Confirmed – Southwest One to sue Somerset, but Surrey Police halt their outsource

As expected, the IBM led Southwest One consortium announced yesterday they are to take legal action against Somerset County Council (who are also a minority shareholder in SW1!) for money they claim to be owed on the basis of their share of procurement savings. Here is Dave Orr's comment on our last piece, pretty much in full as it is really interesting, in case you didn't see it. Orr is the man who first drew attention to the problems arising under the deal.

"In the case of SW1 procurement savings, they were not predicated on SCC implementing process changes, but relied on "Category Management" and directing all spend to the new contract agreed via (the expensive £30m) SAP ERP system.

NOTE: It was IBM pre-contract signing who came up with the influenceable spend figures and ludicrous £200m of savings possible.

There is a lot of (deliberate?) confusion over savings terms  - not helped by the Chief Constable Colin Port of Avon & Somerset Police sitting on the Board of his contractor SW1 and also using them. Mr Port resigned from SW1 last September.

The Duffers Guide to SW1 savings terms:

a) "Pipeline savings" - A NeverLand dream state where massive savings up to the £200m claimed are just around the corner! Or IBM/SW1's latest best guess.

 b) "Implemented savings" - Contract for a category of spend is agreed with clients. Contract implemented on SAP Buying Catalogue and now new spend channelled into it.

c) "Realised savings" - Cash coming into SCC from actual savings rather than "best guess" in b) above..

I suspect IBM will win legals, as they are better at writing contracts than Councils and Police and can afford to employ "World Class" lawyers!

Did big frontloaded 27% Government cuts to Councils in 2011 lower spend and then trigger a contract compensation clause?

Why didn't this silly Alan Jones-led "Beyond Excellence" contract model for contraction as well as expansion?

 Lesson: Predicting 10 years out in complex public services and writing a watertight yet flexible contract is IMPOSSIBLE!"

I'm absolutely in agreement with that last point, which is why it is worrying to see new contracts like North Tyneside's with Balfour Beatty being let with 10 -15 year terms. And I also suspect that IBM would not be doing this unless they were pretty sure they had a watertight case - I'll be asking Paddy Power for the odds later, suspect it's 2-1 on in favour of  IBM.

Today's good news however is that the Police Authority in my county of residence, Surrey, is announcing today that they're not proceeding with their misjudged "business partner" outsourcing approach. (West Midlands may still continue however). The idea was to appoint a single partner (probably some cobbled together "consortium") to cover all sorts of different services - a strategy which seemed to be built mainly on the desire to avoid future procurement exercises.  Which never seemed to be good basis for an entire organisational strategy...

It's cost Surrey £150,000 in consulting and legal fees, but at least it's dead.


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