BT and Cornwall in High Court – Outsourcing Dispute Goes Cornwall’s Way

In the pre-Christmas chaos, I'm sorry to say we missed the news on December 21st that BT failed in their high court bid to stop Cornwall County Council pulling out of their 10-year, £160 million outsourcing contract with the firm.

We have covered this saga regularly (e.g. here) since the contract was awarded in 2013, and it has not been a happy story.

Cornwall announced last summer they were terminating the contract based on BT's failure to meet a number of the contracted terms and KPIs, including the creation of new jobs in the County. In August, BT filed an injunction preventing the termination of the agreement, but the High Court has found in favour of the Council. We have not seen the full court judgement (presumably it will appear in time) but Justice Knowles concluded: “BTC faced problems of its own making and did not provide to the Defendants the service it had promised to the standard it had promised. The Council worked with BTC to try to resolve things but ultimately decided the position was not good enough.”

Adam Paynter, Deputy Leader of the Council, said “We welcome this judgment which confirms our argument that BT Cornwall had been in material breach of the contract due to their failure to carry out services to the required contractual standards and, therefore, that we were justified in reaching the decision that we were entitled to terminate the contract. The ruling also means that the Council will be seeking payment of its costs from BT Cornwall in connection with this legal action.  We also intend to hold discussions with BT Cornwall to agree the level of damages we will receive”.

This whole episode highlights a number of issues around major outsourcing programmes which have been evident in other unsuccessful exercises, such as the complexity of the contracts, which make it hard to understand exactly what the supplier has committed to, and the bold promises too often made by the providers. As Cornwall Councillor Andrew Wallis says on his excellent blog:

“The commercial companies were quick to whisper sweet nothings into any local government ear promising to solve their funding problems. The truth be told, local governments are better at knowing how to save money. They do this without thinking of how it will affect the profit margin. Local government do not think about profit margins, but how changes will affect the service user”.

I’m not sure councils are always better at saving money, but he is correct about the profit focus which can work against the interests of service users and indeed taxpayers.

The council is bringing 250 staff and most of the services back in-house, starting this month, including HR Transactional Services (Payroll, HR Employment Support, First Point Helpdesk, Financial Processing, etc), ICT, Despatch, Printing and Telecare.

We're not anti-outsourcing here, and let’s face it, no public sector organisation can exist without its private sector suppliers. But maybe this is another nail in the coffin of the "we can do everything" propositions that have been pushed by the larger providers of the last decade of more. They have rarely ended well, as we have reported previously. But now, attention will no doubt continue to focus on Barnet, where the huge deal with Capita is supposed to generate major savings and benefits. The jury is still out on that one - we will watch with interest.

First Voice

  1. Dan:

    I always a bit bemused by this one. It might be me being a bit thick, but I could never understand how it was supposed to stack up.

    BT took over business departments where almost all of the cost was in payroll. They promised to make savings where the only real way of doing that was by laying people off. They then also promised to deliver jobs. Can anyone explain how they were going to accomplish both of these? (unless the ‘job creation’ was something so nebulous it was unverifiable…)

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