Agenda item - Key Decision - Project Minerva

Report of the Corporate Director of Resources.

RESOLVED: That

(1) the analysis, evaluation and findings of the options considered within Section 2 of the report be noted;

(2) the exercise of the early break clause within the Incremental Partnership Agreement variation for the provision of IT Services to permit cessation from 24 November 2015 be approved;

(3) the Council does not extend the initial period of the Incremental Partnership Agreement currently scheduled to expire on 3 October 2015;

(4) the re-tender of the IT Service contract under EU Procurement rules and in accordance with Contract Standing Orders be approved and authority to proceed with the procurement be delegated to the Corporate Director of Resources in consultation with the Portfolio Holder for Communications, Performance and Resources and the Portfolio Holder for Finance. and to bring a contract award recommendation to Cabinet for commencement of the IT Service contract; the delivery of the IT Service would require the delivery of major projects from time to time and this would need to be accommodated within the service scope of the re-tender;

(5) having approved resolution 4 above, approval be given to run the process to appoint a Legal and Commercial provider for the re-tender of the IT Service;

(6) the Corporate Director of Resources be authorised to continue exploring the potential for a shared service arrangement with suitable partners;

(7) the launch of a two-year cost reduction programme aimed at achieving a savings target of 17% (i.e. £2.0m per annum) identified from the options analysis in sub-section 2.2.1 of the report be approved.

Reason for Decision: The Council had a balanced budget for 2013/14 and 2014/15 which included the delivery of a total level of savings of £22.8m over the two years. However, the current national ‘austerity’ measures were anticipated to continue potentially up to 2020 and possibly beyond. The Council therefore needed to plan for further potential cost reduction challenges that were anticipated in addition to the £75.0m of savings it would have achieved between 2010 and 2015 (out of a controllable spend of approximately £188.0m).

Current projections were that the Council would need to achieve savings representing 30% of its budget between 2015 and 2020.

Concurrently with the above, the Council’s existing outsourced IT Service contract with Capita contained a break clause permitting an early cessation of the contract from October 2015, if exercised.

In recognition of the above, Project Minerva was launched during 2013 to undertake an evaluation of options available to contribute towards anticipated cost reductions including the following activities:

· determine a baseline revenue budget position;

· perform an informal “soft” market test;

· London Authority research;

· Shared Services research;

· discussions with relevant software providers;

· engagement with clients (of the Resources Directorate);

· engagement with Schools; and

· engagement with Staff and Trade Unions.

Additionally, consideration had been given to the potential for service disruption, financial implications, risks, benefits and outcomes for the options set out within Section 2 of this report.

Following analysis and evaluation of the available options incorporating the above factors, the recommendations were proposed and approved by Cabinet.

Alternative Options Considered and Rejected: As set out in the report.

Conflict of Interest relating to the matter declared by Cabinet Member / Dispensation Granted: None.

The Portfolio Holder for Communications, Performance and Resources introduced the report, which set out options for achieving cost reductions within the Resources Directorate for 2015/16 and beyond, including the rationale for proposing a re-tender of the IT Service.

The Portfolio Holder stated that two events had coincided and that these had been the key drivers to the proposals set out in the report: a breakpoint in the existing Capita Contract and the need to deliver savings in the region of 20% over the next few years. He explained that the stance taken from the outset was that were the Council to outsource back office services, it would be sensible to align its timing with any IT procurement. Additionally, when the Council looked at the outsourcing issue and compared it to the internal options, it found that net savings were broadly the same – whilst the savings were high, the costs too were also high. As a result, the following were being proposed:

· to exercise the break clause in the contract with Capita in regard to the delivery of IT services;

· not to extend the partnership with Capita in relation to the Business Transformation service;

· tender IT Services contract;

· not to outsource back office services but instead deliver an in-house savings programme with a view to producing savings of £2m year on year.

Cabinet was informed of the extensive consultation that had taken place with the staff, unions and schools, and that there had been a cross-party consensus on the way forward, which was confirmed by a Non-Voting Non-Executive Member who expressed his support for the Project and the outcomes proposed.

The Portfolio Holder applauded the Corporate Director of Resources and his team for the work undertaken which had helped to put the Resources Directorate on track to deliver the savings required over the coming years.

Having considered the confidential appendices, Cabinet