Contract Monitoring Overview and Scrutiny Committee

Transcription

1 Meeting Contract Monitoring Overview and Scrutiny Committee Date 17 March 2014 Subject One Barnet: Formal close down of New Support and Customer Services Organisation (NSCSO) and Development and Regulatory Services (DRS) projects Report of Cabinet Member for Resources and Performance Cabinet Member for Customer Access and Partnerships Cabinet Member for Housing Summary of Report: This report notes the formal closedown of the NSCSO and DRS projects. The Customer and Support Group contract (product of the NSCSO project) went live in September 2013 and the Regional Enterprise Ltd (Re) contract (product of the DRS project) went live in October The CSG contract will deliver financial benefits of 125.4m over 10 years; the Re contract will deliver 39m of financial benefits over 10 years. Both projects have also enabled a range of non-financial benefits. The report notes the successful delivery of the projects and some of the key lessons learned from these projects. An external review of the projects was provided by Local Partnerships, and is appended to the report.

2 Officer Contributors: Cara Elkins, Programme and Resources Advisor Tom Pike, Head of Programmes and Resources John Hooton, Deputy Chief Operating Officer Claire Symonds, Commercial and Customer Services Director Pam Wharfe, Director for Environment and Growth Status (public or exempt) Wards Affected Key Decision Reason for urgency / exemption from call-in Function of Enclosures Contact for Further Information: Public All No Not applicable Contract Monitoring Overview and Scrutiny Committee Appendix 1 DRS project closedown report Appendix 2 NSCSO project closedown report Appendix 3 Local Partnerships Gateway Review Tom.pike@barnet.gov.uk;

3 1. RECOMMENDATION 1.1 That the Contract Monitoring Overview and Scrutiny Committee notes the formal closedown of the New Support and Customer Services Organisation (NSCSO) and Development and Regulatory Services (DRS) One Barnet projects. 2. RELEVANT PREVIOUS DECISIONS 2.1 One Barnet previous decisions Cabinet, 20 October 2010, noted the impact of the emergency budget, consultation on formula grant and revised medium-term financial strategy. It also agreed proposals for consultation on budget options. The budget options contained proposals in respect of One Barnet projects The Audit Committee, 21 September 2010, received a report from Grant Thornton, the external auditors, on the One Barnet programme. The report included a recommendation that a single, overarching One Barnet Business Case should be prepared. The decision to accept this recommendation was endorsed by the Audit Committee The financial statements for 2009/10, agreed by the Audit Committee on 21 September 2010, established a Transformation Reserve to meet the costs of the Future Shape programme (latterly known as the One Barnet programme) Cabinet, 21 June 2010, considered the medium-term strategic context for the Council and likely very substantial financial challenges. Cabinet endorsed the Future Shape programme as the response to the challenges set out. The report also noted that the full implementation costs of Future Shape were not budgeted at that time and would need to be factored into future financial planning and in reviewing earmarked reserves Cabinet, 21 October 2009 (Decision item 8), approved plans to implement the Future Shape programme Cabinet, 6 July 2009 (Decision item 5), approved that three principles would be adopted as the strategic basis for making future decisions: A new relationship with citizens; a one public sector approach; and a relentless drive for efficiency. It also approved a phased approach to delivering the Future Shape Programme and immediate consolidation of activity in the areas of property, support and transact Cabinet, 3 December 2008 (Decision item 5), approved the programme structure for the next phase of the Future Shape programme and that a detailed assessment of the overall model for public service commissioning, design and delivery should be undertaken Cabinet, 6 May 2008 (Decision item 5), approved the establishment of the Future Shape of the Organisation programme.

4 2.2 NSCSO previous decisions Cabinet Resources Committee, 28 February 2012 (Decision Item 6) Resolved that: (1) Cabinet Resources Committee approves the recommended New Support and Customer Services Organisation (NSCSO) shortlist of two bidders for stage 2 of the competitive dialogue process. (2) The recommended shortlist was: BT and Capita. They achieved the highest two scores from the evaluation of the outline solutions provided at the end of the first stage of competitive dialogue. (3) The Committee note the update to the New Support and Customer Services Organisation business case Cabinet Resources Committee, 29 June 2011 (Decision Item 7) Resolved that (1) The committee approves the New Support and Customer Services Business Case in order that the council can begin the competitive dialogue process, following the previously approved placing of the OJEU notice. (2) The authority to award contract remains with the Cabinet Resources Committee. (3) The committee gives due regard to the statutory equality duties under the Equality Act 2010 and the outcomes of the equality impact assessments referred to in this report Cabinet Resources Committee, 2 March 2011 (Decision item 9), Customer Services Organisation and New Support Organisation: Options Appraisal Resolved that: (1) The Director of Commercial Services be authorised to produce a business case for the following: a. the procurement of a private sector partner(s) to deliver the following services Customer Services, Estates, Finance, Human Resources, Information Systems, Procurement, Revenues and Benefits. b. the interim transformation (prior to transfer to a private sector partner) of the following services Customer Services, Information Systems c. change and service improvement of the following services Estates, Procurement d. the options and recommendations for the in-house transformation of Legal Services. (2) The details of business case (1)a be referred to and considered by a future meeting of Cabinet Resources Committee. (3) The Director of Commercial Services be authorised to initiate the procurement of a private sector partner(s) to deliver the following services: Customer Services, Estates, Finance, Human Resources, Information Systems, Procurement, Revenues and Benefits. (4) This procurement process will only proceed into the dialogue phase once the business case identified in (1)a above has been approved by Cabinet Resources Committee Cabinet, 29 November 2010 (Decision item 6) Resolved that: 1. The One Barnet Programme Framework is approved.

5 2. The funding strategy for One Barnet implementation costs, as set out in paragraph 6 of the Cabinet Member s report, is approved. 2.3 DRS previous decisions Cabinet Resources Committee, 14 December 2011 (Decision Item 5) resolved that: (1) The Cabinet Resources Committee approve the recommended Development and Regulatory Services (DRS) shortlist of two bidders for stage 2 of the competitive dialogue process; (2) The recommended shortlist was: Capita Symonds Ltd and the EC Harris/FM Conway consortium. They achieved the highest two scores from the evaluation of the outline solutions provided at the end of the first stage of competitive dialogue; and (3) The updated Development and Regulatory Services Business Case be noted Cabinet Resources Committee, 28 March 2011 (Decision Item 5) resolved that the Committee approve the Development and Regulatory Services business case, in order for the council to begin the competitive dialogue process, following the previously approved placing of the OJEU notice Cabinet, 10 January 2011 (Decision item 8) following the referral back by the Business Management Overview and Scrutiny Committee on 16 December 2010, resolved that a decision 7 taken by Cabinet on 29 November 2010 on Development and Regulatory Services be reaffirmed (as stated in 2.5 below) Cabinet, 29 November 2010 (Decision item 6) resolved that: (1) the One Barnet Programme Framework is approved; and (2) the funding strategy for One Barnet implementation costs, as set out in paragraph 6 of the Cabinet Member s report, is approved Cabinet, 29 November 2010 (Decision item 7) resolved that: the Commercial Director be authorised to commence the procurement process to identify a strategic partner for the delivery of the Development and Regulatory Services project. 3. CORPORATE PRIORITIES AND POLICY CONSIDERATIONS 3.1 Corporate priorities and policy considerations One Barnet The three priority outcomes set out in the Corporate Plan are: Better services with less money; Sharing opportunities, sharing responsibilities; A successful London suburb. The delivery of the council s strategic objectives has been enabled through the creation and implementation of the One Barnet programme, incorporating the NSCSO and DRS projects (now the Customer Support Group and Re contracts with Capita).

6 3.1.2 The One Barnet Programme was based around the aim to become a citizen centred organisation, delivered through the adoption of three key principles: A new relationship with citizens A one public sector approach A relentless drive for efficiency The NSCSO and DRS projects were designed to align with these key principles, and were subject to preparation of an Outline Business Case and Full Business Case, subject to review and approval by committee. The overall governance and controls of the One Barnet programme and relevant projects has been subject to internal review through a programme of audits; and external review of projects through Local Partnerships. The Grant Thornton Review of Governance Arrangements of the One Barnet Programme reported that: it is clear there is a strong alignment between the One Barnet programme and Corporate Priorities. The alignment between the NSCSO and DRS projects and corporate priorities is summarised below. 3.2 Relationship between NSCSO project delivery and corporate priorities The Full Business Case for the NSCSO project summarised that Capita s Final Tender (and entering into a contract with Capita to provide these services) made a significant contribution to the Council s corporate priorities, delivering: Better services with less money through contracting for guaranteed standards and levels across all NSCSO services, whilst at the same time reducing the operating cost of these services by at least 45% in real terms over the period of the partnership, saving the Council million in the period 2013 to This enables the Council to meet the requirements of the current Medium Term Financial Strategy and the forthcoming additional savings anticipated as part of the next spending round. This money would otherwise have had to be found from frontline service budgets. Sharing opportunities and responsibilities by significantly enhancing the ability of customers to access and engage with the Council and receive the support they need, whilst also giving them greater control through self-service and self-help, and opportunities to co-design services with the partners. A successful London suburb through an enhanced insight function which will help the Council analyse the needs of the Borough and its communities in more detail and commission services that are targeted to specific needs; commitments to increase resident satisfaction; and support for local businesses and community organisations. 3.3 Relationship between DRS project delivery and corporate priorities The Full Business Case for the DRS project summarised that Capita Symonds Ltd Final Tender (and entering into a contract with Capita Symonds

7 Ltd to provide these services) will make a significant contribution to the Council s corporate priorities, delivering: Promote responsible growth, development and success across the borough by building on the council s successful development, enhancement and protection of the built environment by introducing new technology, skills and commercial ideas to encourage and support sustainable growth in the borough. Support families and individuals who need it promoting independence, learning and well-being by accelerating the regeneration programme and being proactive in driving social, economic and financial benefits for the borough and encouraging local economic growth whilst keeping it a green and pleasant suburb and encouraging healthier and more independent lifestyles. Improve the satisfaction of residents and businesses with the London Borough of Barnet as a place to live, work and study through a better understanding of customer and community needs and utilising new technology, training and processes to provide a better customer experience, thus improving customer satisfaction. Additionally improve engagement and closer working with other service providers including Barnet Homes, the police and health authority, in addition to the business sector and the community in order to ensure all regeneration in the borough meets the needs of residents and businesses. 4. RISK MANAGEMENT ISSUES 4.1 Risks associated with the delivery of the NSCSO and DRS projects were managed and reported through the corporate risk and project management processes. A programme risk register was managed by the Programme Management Office and reported to the One Barnet Programme Board. All risks were reviewed quarterly and relevant actions taken. The risk register for the One Barnet Programme reported to Budget and Performance Overview and Scrutiny Committee each quarter as part of the One Barnet Highlight Report. 4.2 Although the CSG (formally NSCSO) service commenced on the 1 st September and the Re (formally DRS) service commenced on the 1 st October, there are some risks from the project that have become contract risks for on-going management. The Local Partnerships Health Check noted a number of areas that should be monitored and managed. The council s management responses to these risks are set out in section 9. There are some key risks as the major changes necessary to deliver the improvements are implemented. Maintaining morale in the service and ensuring corporate knowledge is protected will be important as the CSG transformation programme is developed. There is also a reputational risk that the services, which are core to local residents and highly visible, are not improved.

8 Arrangements need to be finalised for the client team. 4.3 A review and transfer of project and service risks was required for both DRS and NSCSO projects. A review was held of all risks within the council s corporate risk management system (JCAD) to either close, retain or transfer the risk as appropriate. All retained or transferred risks will continue to be managed and reported at least quarterly via the council s contract management and performance management cycle. Project risks; following the CSG and Re service commencement, any live project risks allocated to the project mobilisation team were transferred to the commercial team. Transferred services risks; o CSG - all service risks for CSG were reviewed. The majority of risks were taken on by Capita. The on-going management of joint risks will be managed by the commercial team. o Re - at present all the risks remain on JCAD and arrangements are being finalised to allocate across Capita and the commercial team. 5. EQUALITIES AND DIVERSITY ISSUES 5.1 Equalities and diversity issues are a mandatory consideration in decision making in the council pursuant to the Equality Act This means the council and all other organisations acting on its behalf must have due regard to the equality duties when exercising a public function and such an obligation is on-going. The Equality Duty should be applied before a decision is made and be part of the decision-making process. 5.2 Section 149 of the Equality Act 2010 provides that: "(1) A public authority must, in the exercise of its functions, have due regard to the need to: eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act; advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it; foster good relations between persons who share a relevant protected characteristic and persons who do not share it" (known as the Public Sector Equality Duty and for the purposes of this report henceforth referred to as the Equality Duty). 5.3 The "protected characteristics" are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex and sexual orientation. 5.4 The Equality Duty applies to the council. In addition, Section 149(2) provides that "a person who is not a public authority but who exercises public functions must, in the exercise of those functions, have due regard to the matters mentioned in subsection (1)". Section 150(5) provides that "a public function is a function of a public nature for the purposes of the Human Rights Act 1998".

9 5.5 Elected Members have been briefed on the Equality Duty and how equality considerations must be integrated into day-to-day business when formulating policies and decision-making. Members are mindful of the need to consider what impact, if any, a particular proposal will have on one or more protected groups, whether there will be any cumulative impact and what mitigating steps must be put in place. 5.6 The Equality Duty has been and will continue to be considered at all stages of decision-making in relation to the NSCSO and DRS projects, and subsequent Customer and Support Group, and Re, contract management. 5.7 The evaluation criteria for the Outline Solution, Detailed Solution and Final Tender stage for both projects included several criteria related to effective delivery against the public sector Equality Duty and influenced the content of dialogue and bidder proposals throughout the procurement process. 5.8 The council has undertaken thorough equalities impact assessments for the impact on employees with protected characteristics who work for services in scope, and external customers with protected characteristics served by the in scope services with public-facing responsibilities. 5.9 The Employee Equalities Impact Assessment was reviewed and updated at key milestones throughout the procurement process Alongside the Full Business Case, the council completed detailed assessments of the bidder s Final Tender including a comprehensive Equalities Impact Assessment The contracts require the service provider to observe equalities legislation and the council s own equalities policy requirements. Throughout the life of the contract, all service change proposals from the service provider will need to be properly considered to ensure that due regard has been given to the Equality Duty. 6. USE OF RESOURCES IMPLICATIONS (Finance, Procurement, Performance & Value for Money, Staffing, IT, Property, Sustainability) 6.1 Finance The Council s One Barnet framework was approved in November This framework was based upon three strategic priorities: A new relationship with citizens; a one public sector approach; and a relentless drive for efficiency. This took into account the central government Spending Review of 2010, which announced reductions in government support to local authorities of 26% over four years. In response to this challenge, the Council began consultation on potential budget reductions of 46m over the next three years. 6.2 The One Barnet programme was closely aligned with business and financial planning. In 2010, the programme estimated 102m cumulative savings over the period from The cost of this was estimated as 9.2m.

10 6.3 At the end of the first phase of the One Barnet programme (known as Wave 1 ) total projected spend is m. Expenditure to date is m, with commitments remaining of 0.134m (as per Quarter 3 monitoring, 2013/14). 6.4 Delivery of the programme was supported by clear governance and programme and project management controls. This included financial, procurement, human resources and legal expertise to ensure robust service delivery arrangements, with internal resources provided by the Council and commercial and consultancy support provided through an implementation partnership with Agilisys and impower. 6.5 DRS Financial benefits The DRS project was expected to deliver a guaranteed financial benefit to the council of 26.5m over the contract term This objective was significantly exceeded, the final benefits being as follows: 39.1m of guaranteed financial benefits with the potential for a share in future profit gains; Capacity to deliver growth in services both in and outside the Borough; and Innovation in technology and new processes so that higher levels of customer satisfaction can be met. 6.6 NSCSO Financial benefits The NSCSO project was expected to deliver a minimum saving of 11% on the cost to the council over the ten years, equivalent to 40m The objective has been significantly exceeded, the final benefits being as follows: A guaranteed core service price reduction of 18.1% during the life of the contract, equivalent to 70m; A guaranteed operational net cost reduction by year 10 of 45%; and A guaranteed net financial benefit of 125.4m including procurement savings and income collection guarantees. 6.7 NSCSO and DRS project expenditure The original budget for DRS and NSCSO was set at 3.4m for the two projects. The DRS project had an original financial benefit of 26.5m and NSCSO 40m over the contract terms The budgets were revised to 4.6m in October 2012 as a result of revised timescales for the projects. These figures were further amended in June 2013 taking into account the judicial review delays, and a budget was also added for mobilisation activity, which was not part of the original procurement budget. The final total spend on DRS and NSCSO was 6.5m.

11 Project Original Budget Total Projected Spend CRC approved budget increase NSCSO 1,654,439 2,754,445 1,100,006 DRS 1,744,019 2,380, ,365 NSCSO/DRS Mobilisation 1,253,257 1,253, ,871* *CRC, February The application for Judicial Review, and subsequent Appeal, cost the council (and taxpayers) 736,000 in legal fees. In addition, the council s joint legal service and council officers, spent additional hours working with the external legal adviser responding to the Judicial Review Additionally, the full year saving in 2013/14 was expected to be 5.8m for the NSCSO project and 1.5m for the DRS project, and the 5 month delay therefore meant that the council did not achieve 3m of these savings in this financial year Although both projects have exceeded their original financial budgets and time constraints, and 3m of financial savings were lost due to the delay of service commencement, the benefits are far greater than previously expected. The guaranteed financial benefits are as follows; DRS project concluded with 39.1m (with the potential for a share in future profit gains) and the NSCSO project concluded with 125.4m. 6.8 Procurement Both NSCSO and DRS projects were subject to OJEU and followed procurement regulations. The procurement for both projects followed a standard competitive dialogue approach after an initial short-listing exercise. Following evaluation and down selection, detailed solution dialogue was conducted with two bidders. 6.9 Performance and Value for Money The CSG and Re contracts are based around Super Key Performance Indicators (SKPIs) and Key Performance Indicators (KPIs) linked to financial incentives. Capita and Capita Symonds Ltd have committed to routinely report performance against both KPI targets and a broader set of Performance Indicator (PI) targets. These SKPIs, KPIs and PIs will be used to drive better services for residents, local organisations and businesses Staffing The council has fulfilled its obligations to staff both under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and the council s additional TUPE Transfer Commitments. The Council fulfilled its TUPE duties to inform and consult staff through tripartite meetings between

12 the council, the new partner and the Trade Unions, and the council provided support to managers and staff throughout the project Sustainability It is felt that the CSG and Re contracts are well placed to succeed in delivering the required outcomes. The Local Partnerships review (October/November 2013) noted that there is a lot of enthusiasm within both organisations for these ambitious outsourcing contracts to succeed and the benefits to be delivered. 7. LEGAL ISSUES 7.1 Legal issues, in respect of each work stream were addressed at the appropriate stage. As these were large and complex procurement and change projects, specialist legal advice was provided by Trowers and Hamlins. 7.2 Following the successful conclusion of the Judicial Review (JR) process against the decision to award the New Support and Customer Services (NSCSO) and the Development and Regulatory Services (DRS) contracts, Barnet has now signed these two contracts with Capita. 8. CONSTITUTIONAL POWERS (Relevant section from the Constitution, Key/Non-Key Decision) 8.1 The rules and terms of reference of all scrutiny committees are contained within Part 2, Article 6 of the Constitution; and in the Overview and Scrutiny Procedure Rules (Part 4 of the Constitution). The Contract Monitoring Overview and Scrutiny Committee is responsible for scrutinising reports from the Commissioning Group, Delivery Units and Lead Commissioners detailing the performance against targets that are included within the Corporate Plan and otherwise relating to the services provided by the Customer & Support Group, Development & Regulatory Services, The Barnet Group Ltd, HB Public Law and NSL (external Delivery Units) and other major contracts, and to be able to challenge external providers. 9. BACKGROUND INFORMATION 9.1 One Barnet The overarching One Barnet Programme is the council s transformation programme and encompasses the major change projects running across the council. It aims to make sure that the council can continue to provide high quality and efficient services over the next 10 to 15 years Barnet s public sector is facing a period of financial and service delivery challenge. While funding is decreasing, demand for public services is rising.

13 Large increases are forecast in the number of people who require often intensive support, such as young children and the very old. Residents also expect that the quality of service they receive from the public sector keeps pace with that available from commercial organisations The One Barnet programme is working to reduce costs, while retaining the quality of services, which in many cases means changing the way in which that service is delivered. The One Barnet programme has sought to find the best solution for the needs and requirements of the users of each service. The council recognised that its services needed to transform to reflect changes in residents needs and attitudes. At the heart of the One Barnet programme is the aim to become a truly citizen-centric council, to help residents lead successful and independent lives. The council tests everything it does against three key principles: a new relationship with citizens a one public sector approach a relentless drive for efficiency. 9.2 New Support Customer Services Organisation (NSCSO) The NSCSO project was part of the One Barnet programme. This project is now closed and is managed through the Customer Support Group contract with Capita. The project aim was to procure the council s customer and support services so that they can be delivered differently in order to: provide improved services for their internal and external customers make savings to benefit the taxpayer enable them to adapt to a changing and evolving customer base in the light of any future developments and therefore be sustainable In June 2011 CRC approved the Outline Business Case for the CSG project. This recommended that the council undertake a procurement process to identify a strategic partner for the delivery of the following services: Corporate Procurement; Customer Services; Estates (Building Services, Property Services, Facilities Management); Finance; Human Resources; Information Systems; Revenues and Benefits; and; Corporate Programmes Mobilisation commenced on 2 January 2013 with an initial target of achieving Service Commencement (Go-Live) on 1 April In January 2013 the council was informed that Judicial Review (JR) proceedings regarding the validity of One Barnet would be brought against the council and in March

14 2013 the application for a JR was heard by the High Court. In April 2013 the High Court ruled that the application was out of time. In May 2013 the council was informed that the decision of the High Court would be appealed and the Court of Appeal heard the case in July On 2 August 2013 The Court of Appeal upheld the High Court s decision On 5 August 2013 the CSG contract was signed with Capita, staff and services transferred on 1 September Following on from service commencement the project is now closed. 9.3 DRS Regional Enterprise (Re) formally DRS is part of the One Barnet programme. The project aim was to form a strategic partnership with a private sector partner to deliver the following services; Building Control Environmental Health Hendon Cemetery & Crematorium Highways Network Management Highways Traffic & Development / Highways Strategy Highways Transport & Regeneration Land Charges Planning Development Management Regeneration Strategic Planning Trading Standards & Licensing In order that the following aims can be achieved; meet the unprecedented financial pressures it is facing; invest in these services; and preserve and improve on existing service levels In December 2011 CRC approved the Outline Business Case update which listed the contractual guarantees and targeted benefits required from the strategic partner In January 2013 the council was informed that Judicial Review (JR) proceedings regarding the validity of One Barnet would be brought against the council and in March 2013 the application for a JR was heard by the High Court. In April 2013 the High Court ruled that the application was out of time. In May 2013 the council was informed that the decision of the High Court would be appealed and the Court of Appeal heard the case in July On 2 August 2013 The Court of Appeal upheld the High Court s decision.

15 9.3.4 The impact of the JR was to delay the evaluation of the DRS final tender submissions and in June 2013 Cabinet approved the recommendation for Capita Symonds Ltd (CSL) to form a joint venture with the council in June Following Cabinet approval, the DRS Project moved into due diligence/mobilisation phase (on 15 July 2013) and was subsumed into a wider programme combining it with NSCSO mobilisation and several other work streams to ensure efficiency and maximising knowledge sharing On 5 August 2013 a partnering contract was signed between the council and Capita BDRS (Ltd). Capita (BDRS) Ltd is a joint venture between CSL and the council. Staff and services transferred on 1 October Following on from service commencement the project is now closed. 9.4 NSCSO and DRS project benefits NSCSO and DRS were very ambitious projects which delivered a high profile transformation resulting in the establishment of a partnership and joint venture with Capita A number of benefits can be identified from the delivery of the DRS project; Financial benefits: The new service arrangement has exceeded the financial benefits forecast at earlier stages of the project and will provide 39m of guaranteed financial benefit. Innovative solutions: The Joint Venture solution allows the council to generate additional income from commercial growth, improve services and deliver planned regeneration within the borough. The contract will provide citizen-centred services that are easy to access and simple to navigate, and as a result, improve customer satisfaction. Close and effective working links with other public sector bodies. Develop new and innovative ways to engage and involve the community A number of benefits can be identified from the delivery of the CSG project; Financial Benefits: Over the ten year duration of the contract, this partnership will achieve 125.4m of financial benefit to the council. The overall benefits unlocked by the NSCSO project were greater than the benefits forecast at earlier stages of the project. Increased customer satisfaction: Capita s offer includes a commitment to increase customer satisfaction levels. The service intends to increase the quality of service, provide greater choice and control for residents and customers, and implement systems to save customers and partners time when interacting with the council As outlined above there were a number of benefits for both projects, however, it must be noted that neither were delivered to time nor cost due to the

16 Judicial Review (JR). The Go live date for both projects was delayed considerably, 2 nd April 2013 to 1 st September 2013 for CSG and May 2013 to October 2013 for DRS. In addition, the time delay resulted in higher costs for the project, including the JR legal costs and related management costs and the cost of interim management arrangements of the services due to the delay in mobilisation. The full year saving in 2013/14 was expected to be 5.8m for NSCSO project and 1.5m for DRS project, and the 5 month delay therefore meant that the Council did not achieve c. 3m of these savings within this financial year. 9.5 Assurance activities The project reported within the One Barnet programme, in accordance with the Council s project management methodology. Governance structure was consistent throughout both projects. Changes to the structure were incorporated following the transition of the council to a Commissioning Council on 2 April There have been a number of assurance activities throughout the lifecycle of the One Barnet programme, in particular: Internal Audit undertook an initial review of the One Barnet programme in November 2011 as part of the Audit Plan. The review focused on scope and change control, dependency management and project governance; A second Internal Audit review was undertaken in March 2012 outside of the Audit Plan. This review specifically looked at NSCSO and DRS projects and considered planning, benefits management, team capacity and capability, communications/change management, monitoring/reporting, and risk/issue management; The recommendations from the November 2011 and March 2012 reviews were subject to a follow-up review in March 2012; and A further two Internal Audit reviews took place in December 2012 as part of the Audit Plan, which considered supplier and stakeholder management and gave both a Satisfactory assurance rating; Supplier management looked at NSCSO in particular; Stakeholder management across the One Barnet programme more widely. Neither of the reviews looked specifically at DRS. In March 2013, Internal Audit undertook a review of the key performance indicators for the DRS and NSCSO programmes. In August 2013, a review of the key performance indicators for the DRS project was undertaken. This followed up the findings from March 2013 and looked at additional indicators.

17 In September 2013, as part of the Audit Plan an Internal Audit of the management of the One Barnet transformation programme was undertaken which provided Satisfactory assurance, although this did not look specifically at NSCSO or DRS but at the One Barnet Programme more widely. In October 2013, as part of the Audit Plan an Internal Audit of the management of the NSCSO mobilisation project was undertaken which provided Satisfactory assurance. Three reviews have been held by Local Partnerships; DRS in December 2011, NSCSO in September 2012 and a joint DRS and NSCSO review in October Local Partnerships review October/November Local Partnerships conducted a review of NSCSO and DRS projects in October/November This included interviews with lead Members, the Leader of the opposition, senior officers and a sample of other individuals connected with the project. The key message from the review was that although there were a number of challenges, most notably the Judicial Review, it was clear that the projects have been successfully managed and have delivered their objectives. A summary of the conclusions of Local Partnerships is provided below: Local Partnerships has now undertaken three reviews on the One Barnet programme and throughout it has been very evident there is strong leadership of the programme both at project and senior management level. Barnet staff have consistently put the programme and residents interests first. They have adopted a very professional approach and a can do attitude in the face of some major challenges and in some cases in spite of personal job uncertainty. The transformation plans for these services are intended to enable the success of the business model. In both cases, this is underpinned by clear contracts to deliver required outcomes for residents. The CSG and Re contracts are now operational and the Council is at the start of a partnership journey with Capita. The procurement process had its challenges most notably the Judicial Review, but the Review Team (RT) feels that effective project management has been adopted throughout the process, and close out reports have been produced setting out the key learning points. The RT feels the contract is now well placed to succeed in delivering the required outcomes This external review also made a number of key recommendations to be implemented so that the CSG and Re contracts deliver the intended results. The recommendations have all been allocated a priority rating;

18 Critical (Do Now) To increase the likelihood of a successful outcome it is of the greatest importance that the programme/project should take action immediately. Essential (Do By) To increase the likelihood of a successful outcome the programme/project should take action in the near future. Recommended The programme/project should benefit from the uptake of this recommendation These recommendations have been reviewed by management and a full action plan has been produced (Figure 1 below).

19 Figure 1: Local Partnerships Recommendations and Action Plan Recommendation Priority Management Response Action as of Feb Ensure adequate resource by Capita to support a smooth transition and maintain council services. Essential within 3 months As reported to Overview & Scrutiny Committee, both contracts transitioned smoothly supported by both the council and Capita. Complete 2 Develop opportunities within the Re contract area to speed up the sharing of skills and the overall learning process. 3 Put the final touches to arrangements for the client team. 4 Conclude the baselining exercise of highways and estates. Recommended Critical Essential within 6 months Developing and enhancing skills and learning is a key part of the Re service offer. A number of areas of skills and learning development have been prioritised. The permanent structure has been agreed and created. Recruitment is now under way and the client team is expected to be in place within the first quarter of 2014/15. A skilled and experienced interim team is currently in place to ensure effective delivery and knowledge transfer. The Estates KPIs and PIs for Condition and Compliance were not finalised as expected by December while issues with the surveys by the council s previous suppliers were addressed. Agreement Capita have undertaken a skills audit of all staff to assess training and development needs. In addition service specific areas have undergone additional training in Environmental Health and Trading Standards; and cross-cutting areas such a Health and Safety. Recruitment process to be followed for all new roles. Resolve the issues with the surveys to allow Condition and Compliance of the Estates KPIs and PIs.

20 was reached on 5 key compliance tests for the main property estate allowing the KPI to go live in the interim. 5 Keep under review KPIs, Super KPIs, and PIs and the wider Performance Management System. 6 Ensure that change control procedures are effective and efficient. Recommended Recommended The highways base lining exercise is now completed. All are monitored closely and reported to the appropriate Boards and Committee. Change management controls are in place and were recently reviewed as part of an audit which cited them as good practice Continue with the good practice. Any shortfalls in baselining are being addressed. Continue with the good practice. 7 Undertake a detailed benefits realisation plan to identify the wider range of benefits resulting from the contracts. Essential within 3 months The process for ensuring that anticipated benefits are delivered will be incorporated into a new Contract Management Handbook. The definition and agreement of the detailed acceptance criteria is being undertaken on a prioritised basis dependent on the date for the commitment/benefit being delivered and is agreed between the LBB Client Officer that has been identified for every Commitment/Benefit and the relevant Capita Workstream Lead. Publish new Contract Handbook Maintain the Commitment Tracker

21 8 Develop a joint communication plan. Essential within 3 months The Contract Management Team has visibility over the progress of Commitments through the development of the acceptance criteria and sign-off and progress is reported to the Operations Board and escalated as required to the Strategic Partnership Board The Capita Press Office are producing a CSG joint transformation communications plan. To date, senior Re staff have had media training and a key messaging workshop has been held. Expected revised communications plan for Re to be presented at the next Partnership Operations Board in February. 9 Agree a protocol for use of Barnet dedicated Capita staff on JV bid work. Recommended We have key staff identified in Schedule 19 of the Contract and a further 84 staff identified as Joint Employees. The contract requires these to be dedicated to the Contract unless we agree otherwise. At present no major bids have commenced and therefore this has meant no impact to Barnet s service. We will keep a watching brief on this and balance the requirement with regards to growth as this also flows to the benefit of Barnet through the JV.

22 9.7 Project close key lessons learned An internal project close and initial lessons learned activity was undertaken for both CSG and Re projects. The complex, large-scale nature of delivering procurement and mobilisation of CSG and Re has meant a number of lessons learned have been accrued. Workshops were held with a wide range of stakeholders and summarised into lessons learned reports. The key lessons learned are identified below DRS lessons learned A number of positive lessons learned can be identified from the delivery of the DRS project: Successful delivery: The successful procurement, contract close and mobilisation of the Re contract is a significant success - outsourcing 11 services and transferring 299 posts. This represents the delivery of a highly innovative Joint Venture with a private partner, producing savings, financial benefits, commercial benefits and a platform for future success. This was a large and complex project - and a major procurement undertaking. The delivery of this project, achieving significant benefits for the taxpayer and residents, is noteworthy. The commitment of the project teams and service teams was critical to success. Financial benefits: The completion of this project provides significant financial benefits. The new service arrangement will provide 39m of guaranteed financial benefit, greater than that forecast at earlier stages of the project. In addition, the introduction of a commercial model also gives the opportunity and potential for additional income generation in future years - providing the potential for future additional benefit in years to come, when public spending pressures will remain. Additional investment was required within the project to ensure successful delivery; and greater financial benefit has been enabled by the Re contract. Commitment of council staff: The project required a significant amount of time from some DRS staff, which increased the pressure on business-asusual activities. However, the impact was reduced due to the resilience and commitment of those staff who took on extra responsibility and continued to provide services and maintain standards during this time of transition. In addition, the core service performance and quality of the services was largely maintained and in some cases improved over the duration of the project. Project management: An external healthcheck of the project and internal audit assurance recognised that effective project management was adopted throughout the process and that the governance was satisfactory. The project and procurement activity was a major undertaking, requiring significant and sustained management focus. Innovative solutions: The Joint Venture solution allows the council to generate additional income from commercial growth, improve services and deliver planned regeneration within the borough.

23 Our initial lessons learned review has also identified areas for improvement in future project delivery: Consultation and engagement with residents: The basis of the council s approach to consultation was to use the annual budget consultation process, supported by a comprehensive programme of communications activity. This approach was subject to legal challenge and an active campaign emerged arguing that change on the scale proposed in the DRS and NSCSO projects should benefit from a specific consultation activity. This process and the challenge and debate generated through Barnet s approach to consultation should inform future change activities and the council will build a firmer foundation for future consultation activity. The council is currently revising its consultation strategy, clarifying what residents can expect from consultation in the future and developing a more systematic model of engagement with the Citizens Panel as a representative group of Barnet residents. Communication: While communication was clear and concise throughout the procurement process, there were significant challenges throughout the judicial review process in keeping staff informed at a time of considerable uncertainty. The experience throughout this process will be used to inform future project communication planning. In addition, the council should also seek to find opportunities to improve management information cascade. Improving initial planning: This was a large and complex project which required significant initial planning. Using the lessons learned from projects of this size, the council should ensure that complex procurement/project activity is subject to detailed planning in its early stages. This includes early recognition that for major projects the composition of project boards may vary over time for specific phases of the project requiring clear gateways and phasing of lessons learned to ensure continuity. Stakeholder groups were initiated where required, reflecting a flexible approach. This should be taken into account in future exercises. In addition, this planning should be mindful of routine business activities and pressures to ensure resources are available for procurement activity to avoid capacity challenges CSG lessons learned A number of positive lessons learned can be identified from the delivery of the NSCSO project: Successful delivery: The council has achieved the successful delivery of CSG, it has outsourced 8 services, transferred 582 posts and set up a contract to improve services. In addition, the new service arrangements provide a guaranteed saving of 125.4m over a 10-year period. This project provides a platform and incentives to improve customer services to residents, increase service efficiency and adapt for future challenges and opportunities. Project management: This was a large and complex project, which involved a complex review and assessment of the council s operating model, market reviews and appraisal of options, complex procurement and commercial

24 activity, and a large-scale impact on staffing. The project has delivered, the contract is live and plans are in place to realise significant benefits. Benefits: As with DRS, the overall benefits unlocked by the NSCSO project were greater than those forecast at earlier stages of the project; but additional time and resource was required to deliver the project pushing back the implementation date and increasing costs. However, the NSCSO project has delivered a number of benefits which will now be delivered through the CSG project: increasing customer satisfaction; improving online services; investing in new technology; providing new skills, capacity and systems to improve back office services. Managing business as usual: This was a lengthy and complex project, with additional delays arising from legal challenge. A significant proportion of employees providing these services were fixed-term or agency; the commitment of employees and managers to maintain effective service delivery during this time of change and uncertainty is recognised and highlighted. Our initial lessons learned review has also identified areas for improvement in future: Engaging with residents: As set out above (9.7.2) the engagement and consultation process was subject to significant challenge. This will be used to inform future change projects or policy changes. Communications and staff engagement: There were significant challenges throughout the judicial review process in keeping staff informed at a time of considerable uncertainty. It is important that the communications plan is subject to check and challenge by the wider project team membership to ensure that it is fit for purpose, up-to-date and uses the most effective methods. Contingency planning: The process of going through a Judicial Review (JR) led the council to conduct detailed contingency planning. Due to the uncertainty regarding timeline, during the JR, the planning was complex and stretched across the council. Lessons learned from this period included the importance of clear and consistent communications to all stakeholders on the status of contingency planning to avoid uncertainty, and for the activity to be appropriately resourced. 10. LIST OF BACKGROUND PAPERS Cleared by Finance (Officer s initials) Cleared by Legal (Officer s initials) JH JF