Last month, Barnet eye blogger Rog Tichborne was sent a confidential document in a stamped Barnet council envelope. He posted the document on his site.

He assumed the document had been sent to him by a Barnet council staff member who was concerned about the council’s methods for choosing big private companies as partners and service providers.

He was probably right. Only a day after he’d posted the document on his site, he received a letter from Barnet council’s legal department which threatened him with legal action if he didn’t take the document down.

It’s easy to understand why the council was and is so sensitive. For several years, Barnet council has been working towards commissioning-council status – as a commissioning council, the borough would outsource all council services to the private sector and administer contracts for those services, rather than provide services directly.

This has been a tremendously controversial project in Barnet. Staff aren’t onside: workers have taken several days of strike action so far in protest and were on strike again on Thursday 9 February to oppose the council’s outsourcing plans. An enormous amount of money has been spent (many say wasted) on consultants to advise the council on its outsourcing plans – that figure runs into the millions and does not, as Rog T says, include the council officer time and resources diverted to the project at a time when services to vulnerable and young people have been cut.

The public-private partnership projects that are developed by outsourcing councils are themselves extraordinarily costly – last year, for example, Barnet council agreed to set aside £750m for a private partner to assist in the delivery of a support and customer services project.

Questions have also been asked about the council’s ability to manage and control big private sector contracts. Last year, the council’s internal auditors found major irregularities in the council’s contracting processes – no tendering, no financial or CRB checking and no written contract with a major provider in at least one case. A series of reports by Barnet Unison found that the council failed to produce convincing business cases for its most expensive outsourcing proposals. Unison believes savings figures have been grossly overestimated and the failure of similar projects in other boroughs ignored.

So – the leaked document. I’m happy to link to it and have been doing so for some time. It’s been in the public domain for a while. As it should be. Like Rog Tichborne and many council bloggers, I believe these commissioning documents should be public. Council services (and the NHS for that matter) are rapidly being transferred to private providers with almost no consultation with service users and voters. The contracts private companies are winning are enormously lucrative – for them. The Mail’s investigation this weekend into McKinsey’s influence on NHS reforms gives people some idea of the extent of private sector influence on public sector “reforms” and the scale of the behind-the-scenes operations that protestors and opponents of privatisation are up against. Councils need to open their books up on some of these massive outsourcing deals, too.

If they don’t, they can expect to have their books opened up for them. Someone who is reasonably close to Barnet’s commissioning process leaked this document. It seems likely that others will be similarly inspired. Councils have no mandate for this outsourcing. As Vicki Morris of the Barnet Alliance for Public Services said to me in this New Statesman article on privatisation, mass-outsourcing is rarely part of local government election manifestos. Tendering sensitivities do not justify the lack of transparency which is the hallmark of these outsourcing deals. These are desperate times for council service users. Services are being cut and even eradicated as local government grants are slashed. It is vital that service users and council taxpayers have a complete view on these massive lucrative (for the private sector) outsourcing deals.

The leaked document appears to be a summary of the evaluation of bids for a contract from four big companies: Jacobs Engineering, EC Harris & FM Conway, Capita Symonds and Mouchel. The successful bidder will provide these services: trading standards and licensing, land charges, planning and development, building control and structures, environmental health, highways strategy, highways network management, highways traffic and development, highways transport and regeneration, strategic planning and regeneration, and cemeteries and crematoria.

The document serves two important purposes. It shows how the council scores bidders (and demonstrates a lack of robustness around its processes if this document is all there is), but, perhaps even more importantly, it tells us about the sort of money bidders claim they’ll save and the income they’ll generate. This sets a useful benchmark in measuring private sector performance. We’ll be able to look back and see if these estimates were realised.

What Barnet bloggers and I would really like, though, is for the council to sit down with us and go through this document and some of the points raised below before its report confirming bidders for the project goes to the council’s cabinet resources committee meeting on 28 February 2012.

Comment and assessment from other bloggers and analysts

I’ve been passed a series of questions and points from other council bloggers regarding these documents which I’m collating here. We’ll add to these as time goes on and continue to collate them here.

First points:

1. The evaluation is dominated by financial matters at the expense of the quality and sustainability of services.

2. The ‘confidence adjusted aspirational financial benefit’ is neoliberal babble. It is the reverse of the public sector comparator in PFI projects, which was designed to show the inhouse option as being poor value for money. Barnet council has invented a new means of enhancing the value of private contractor bids to ramp up their claims of savings. It is little more than a way of ensuring your favourite contractor wins – Capita’s bid was increased 27% by the ‘confidence adjusted aspirational financial benefit’.

3. The council should immediately publish an explanation of how the ‘confidence adjusted aspirational financial benefit’ was used to allocate the £0 to £5.7m adjustments to the bids. It appears to be very subjective, based on estimates and opinions, yet this scale of adjustment could have a major influence in determining the successful bidder.

4. The evaluation identified significant weaknesses in the two leading bids which were “below expectations” and “lack of evidence”, yet these are lost in the clamour to make even bigger savings.

5. It appears that management consultants had a dominant role in the evaluation, with council officers having a relatively minor role. This raises fundamental questions about their understanding of services, systems and the needs of Barnet citizens.

Second points:

This analysis (by a second council blogger) uses the paragraph numbers in the leaked documents as identifiers.

1.1 The business case envisaged 3 bidders to go to the final stage. Having only 2 does not provide sufficient competition to fully drive the price down. Neither bidder has demonstrated any capacity in so far as this bid is concerned. The capacity, or lack of it, will only be demonstrated once the contract is in place.

1.3 This paragraph is pure conjecture. One cannot forecast the financial future across 10 years. Barnet bloggers have already written about the effects of inflation on this contract. Inflation has been ignored and will be the largest variation to the figures.

headline 2023 drs outsourcing success

2 Only 6 bidders coming forward is quite a worry. That is possibly because of the vast range of very different services that have been bundled together which is beyond the capacity of most organisations and has caused some to hold back – if you haven’t run a cemetery before you will naturally be nervous about it.

The council still has to establish,. after further dialogue, if the outline solutions are likely to meet requirements. The risk is that after all the time and money that has been invested and the posturing about One Barnet being so marvellous that no-one will be brave enough to say “stop”.

Until the wording of the contract is agreed we do not know how “guaranteed” the “guaranteed financial benefit” will be. Very clever specialist city outsourcing lawyers will be watering the contract terms down for all they are worth.

3 Were the specialists who carried out the evaluation employees or consultants? Is one consultant going to choose what is, in effect, another one to outsource to? Have the specialists got experience in the work being outsourced or in outsourcing contracts and have they done this exercise before?

How many is “more than one person”?.

Were they all the same pay grade or will the boss have ruled and thus distorted the scoring? How was scoring consensus reached?

How far apart were some of the marks?

Did the lowest or the highest score get taken?

Who are the members of the DRS Project Board?

4. The highest focus is saving & making money pure and simple. The lowest is the transfer of risk (councillors often say they are going to do this by outsourcing ) so the risk is going to be largely with the council.

5. The council completely ignores its own scoring matrix for financial factors. The scores should be 1, 2.66, 4.33 and 6 and they aren’t. Not all the low scores are 1 and not all the high scores are 6 and the range of middle scores are 1.5 to 5 which is not what the matrix says.

6. The scoring matrix does not allow for half mark scores but they have been used.

The winning score of 64.5 out of 96 is an average of 4.03 which is only satisfactory. Hardly resounding support for outsourcing this size of contract.

Even the winning scorer has 7 marks that are 3 which are satisfactory but:

below expectations
lack significant content
unacceptable risk perspective
unacceptable approach to partnering, technical delivery and financial aspects.

That doesn’t sound good, does it?

The bidders have been scored on contract flexibility but the contract has not been issued yet.

How can you measure the satisfaction that Barnet residents are likely to experience before the service is provided?

45 out of 64 scores were 3 or below i.e. not completely satisfactory.

7. The effect of inflation can be read about on this blog post.

“Confidence Adjusted Aspirational Financial Benefit” is mere supposition.

Increased income will only be shared with the council. If it ran the service itself, the council would get all of the increased income.

The council displays a complete lack of confidence in the bidders’ figures for Aspirational Financial Benefit, so how can we be sure that any of their other figures can be relied upon?

The level of detail is not defined nor the knowledge of the evaluators.

Pensions costs of £450,000 a year have been deducted from the costs of running the service. It is not clear why. The funding rate is currently 28%. Do all the bidders envisage that they will have to pay this on top of payroll cost? Did any bidder exclude the funding of the pension shortfall?

8. Services are either new to the market or infrequently outsourced – therefore no one has any real idea what will happen.

Output specifications are based on current performance levels (many of which are unsatisfactory)

All flexibility and risk scores were acceptable but they are a 2 , nine 3s and two 4s which isn’t great – merely different levels of satisfactory.

9. Does Capita get the £10.7m partner fee (whatever that is) regardless of outcome?

In the business case (for this project), 88% of the cost savings and increased income are all scheduled to happen by year 4 – so why enter a 10 year contract?

9.4 EC Harris / FM Conway

So the profit share is a greedy one for the supplier.

Force majeure events will list all of the get-out clauses they are trying to write into the deal.

Only 6% of their fees at risk ( of £8m ) would leave them with £7,520,000 even if they were a disaster.

Why would another local authority be happy to see Barnet council making money out of them? Will any other council want to partner with Barnet? Chopping a figure from £6.5m to £650k is pointless because even that cannot be substantiated.

9.5 They may have scored highest or joint highest on 15 of 16 scores but when seven of the scores were a 3 it is a comparison of one bad score to another.

It seems that bidders get a profit share as well as a fee. The profit share rules are not clear.

If the evaluators are out by just 1 confidence point and the rating should instead be a 2, that would mean a confidence rating of only 10% would be used and 20% of the £19m Barnet share of sales of £96m (not much for Barnet?) would mean a reduction of £3.8m – taking the total assumed financial benefit down to 323m (only £400k in front of Mouchel).