SHOCK! HORROR! In-house service wins Somerset Police competitive bid…

(Our regualr guest commentator, Dave Orr has come out of retirement to comment on interesting news from Somerset...)

Recently, Avon & Somerset Police decided to consider outsourcing their custody services to the private sector. Unusually, the new Police & Crime Commissioner, Sue Mountstevens, decided that the in-house service had to be kept in the competition right to the end.

Then to cap it all, the in-house service was allowed to have a service improvement plan. And ultimately, the service won the competitive bid, by being £600k cheaper than the private bid.

You can read about it here courtesy of the BBC. 

But why is this common sense and impartial approach so unusual and newsworthy?

What usually happens in the public sector is that a premature Options Appraisal takes place (long before a full Business Case is developed), that labels the in-house service as the “Do Nothing” or “Status Quo” option. There is no opportunity for a service improvement plan or access to ‘invest to save’ funding and the in-house service is ruled out very early on in the procurement process.

This is the approach that Somerset County Council took in 2005 when Project ISiS (that led to the controversial contract with IBM for Southwest One) decided from the outset that the Joint Venture was the preferred option. Thereafter, the Project ISiS Business Case was built around the Joint Venture preferred option, without the detailed work (rather than high level aspirations based upon “transformation”) on service baselines and specific requirements taking place.

When services may potentially be outsourced, agreeing clear service baselines lets you know how much support and new work capability your current service and budget gets you. This is critical to knowing what work you should expect for your unitary payment to the contractor and whether an “extra” is or should be chargeable or not by the contractor.

It is best practice to use an existing service (with a service plan for improvements etc) as a comparator to the bids coming in. Discarding the in-house service early on removes a competitive element and makes judging value for money much harder.

How did the approach taken by Somerset County Council work out now they are seven years into a ten year contract?

Not too good. The net loss of payments to IBM/Southwest One over cashable savings delivered could have paid for the rivers Parrett and Tone to have been dredged twelve times over, which puts the scale of the losses in this controversial joint venture into a flood-hit Somerset Levels context.

However, Somerset County Council is to be commended for producing a “Southwest One Lessons Learned” 4-page report to the Audit Committee recently. It was quite high-level, so with external Auditor support, the Audit Committee have asked for a more in-depth report to be heard in June. Meanwhile, several respected third parties have analysed the report including Tony Collins and Best Practice Group.

Have a good look and do remember “Beware the Ides of Somerset”…

First Voice

  1. RJ:

    At present isn’t it “Beware the Tides of Somerset”?

    Nice to see a jolly post from Mr Orr and yes, it is welcome good practice from the public sector at last.

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