Somerset Council to bring Southwest One services back in house

Somerset County Council is seeking to bring key services back in house from Southwest One , the troubled joint-venture it created with IBM in 2007.

Council Cabinet member David Huxtable signed the decision to renegotiate the Southwest One (SW1) contract at 10.30 this morning, concluding a year-long deliberation over how the council could cut the cost of the loss-making venture. Somerset councillors had five years ago proposed cutting costs by outsourcing services to Southwest One. They now proposed cutting costs by taking some of those services back.

Somerset will take strategic human resources, finance and accounting functions back from SW1 and expects to sign a renegotiated contract later today, little over four weeks since IBM bailed the joint-venture out with a £10m loan.

Cllr. Huxtable and lead officer Robert Booth had considered cancelling the controversial contract altogether, according to documents detailing the negotiations. But they ruled it out because the contract imposed termination fees that were too high. The council also didn't want let down its joint venture partners.

SW1 was originally intended to deliver savings of £192m over 10 years. SW1 said last week it had delivered £15m of savings since the contract was signed in 2007. Council leader Ken Maddock told council members last week SW1 was "failing" and the contract should be more flexible.

Computer Weekly understands the council will tackle the IT elements of the contract in ongoing negotiations. SW1 had overseen an SAP implementation for Somerset and two other public authorities who joined its shared services venture with IBM. It has since posted consistent losses, including most recently a £31m loss for 2010.

The council said the value of the renegotiated contract was confidential. A report on which councillors based their decision to bring key SW1 services back in house has also been kept from the public. There is greater public interest in protecting the commercial confidentiality of the SW1 deal than in allowing scrutiny of the renegotiations, said Huxtable's decision today. The council has given no public justification for the rearrangement other than that it would make the contract "fit for purpose" in light of budget restrictions, as Huxtable said last February in the official report from which Somerset drew licence to renegotiate.

The Information Tribunal has meanwhile ordered the council to answer questions into an alleged conflict of interest over the original £0.5bn outsourcing deal.

Retired surveyor Roger Conway had raised the question of a conflict of interest with the Chartered Institute of Public Finance & Accountancy (CIPFA). It concerned the question of whether Somerset's then acting director of resources Roger Kershaw had been senior responsible owner for the £0.5bn deal while simultaneously holding responsibilities as council treasurer - known as the Section 151 officer, who represents the financial interests of local tax payers.

CIPFA rejected the complaint after a review that consulted Somerset. Its conclusions were published with redactions. Conway asked Somerset to state what role Kershaw had taken in formulating the council's response to the CIPFA investigation into his own conduct, as well as the report and its redactions. The council refused to reply, accusing Conway of vexatious, obsessive harassment of its officers.

Setting a precedent for vexatiousness under the FOI Act, a Tribunal team led by Brian Kennedy QC upheld Conway's appeal. It told Somerset Conway's request had "serious purpose and value" and ordered it to answer Conway's questions, which it said were neither vexatious, obsessive nor constituted harassment.

A Somerset spokesman said: "We answered these allegations when they first surfaced two years ago. Nothing has changed since then."