that something that the external auditor picked up during his audit? oh bless me no. Mrs Angry was the lead auditor that day with her army of armchair auditors all offering their assistance, advice and publicity. Well, at least with NSL Ltd there is a Contract. 

So why is Mr Mustard unhappy? Simples, because the Contract terms aren't being enforced.

The KPI are meant to be recorded every month. As part of his armchair audit, under the Audit Commission Act 1998, Mr Mustard asked to see actual KPI in July 13 for the previous year to March 13. The actual measurements were not available even though within the Contract they are clearly specified (despite NSL thinking they had yet to be agreed - the numpties) and accordingly each month has to be considered as not met. Therefore the "Bits" - bonus payments or deductions - had to be heading downwards to the floor and Mr Mustard calculated, & he is quite good at maths, that a refund of £137,343 was due to the council (on behalf of Mr Mustard and every other resident). Somehow he feels that if a bonus of that amount was due to NSL they wouldn't have wasted any time in submitting their invoice. This refund has not been made.

Let us now look quickly at the average recovery value of a PCN.

Year to 31 March 12, when Barnet Council ran the whole show:

Income / number of PCN issued
£7,227,652 / 134,801 = £53.61 average PCN income.
 

Year to 31 March 13, NSL were appointed on 1 May 12 (so 11 months of this year is theirs and their figures will have been boosted by the council handling the first month)

£5,834,877 / 165,569 = £35.24 average PCN income.

From this we can see that the income achievement of NSL (and Mr Mustard doesn't want PCN used as revenue raisers) is only 65.7% as good as the council's. Quite simply, their performance is mediocre (Mr Mustard is being polite here, Private Eye would say they are piss poor)

Now the bloggers have got sadly inured to council procurement being awful. Which cretin, or cretins, agrees a KPI for £45 when the current council performance is £53.61. So some complacement idiot is content with a KPI performance level that is 84% of the current performance. If the person who agreed this hasn't yet left the council please would they now do so now and don't put your hand out for a pay-off. The first rule of negotiation is that you don't give anything away for nothing.

What is also clear though is that at £35.24 NSL are performing at 78% of a woefully reduced expectation.

Clearly KPI.11 has not been met, ever.

If a KPI that measures incoming revenue isn't a revenue raising measure then Mr Mustard doesn't know what is (no matter how satisfied our apparently easily satisfied external auditor is).

The parts of the Paul Hughes letter that Mr Mustard did find interesting are these, thanks Paul: 

In appointing NSL Ltd, the Council had an expectation that recovery rates would improve so these figures do represent underperformance to date in recovery of PCNs.

There is a clear acknowledgement from the Council that management of the NSL contract has not been acceptable.

We are aware that remedial actions are being put in place by the Council, including a recent performance meeting with NSL, resulting in a high level performance plan.

the overpayment to NSL ... remains the subject of performance discussions with the contractor.

What Mr Mustard notes from the above remarks.

Once a contract is signed even if your performance is only 65% of what it ought to be, not much will happen.

The council is unable to properly manage outsourced Contracts, as the Famous Five Barnet Bloggers have been saying for ages.

Every blunder simply results in a "lessons will be learned" improvement plan. We had one after MetPro; it evidently hasn't worked; they are just a sop.

Some 10 months after the year end, and 22 months after the contract started, the contract terms have not been implemented. 

What is the point of having contract terms that the Council don't implement.

The wider picture

The NSL contract is a simple procurement of one service, parking enforcement.

Scale it up 40 times to the level of NSCSO (customer services) or DRS (development and regulatory services) which bundle together a myriad of services with many more KPI and it is clear that the council doesn't have the skill or the will, or both, to properly enforce the contracts that they sign.

The commissioning council is going to be an unmitigated disaster, no matter how much hot air is spouted by councillors in Hendon Town Hall. 

You councillors don't have the grasp of details that the bloggers have. 

You did pick this contractual failure up before Mr Mustard, didn't you? 

Silence.

Yours frugally

Mr Mustard

Where did the NSL contract savings go to?

Parking contract savings - as safe as houses?

Calculator and cup of tea at the ready? then armchair audit time it is.

Back on 23 September Mr Mustard attended the Cabinet Resources Committee. It was receiving a report from Finance about the financial performance for the first quarter of the council tax year i.e. for April to June 13. For the first time in Mr Mustard's short but eventful life (since 10 March 2011 - ha, he is in his terrible twos phase) there was an overspend, of £2,384,000 (to nearest £thousand) and the biggest culprit was "Streetscene" (hard to tell exactly from the name what that encompasses but it will become clearer later) which was £2,163,000 overspent on a budget of £15,212,000 a spectacularly awful result which is 14% over budget.

Now Mr Mustard hastens to add that these were the projected outturns for the end of the year so there was still 9 months remaining in which to get back on track (or go further off the rails!) but clawing 14% back, or 7 weeks of expenses to put it another way, looks like a mighty ask.

The way in which the figures were presented was insufficiently precise at the Directorate level for Mr Mustard and this is how the streetscene budget problem was presented in the written report:

The Street Scene Directorate is forecasting an overspend of £2.163m which includes:
•   An overspend of £1.081m in  the Special  Parking  Account. This  is  due to cost pressure on the NSL contract of £0.800m plus shortfalls in income of £0.378m.
•  The Parking service is forecasting an overspend of £0.434m, due to shortfalls in off street parking. (this is a different overspend to the one above)
•  An overspend of £0.380m in the Waste service is a result of domestic refuse staff cost pressures, however it is anticipated that the May Gurney contract negotiation should bring this back in line.
•  An overspend of £0.170m in  Street Lighting  is  as a result  of budgeted savings that will now not be achieved during the year.
•  A Highway Maintenance overspend of £0.246m is a result of winter maintenance pressures.

That was all far to vague for Mr Mustard (who had failed to notice Appendix 2 where the answer to his question was to be found) so he asked for a breakdown of the £2.163m and he was helpfully sent a copy of the table although he could have been pointed at it. Here it is:

Description	Budget V1	Q1 forecast	Variation
	£'000	£'000	£'000
Street Scene Management Team	647	631	-16
Business Improvement	333	332	-1
Mortuary	136	134	-2
Street Lighting	6,339	6,509	170
Transport	-6	-131	-125
Highways Inspection/Maintenance	508	754	246
Parking	-747	-313	434
Parks, Street Cleaning & Grounds Maintenance	5,052	5,084	32
Street Cleansing	4,236	4,240	4
Waste	2,911	3,291	380
Recycling	3,278	3,238	-40
Streetscene	22,687	23,769	1,082
Special Parking Account	-7,475	-6,394	1,081
Total	15,212	17,375	2,163

Variations in red are underspends so no need to worry about those.

The street lighting overspend is last year's budget failure carried forward. Surely we can just buy fewer lamp posts? It's not as if anything appears to be wrong with the ones that are being taken out.

There is winter pressure on highways maintenance. Mr Mustard seems to think that much greater sums have been spent in previous years and this lack of spend will shortly show up as potholes.

Parking refers to the anticipated spend in off street car parks. Mr Mustard thinks that this would magically come back to what it was if the system and charges are put back to what they were when he started blogging i.e. install cash parking meters (and card) and make prices those of 2010 or lower until there is 90% occupancy of car parks most of the time.

The waste overspend of £380k is expected to be salvaged from changing to in-house and away from May Gurney (except that they are going to continue to run the Summers Lane recycling depot - shiny new signs everywhere and a most useful facility). When the dust settles, we'll see.

So everything except for on-street parking, permits and PCNs is £1,082,000 behind budget and the Special Parking Account (on-street parking, permits and PCNs) is very nearly the same at £1,081,000 behind budget. The annual increase in the SPA budget was always going to be hard to maintain and Mr Mustard has told the relevant councillors to wean themselves off this income stream which just shouldn't be there. So instead of ripping almost £7.5m out of the pockets of the motorist (the majority of whom are also residents) a mere £6.4m will be filched instead; both surpluses are obscene.

The SPA budget problem was explained as "Cost pressure on NSL contract plus shortfall on income". The shortfall is easily fixed with cash parking meters but the NSL overspend had Mr Mustard foxed as it is a fixed price contract. So he asked for a breakdown, the one that should have supplied to councillors in the report (which to be fair Cllr Alan Schneiderman did pick up on in the pre-scrutiny meeting) and here it is:

Reason	£,000
Vacant Managers Post	-41
Agency Costs (parking manager back fill) and Pension strain	107
Signs and Lines	100
NSL Parking deployed Hours and bit payments.	821
Software license and support	-7
On street parking/parking suspension fees/Parking permits	378
DLO charges for suspensions	143
Reduced SLA with Parking Design team	-421
Total	1,080

So we have had an interim parking manager since the NSL contract started on 1 May 12. Why? is the startlingly obvious question. Why we employ someone who has to travel miles when there must be perfectly good candidates available locally is hard to fathom. Has the council even advertised or is it that the reputation of parking at Barnet is so bad (as has been reported to Mr Mustard by another council parking department less than 20 miles away) that there are no takers? It's not as if parking is a temporary thing, there will be a need for a parking manager into the next decade at least. Anyway that is £66,000 to the bad.

Nice to see real money being spent on signs and lines. Only another £900,000 needed.

We'll come to the £821,000 in a minute in yet another table.

Is it any wonder that the income from on-street parking and permits is down. Prices were increased markedly and that caused behavioural changes and suppressed the income. Making it harder to pay also had an effect; cash is universal and the meter removal policy has hit the council hard. Permit income will slowly recover now that they are £40 again.

Then we have the usual inter department budgeting which seems to be such a waste of time, moving money from the left pocket to the right. An extra £143,000 paid to the DLO (Direct Labour Organisation) for suspensions. How many suspensions are going on and what does one suspension cost? This figure seems high.

Now Mr Mustard was concerned about cost pressures of £800,000 on the NSL Ltd parking enforcement contract, you know the one which was advertised as saving us £600,000 and here is a screen print from the council's website which is looking rather out of date

Then Mr Mustard asked for a breakdown of the figure of £821,000 as he likes everything to be clear. Here it is.

	£’000	£’000
2012.13 budget (NSL Contract)		3,020
Savings 13.14		-349
13.14 budget		2,671
13.14 Spend
Deployed hours	541
BIT Payments (Contract management KPIs)	291
Basic Contract Payment	2,635
NSL Non-Scheduled Items	25
13.14 projection		3,492
Difference		821

Now the standard monthly payment to NSL this year is £212,755.64 giving a base annual payment of £2,553,067 and on top of this about £25,000 a month (yes, a month) is paid through NSL to Verrus for the largely unloved PayByPhone system giving another £300,000 per year (2012/13 payments came to £290,559). This seems an extraordinary amount for processing payments willingly made of £2,945,682 from Pay & Display (as it was quaintly described in the SPA) and another £300,000 or so of car park income. A fee equivalent to 9% just for holding your hand out and taking money seems like remarkably poor value.

So last year £3,020,000 was budgeted for NSL and base fees & charges amounted to £2,843,626 and the rest was swallowed up an extra hours payment of £104,000 and by one-off transition costs such as redundancy payments. In version 2.5 of the Business Plan, which went through a dozen iterations, are the projected annual costs of parking enforcement for the 5 year term, viz:

Projected costs of Options	2012/13	2013/14	2014/15	2015/16	2016/17	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
NSL – Cost of Contract	3,246	3,220	3,328	3,328	3,328	16,451

which leaves no scope for a saving of £349,000 in this financial year 2013/14 and ignores inflation. Mr Mustard asked under Freedom of Information legislation for the NSL contract and he did receive most of it although the financial information was, of course, redacted. Thus Mr Mustard can't tie the actual payments to the budgeted figures but a budget of £2,671,000 against an annual payment of £2,850,000 is utterly unrealistic.

What the budget also shows is that there is no budget for the KPI (Key performance indicator) performance payments which might amount to another £291,000 in 2013/14 except they can't as the performance was stuck at minus 6 at the start of the year so it should be 6 months before a KPI payment is due assuming performance improves every single month. Mr Mustard will be checking the actual KPI measurements at the year end.

Now the really shocking figure is the one of £541,000 for deployed hours which should have said "extra deployed hours". Now why are the council trying to save £600,000 p.a. and then negate 90% of the proposed savings by  spending on extra enforcement hours.

Now call Mr Mustard suspicious if you like but an extra £541,000 spent on enforcement is likely to lead to a net PCN income of at least £1million. That wouldn't be the motivation, would it?

We know that the contract was failing all the way through 2012/13 and so the solution looks like rather than termination is to throw money at the contract to make it work in 2013/14 and it is one of the few contracts that the council enters which works this way,i.e. the more you spend the more you gain, always assuming that all the extra marginal parking tickets don't just lead to extra appeals to PATAS.

One final point is that NSL are entitled to 50% of the savings they generate on the contract. No "options proposals" were suggested in the first year of the contract. The 50% saving is meant to encourage and reward innovation. 

There hasn't been any.

This is an early One Barnet contract. It hasn't made the anticipated savings. Let's hope that NSCSO and DRS are better (don't hold your breath).

Yours frugally

Mr Mustard

Second objection to Accounts - One Barnet implications

It seems that the External Audit of local authorities relies so much on trust these days (not like the old days where everything was checked and reconciled within an inch of its life) that a mere 6 figure overcharge by a supplier doesn't appear on the radar of external auditors, nor the internal ones come to that.

Fortunately armchair auditors don't sleep much and they spot stuff that is wrong and raise it with the external auditor who will probably find a convenient carpet to sweep it under, although Mr Mustard would be delighted to see Mr Paul Hughes prove him wrong. Here is Mr Mustard attempting to save council tax payers a collective £137,343


23 July 2013

Mr P Hughes
Grant Thornton
Melton St
London
NW1 2EP




Dear Mr Hughes

The London Borough of Barnet
Accounts for the year ended 31 March 2013
Second Notice of Objection

I refer to the parking enforcement contract with NSL. It contains KPI that lead to a number of "bit" payments each and every month. There is a chart which explains the way in which the bits work included in the contract. Put simply the KPI payment, or deduction, is, after the first two months, never static. The bits start at +2 in months 1 & 2 to allow time for the contract to settle down and then month 2 performance provides the basis of payment in month 3. If targets are achieved then payment goes up one bit, if not, it comes down one bit. It never stays the same unless it is at +6 or -6 bits.

If bits fall below zero, then 2 bits are deducted each month going down to -6 at the worst.

I asked to see the actual KPI measurements for the entire period. I have been informed in an email from Mark Taylor that NSL have not met its KPI targets, and bits must therefore reduce. There was a deduction of one bit for one month which proves what I say but after that the matter has not been pursued. This is wilful misconduct and the council have overpaid the contract value by £137,343 (in round pounds) according to my attached calculations which should be the object of consideration by you under section 8 of the Audit Commission Act 1998.

A copy of this Notice of Objection has been sent to Mr C Naylor and to Cllr Monroe Palmer, Baron Palmer of Child's Hill, OBE, FCA.

I look forward to hearing from you.

Yours sincerely

Mr Mustard

Now there are implications for One Barnet contracts with Crapita. This NSL contract is tiny compared to NSCSO & DRS and relatively simple to manage. Scale up this lack of management and the failure to hold the contractor to account when 25 times as much money is involved and you would be looking at a loss to council tax payers of more like £3million, which would wipe out lots of those juicy aspirational savings and be a real loss to boot. 

This is why Mr Mustard is opposed to the big One Barnet contracts (and the parking one due to loss of control). It is because the council management simply don't have the ability in procurement or commissioning, the vision, the flexibility, the manpower, the organisational skills, the desire or the tenacity (unlike those pesky bloggers) to properly manage and enforce the contracts that they have signed.

NSL is our very own Serco / G4S mess.

Mr Mustard fully expects a mention in the 2013 Armchair Auditor Awards (oh no, they don't exist as we work for free and don't have council tax payers money to pour down the drain on self aggrandising vanity awards nights out in Park Lane; a pint in the Black Horse it is then, much more fun).

Yours frugally

Mr Mustard

Yet more Crapita - quelle surprise

This posting has been stolen from Citizen Barnet as Mr Mustard is pretty pressed on other matters at present. Please visit her site here to make Mr Mustard feel better about himself.

"Capita - well I would never have guessed"

No great surprise that Capita, in the shape of its subsidiary Capita Symonds, are the preferred bidder for Barnet Council's second enormous One Barnet contract, Development and Regulatory Services (DRS), having already got their claws on the New Support and Customer Services Organisation contract.

Always assuming the law allows it! An appeal is pending in the Judicial Review case brought by Barnet resident Maria Nash, and all of these contracts are on hold awaiting the outcome of that.

Here is Barnet Unison's press release on hearing the news this morning about the DRS contract.

‘Capitaville’-Capita to take over more Barnet Council services

Today staff were told at a series of briefings that Capita Symonds is the preferred bidder to deliver a whole range of Council Regulatory services to Barnet residents and businesses.

 The services to be handed over to Capita include the following:

Trading Standards & Licensing, Land Charges, Planning & Development, Building Control & Structures, Environmental Health, Highways Strategy, Highways Network Management, Highways Traffic & Development, Highways Transport & Regeneration, Strategic Planning & Regeneration, Hendon Cemetery & Crematoria

Barnet Council has a number of statutory responsibilities to monitor the private sector in order to ensure the health and safety of their residents. The recent high- profile national public-health scandal about the use of Horsemeat in processed foods emphasises that private companies do not adequately monitor their own activities, leaving the public at risk. If Barnet Council is allowed to privatise these services, it will set a dangerous precedent for other councils.

Barnet Council has been promoting itself as an innovator for the future of public services by adopting the Commissioning Council model. In the last 12 months the Council has overseen a significant number of services outsourced to other providers. The full list of services are here.

John Burgess UNISON Branch Secretary said: “Barnet Council is making a huge mistake in handing over these critical services to the private sector. It is not just about the risks this brings but what it means in term of democratic accountability. Next year we have the local elections in May 2014. What options will there be for the electorate if all the council spend is tied up into complex contracts? As for all the remaining staff the message is stark: no matter how loyal you are, no matter how hard you work political dogma is dictating all services are to be outsourced. Today a number of our members have chosen to wear black armbands/ black clothing as a sign of the demise of the public sector ethos in Barnet Council.”

Links

1. What is One Barnet? Watch this short animation http://ning.it/Qp5Adx

2. UNISON report on One Barnet DRS contract http://ning.it/11OQWlQ

3. UNISON financial report on One Barnet DRS contract http://ning.it/12mocvO

4. 100+ reasons why One Barnet is high risk and bad for residents and services http://ning.it/NAyJLY

5. 397 jobs “The true cost of One Barnet outsourcing” http://ning.it/11OSuMT

Crapita - Did anyone from Barnet ask Sefton anything?

The Jolly Roger - look out for pirates from Sefton

So still on the Capita Symonds website was the following puff piece:

Capita Symonds’ ten year strategic partnership with Sefton Metropolitan Borough Council officially began in October 2008.

Key facts
Start Date: 1st October 2008
Duration: 10 Years
Value of Contract: £70 million
Primary Office location: Magdalen House, 30 Trinity Road, Bootle, L20 3NJ

Overview

Capita Symonds’ ten year strategic partnership with Sefton Metropolitan Borough Council officially began 01 October 2008, with the TUPE transfer of over 120 employees. The £70m partnership, which includes the option of a five year extension, will see Capita Symonds working with the council to deliver a wide range of projects and services.

The formation of a partnership is a bold and exciting step, which places Sefton MBC at the very forefront of public service delivery; providing the investment needed for transformation and ultimately world class services for the citizens of Sefton, Council colleagues and partners.

We’re working together to create a culture that embraces change; one which is rewarding, and encourages creative thinking and innovation.

Services offered

Architecture and quantity surveying
Building maintenance and M&E design
Engineering design
Property management
Highways management and street lighting
Drainage

and from the Liverpool Daily Echo of 25 November 2011.

SEFTON Council last night confirmed plans to tear up a £65m contract outsourcing swathes of the authority’s services to the private sector.

Council leaders claimed the contract was not delivering the savings which were anticipated when the deal was stuck.

Capita was awarded the contract to deliver the borough’s technical services after forecasting it would save 5.5% of Sefton’s predicted cost of doing the work in-house.

The engineering giant said it would invest £7.39m in people, processes and new technology and create 100 new jobs within the first five years.

But Sefton Unison union leader Glen Williams last night said the firm had failed to meet its promises.

So what is happening in Barnet Council? The planned outsourcing for 10 years of services grouped togther as DRS (Development & Regulatory Services) which are

 

So similar services are to be outsourced in Barnet with Capita Symonds being one of the two remaining bidders. The contract is set for 10 years with a possible 5 year extension. All shockingly familiar and very doubtful that anyone from Barnet Council has been on a train to Sefton to find out the reason why they are pulling the plug early but we wouldn't know as no-one is saying where they physically went, probably because no-one left the Town Hall to go anywhere.

Come back in 2018 to find out if Barnet Council appointed Capita Symonds and if they then let them go five years later.

Change costs money. Changing to Capita will cost money and local jobs and mess up people's lives, changing back will cost more money again.

Why don't Barnet simply sign up for 5 years with an easy get out clause?

Yours frugally

Mr Mustard