An earlier Barnet Joint Venture?

Which Councillor would you vaporise first Mrs Angry?

Dear reader

As you will have seen from the joint blogger letter to the "leader" of Barnet Council, Richard Cornelius, the long in the gestation One Barnet programme, about which Mr Mustard has read dozens of interminable reports, was basically the out-sourcing of £1bn worth of vital services over a 10 year period (+ a possible 5 year extension). Suddenly last week, Pam Wharfe, the interim Director of something or other and with possibly the least firm future employment prospects, was passed the poisoned chalice of slipping out to staff in an internal email the startling news that the out-sourcing was now going to become a Joint Venture. Stone the crows, something has gone seriously wrong in the process somewhere if after over a year of every report saying that out-sourcing is definitely the way to go. The Mars Rover shown above, called Curiosity (how apt for this One Barnet change of mind, which is a curiosity) took over 8 months to reach its destination. If Barnet Council had been in charge they would have re-routed to Venus after 6 months of travel.

Now we need to think about a Joint Venture. Has Barnet Council been in one before? In effect yes as Barnet Homes, the arms length management company, or ALMO, entered into one in the recent past and although called an arms length company the arms are not that far from the body of the council as Barnet Homes is housed in Barnet House a council building (the old Ever Ready building at Whetstone) and as the funding is from Barnet Council for the specific purpose of looking after council house stock there is zero prospect of a JV being entered into without the council knowing about it and endorsing the decision on the quiet.

So back in 2005 the company called the London Area Procurement Network Ltd (LAPN) was formed and it changed its name in June 09 to Cyntra Ltd (what a vague name). The owners of the company are listed in the attached link and you can see that it contains our local ALMO, Barnet Homes Ltd. That link also tells you that the purpose of the company was that it could, by joint buying, save 13% on the procurement cost of building works for its members. The Directors were from each of the participating local authority housing members so our very own Tracey Lees was a Director.

Savings are very elusive beasts and a saving of 13% on building works can be demonstrated if comparing to a very inefficient company or one that doesn't really want the work. Mr Mustard is completely unconvinced by the figure of 13% as an ALMO that manages 15,000 homes already has enough work to give out to obtain good quotes so maybe the negotiating skills of the buyers at Barnet Homes just weren't good enough or maybe the possible savings were over-stated. For every building job the material cost is about the same whoever you buy through and the labour cost should not vary much because there are recognised daily rates for each trade. The saving can only come from better administration or doing a job a radically different way and if the job is fitting double glazing or a new kitchen or bathroom there really is not going to be much difference in method between 5 different firms.

How was Cyntra doing finance wise? You would think that with a £1bn sloshing about (ooh look the same sum as quoted for One Barnet) that Cyntra could easily make a turn on that but no, its finances were pretty sick from the start

Thank you to Duedil

The blue line is turnover. Most of the 06/07 turnover was probably the annual fees paid by members which were about £40,000 p.a. at the start and these reduced to a maximum £25,000 as extra members were signed up.

Net assets (the orange line) remained stubbornly in the negative. It is harder to increase profitability than turnover.

One of the changes was to move to a paid board of Directors. This meant saying goodbye to Lesley Meeks who had served on behalf of a different authority from October 08 to May 09. This will be the same Lesley Meeks who is now the Assistant Director of Commercial Assurance (Town Hall Tax Dodgers branch) at Barnet Council. Mr Mustard is sure that if he had been on the recruiting board he would have looked more closely at her history and had some testing questions for her at interview although as Craig Cooper claimed to have poached her from Westminster Council, Mr Mustard supposes that her interview, if there even was one, was not that probing and probably just consisted of a phone call, something not at all like this one "when can you start, yes that is fine, part time at first and then full, OK, off payroll, no problem, £772 a day, a bargain. Bye, see you soon, Craigie xx"

Here are the minutes from a Barnet Homes board meeting in May 09 when the changes to Cyntra were taking place:

Proposed changes to London Area Procurement Network (LAPN) Board Structure.

The report outlined proposed changes to the governance arrangements for LAPN to make it more businesslike and robust and for which the Board’s approval (as one of the Beneficial Owners of LAPN) was sought. It also advised the board of a proposal to review BH’s continued

involvement over the longer term.

TL (Tracey Lees) explained that all other ALMO Beneficial Owners had approved the changes (so you lot had better do so) and Barnet Homes was the last such meeting to take place. TL further advised that the formal arrangements of the new structure would be decided at the last LAPN Board meeting on 17th March 2009.

AS (Angela Spooner) asked if there would be any costs to Barnet Homes as a result . MW (Mike Wiffen) advised that the proposed introduction of board remuneration would be £50k a year but it was not clear how this would translate into fees although this was expected to be self financing in the future (the future never comes). MW outlined the benefits that BH had gained from membership to date and the further benefits that may result from the distribution of surpluses to the beneficial owners who remained in LAPN (a cracker Mike, surpluses, would that be why Barnet Homes are now filing a claim as a creditor in the Liquidation, i.e. you lost money).

EM (Eric Misewe) asked what kind of business LAPN were thinking of developing. MW confirmed that this would mainly be based on construction services for Registered Social Landlords and ALMOs.

JM (John Macfarlane) commented that this had come about the wrong way round since the LAPN Board meeting is on 17th March and the review would not complete until 2009/10.

MW (Mike Wiffen) said that as a founder member of LAPN, Barnet Homes has had the most benefit with considerable efficiencies achieved. He also informed the board of the significant benefits in remaining with LAPN. (Could you explain these at the next board meeting please Mike. Are they public? Mr Mustard might come along to watch you explain this one away).

The Board considered the recommendations and approved the proposed changes to the LAPN Board Structure.

The Board noted a review of LAPN and the outcomes from the review will be reported at the next Business and Resources Sub Group.

AS had the right idea to look at costs. The whole progress of Cyntra had evidently not been well enough thought through or closely enough managed because there were 7 or 8 owners at the beginning and later on there were other junior partners added which took the membership up to 30, imagine trying to manage anything with even only 8 owners, they were never all going to agree. The founding partners were all local authority based and their funding is secure and profitability is not something that they have had to grapple with.

Cyntra came before the Board again in September 2010.

Barnet Homes Board Meeting Re Cyntra Sept 10

There is lots to be gleaned from this set of minutes.

A loan extension is agreed before the review of Cyntra has taken place. It is now self evident that calling in the loan would have been a better choice.

Para 1.1 is the sort of thing Richard Cornelius is saying about One Barnet savings. "It was felt" that goods "could" be bought more efficiently. Hardly a ringing endorsement.

Para 3.4 shows the problem of getting things done the way that you want in a JV with 6 out of 9 members needing to agree something and then it goes ahead whether you like it or not. Barnet Council may only have 1 or 2 partners in its JV but they will have to agree. If they are 50/50 partners in profit share then some interesting and difficult discussions will inevitably have to take place in the future.

Para 4.1 Barnet Homes have lost at least £35,000 in Cyntra.

The Teckal exemption workaround is a bit like investing in a pyramid scheme because of the tax advantage. The fact that you are going to lose all of your money should not be over-looked but of course in Barnet Homes and Barnet Council they lose someone else's money when they take bad decisions, ours.

There is hell to pay with Cyntra Ltd going into liquidation, as you can read here. Creditors, amount to £1,600,000 and the ALMOs have been happy to dump Cyntra Ltd into liquidation and leave creditors to see what can be recovered off the carcass and the answer will be not a lot. Fees for the liquidator will be paid first and employee claims are higher than unsecured creditors. Now there is a moral question here. If the joint venture company had simply been eight councils acting together without the umbrella of a Limited company and they decided that the time was past for their informal joint buying group and stopped using it they would have had to pay all of the creditors including the  £173,000 of VAT.

One of the dangers of being a Town Hall Tax Dodger is illustrated in this case. If you are not an employee paying PAYE then you do not get preferential status for your pay as it isn't pay. In this case Hann Barton Ltd are listed as owed £10,500 presumably for the services of Robert Hann, a non-exec Director, Sallet Consulting Ltd are owed £11,340 which presumably is for the services of Paul Orrett, the Chief Information Officer at Cyntra (sounds very much like an employee post) and those are just the two cases that can be easily identified. There will be more. There is no reason why the ALMOs will have checked if Town Hall Tax Dodging was going on in the companies they own because they are at it themselves.

So now that we hear that the DRS out-sourcing is going to be a Joint Venture company just like Cyntra.

Lessons for Barnet Council before they go ahead with another JV are that there is a loss of control and there can be a loss of investment. Internal audit will not be as strong as in the council (and theirs needs beefing up as it is) and there are costs. Cyntra's cost of sales + administration costs came to £3.3m in their 2010 accounts. The extra layer of management in a JV will need to be replicated by a client side at the council to keep an eye on them and whether you call it a thin client or not it will cost money. There will be delay in implementing any service changes that the council wants to implement. If it all goes wrong I don't think that when c.£275million over 10 years is at issue and there are maybe £10m or £20m of losses and unsecured creditors that a council will be able to simply dump a JV company in which it holds a 50%+ stake and not expect to be sued to the ultimate as a shadow director or whatever other way the creditor can find to get their money back. With his credit consultant hat on Mr Mustard would advise any company offering its services to an ALMO or a JV to get a parent company guarantee from the council itself before agreeing to supply anything.

It is early doors yet but if the council think that politically they can present the same partner, BT or Capita, in a JV rather than as a provider of outsourced services and that this will suddenly become acceptable to the luddites, whingers and complainers (Mr Mustard is not any of those) and to the Barnet Bloggers, then they are as is so often the case sadly mistaken.

Yours frugally

Mr Mustard

The Procurement Centralisation Plan

Richard Cornelius, I agree with you, the stuff of nightmares

Executive summary : Despite paying Craig Cooper £132,480 p.a. for some years to be the "Commercial Director" procurement has not been properly controlled and maverick buying is systemic.

The plan

There is a plan to centralise procurement. This is the antidote to the previous plan to move procurement to the directorates. After, procurement will be out-sourced and they will probably ditch the centralisation plan as being over-managed.

Mr Mustard can't bring you the whole plan, although he has it, but the bits he does bring you will be more than enough to shock you.

The plan was produced in April and has the name of Lesley Meeks, Assistant Director of Commercial Assurance (Town Hall Tax Dodgers branch) at the end. Snippets will be presented by Mr Mustard along with comment.

...complying with contract procurement rules is paramount, this does not necessarily make procurement efficient. Not complying with contract procurement rules, as in the olden days (2011!) certainly wasn't efficient.

Any change to 'the way we do things' has three elements, tools, processes and people.

The graphic is out of focus probably because it has been cut and paste into the plan from somewhere else. That is Barnet Council to a t - out of focus. If you search for tools, process and people you find lots of example in google images; this is not an original concept, we are paying people massive salaries to repeat textbook stuff.

Tools.

Presently there are a number of reports that present data. One of the changes to the tools will be to build reports that provide management information. A simple area would be the reporting on vendors. The vendor list has already been reduced by 50% and the objective is to further reduce. The current reports don't appear to be useful is the conclusion that Mr Mustard draws from this. The vendor list being reduced by 50% is another example of local business being sacrificed on the altar of administrative convenience. 

What does the guide "How to do business with the council" say:

The Council cannot discriminate in favour of local suppliers but they will be given every encouragement to compete for Council contracts.

Chopping the supplier list in half, thus making the probable average contract value double what it is, will naturally discriminate against local business who have already suffered enough from the hike in parking charges and difficulty in paying. Have you noticed this councillors so you can rein in the officers?

Presently when a requisition is raised in the system it can be raised against an existing contract or vendor. The route to ordering directly from a supplier can lead to over-spend and non-compliancy as it is not going through a compliant contract. This buying route will be closed in the system. So it looks like anyone can order anything against an existing supplier and this is why the £25,000 limit was so easily breached in the past. This will be stopped; it has only taken a year since MetPro, such a turn of speed!

With the procurement route to vendors is (sic) closed off in the system, the only route available will be through an existing contract, catalogue or framework (the 'green route').  = In the future we will be compliant. Are we supposed to cheer?

At present approximately 1000 purchase orders per month are raised using the 'free text' or 'red' route and of these a large number are raised verbally and then purchase orders raised retrospectively (there were ~800 retrospective orders in March 12). There is work presently underway, which is planned to be completed end April 2012 that will limit spend on contracts, however the route direct to vendors also needs to be 'closed'.

Sadly Mr Mustard had to listen to Craig Cooper, the unCommercial Director waffling on at the Audit meeting of 26 April 2012. He has his manuscript notes, and probably a tape recording as well. His notes about retrospective purchase orders are that Cooper said "still a number coming through. Are an expected activity - are trying to manage it down". Lesley Meeks, Assistant Director of Commercial Assurance (not on the payroll though?) said she was "going round service areas to look at exceptions. Will monitor retro P.O. in order to stop them in the future" 

Lord Monroe Palmer said he did not want to see retro P.O. in non urgent areas and Meeks hoped to show if it was achievable at the next meeting.

This is all very unsatisfactory to Mr Mustard. Officers when reporting should not waffle "still a number" Craig, really how misleading of you. When officers report they should be asked to report facts. If any councillor had asked how many PO were retrospective we could have had a much more informed discussion on the subject.

Also when the boss of the Audit committee says he wants to see something, especially something enshrined in the rules, then the correct answer should be that it will not be done, not I'll see what I can do.

Mr Mustard can't recall, and his notes do not show, this specific question coming up at  the June meeting. The Procurement Action Plan had by now been in existence for over a year and still there is a problem with retrospective purchase order. Note no. 8 said "Each Directorate is reviewing the use of retrospective purchase orders in their area and reporting  back to the Working Group. Presently we are identifying exception (sic) where it may be necessary to raise a retrospective order. We will then report and monitor by purchase type and ensure that orders are placed with corresponding purchase orders. Action on track for July deadline."

Mr Mustard will check, properly.

The closing down of the 'red' route has impact on people in both delivery units and CPT. For this reason the approach will be a three step approach: all contracts will have contract limits; workshops will be run with delivery units to change process and the vendor buying route will be closed down. The workshops will establish a new way of working as well as identifying any exceptions and uniqueness's (sic) within the delivery units.

So a year after MetPro and contract limits were not in place. Pathetic.

Processes

As described in section 2.1 the first level processes of the P2P systems will be changed in order that there is only one process available to selecting a buying route. (ie through compliant contract, framework or catalogue). This process change will stop the potential for contract overspends and maverick buying. 

( P2P = Purchase-to-pay systems automate the full purchase-to-payment process, connecting procurement and invoicing operations through an intertwined business flow that automates the process from identification of a need, planning and budgeting, through to procurement and payment. )

Barnet Council - the home of the maverick buyer.

At this point the ridiculously complicated chart which is at the top of the article appeared and then the following text.

The aim is to have this process working smoothly before the transition to NSCSO provider.

Two comments.

1. That doesn't leave long.

2. The NSCSO provider will almost certainly scrap the lot as they are not bound by EU rules or probably any council rules either.

A contract management e-training tool will be rolled out during May 2012. The process will ensure compliance with contract procedure rules as well as providing guidance on how to monitor the effectiveness of the contract and gather performance information. We'll see how they do.

People

The approach to implementation is through workshops with the delivery units, establishing those processes which are common across LBB and those that are specific to units. The workshops throughout May will identify the interfaces between a centralised outsourced procurement and the delivery units, agree roles and responsibilities, map top level processes (recognising exceptions and uniqueness) and agree management reporting. We will work it out as we go along.

Will the NSCSO want a well overpaid AD? 

An unknown number of buyers, what sort of plan is that? Craig said 5 or 10 at one meeting and got pulled up on it.

Enough, even Mr Mustard, a former purchase ledger manager can't write any more.

Yours frugally

Mr Mustard

Are you thinking "customer"?

Was Johnathan on overtime or has he learnt how to set a date and time on an email to make it look like you are grafting away at 07:26 when in fact you are snoring your head off?

I will aim, but I might miss by a mile?

Are you Thinking Customer? Mr Mustard thinks that the screensaver and this intranet communication would have benefited from some punctuation.

Saturday, 05 May 2012 07:26 Schroder, Johnathan

Think Customer is the council's latest internal campaign aimed at making sure that staff across the organisation are getting it right first time, every time when dealing with customers.

Every Assistant Director in the council has made a commitment (rather bland most of them and not very definite, just a load of old tosh really as no-one is going to check up on them, well apart from bloggers) to customer service, which are being shared with staff every day on PC desktop screens (do staff really want such a screensaver or would they like to look at a calming waterfall or goldfish swimming around?), while large posters and banners have been used across NLBP and Barnet House reminding staff of the council's key customer service principles (when are management going to actually talk to staff rather than lecture them in 8ft high posters and on the back of the toilet doors; what next toilet paper printed on every sheet with "One Barnet; One Sheet project?")  which are based on what really matters to our customers; resolution, accountability and keeping the promises we make. (and this must be why management have foolishly decided to take calls about council tax out of the expert department and put them into a call centre where no-one ever knows anything about anything and doesn't have any power)

The campaign kicked off in April ahead of the launch of Barnet's renewed customer care standards in June. Mr Mustard hopes that the bar will be set higher than the low standard for answering the telephone set by Richard Cornelius when Mr Mustard asked a rare question at a committee. Mr Mustard doesn't usually bother as the answer received is not usually the answer to the question that one has asked. Next up is customer service mystery shopping, a scheme which will test out the customer service skills of staff in all areas. Does Mr Mustard guess correctly that external consultants will be employed to do the mystery shopping when real shoppers could be asked for free?

Meanwhile, the council's Customer Service Transformation (CST) programme continues apace. The last edition of First Team detailed the aims of the CST programme, and it is already reaping rewards.

Despite high volumes of calls for school admissions coming in at the beginning of March, (for which any sensible council will have planned)  nearly every call was answered and almost 90% were picked up within 20 seconds (so over 10% of calls were answered late). This was as a result of the transfer of calls into the customer contact centre rather than being dealt with by the school admissions team (there are a large number of unhappy parents). Meanwhile the process of applying for a blue badge has reduced from eight weeks to just two. Is Barnet doing anything about blue badge fraud. Enfield Council seem to regularly prosecute blue badge cheats but then i suppose as we have our own councillors abusing their system that might be a bit much to ask for.

The CST programme is continuing to put in place new ways of working that make life easier for the customer, well ahead of the transfer of all customer service activity to either BT or Capita in early 2013.

Monika Singh, Head of Customer Services Transformation, said: "Over the coming months, I want everyone in the council to spend some time 'Thinking Customer'. The new-look council is putting the customer at the centre of everything we do, and it is absolutely vital that this is engrained in the culture of every service now. We should know what it feels like to be a customer of the services we deliver, we should think about the impact of any new processes or policy changes we implement on all our customer groups, and we should ask our customers what they think of us at every opportunity. Many senior officers live miles from the borough so don't have the foggiest idea what it is like to be a "customer".

"We are already seeing great results through the CST programme and now we want every single person to engage with this programme and make a difference for the people we work for, by Thinking Customer all the time."

Keep watching barnetwork for more on the Think Customer campaign and the relaunch of our customer care standards next month. Mr Mustard will keep watching.

What does Mr Mustard think when he sees the above screensaver.

He thinks:

Will Lesley Meeks last longer than Mick Stokes who did the job before her for a few months?

Is she a Town Hall Tax Dodger? (as it takes up to 9 months for Mr Mustard to get a reply under Freedom of Information legislation the answer might be a while in arriving)

Wasn't there anyone who lived in Barnet with the necessary skills?

Yours frugally

Mr Mustard