Meeting documents

1 THE ISSUE

1.1 The Council Executive on 15 January 2003 appointed HBS Business Service Group Ltd (HBS) as preferred supplier with whom to negotiate a long-term strategic partnership.

1.2 The Executive delegated the negotiation of the agreement to the Resources Director in consultation with the Executive Portfolio holder for Resources. The Executive resolved that the draft agreement should then be reported back to the Executive.

2 RECOMMENDATION

2.1 The Resources Director in consultation with the Leader of the Council be authorised to complete the Partnership agreement with the Preferred Partner and make the final agreement on the outstanding issues detailed in section 11.

2.2 The Executive agree category A projects and category B projects (subject to budget) for delivery and that category C projects go forward to the Partnership Board for consideration using the procedure outlined in section 7.

2.3 The Executive agree to the Partnership Board terms of reference as detailed in section 5.6 and that the Chief Executive be authorised in consultation with the Council leader to make appointments to the Partnership Board.

2.4 The Solicitor to the Council and the Corporate and Community Law Team Manager be authorised to execute all documentation necessary for the completion and implementation of the contract, subject to successful conclusion of the outstanding issues at paragraph 2.1 and section 11.

3 FINANCIAL IMPLICATIONS

3.1 When the Council agreed to invite proposal for the partnership it agreed a budget for the delivery of the project of £500,000 and agreed to earmark a further £100,000 from balances to progress the project to completion.

3.2 The initial £500,000 has to date been almost fully used and will be fully expended by the time of prospective transfer, end July 2003, and it will therefore be necessary to draw on the previously earmarked £100,000 to ensure that the project is adequately resourced for the transition period. Final costs will be reported at a later date.

3.3 It would be sensible to set a target of £150,000 savings per annum from 2004/5 from the Business Improvement Service in order to ensure this expenditure is recovered.

3.4 The Financial Implications of the Partnership itself are detailed in full in the report in section 7.

4 THE STRATEGIC PARTNERSHIP PROJECT

4.1 The Council embarked on the procurement process in April 2001. In January 2002, following a period of pre qualification and market testing the Council agreed that it should invite three bidders ITNET, SX3 and HBS to make detailed proposals with the aim of forming a long-term Public Private Sector Partnership. It acknowledged that although this would involve the outsourcing of some services that this should be part of a Partnership where the selected company and the Council developed an arrangement making the best use of their respective strengths. It also acknowledged that in the current constantly changing environment that the Partnership should be capable of adapting to this change and helping the Council deal with this.

4.2 The Council followed a unique process acknowledging that it needed to be innovative in its approach. It set a clear set of objectives for what it wanted to achieve and principles for how it wanted to work in the future. These have underpinned the whole process being a key part in directing the bidders to delivering what the Council wanted to achieve; assessing the proposals made; guiding the negotiation of the agreement and ultimately informing the future operation of the Partnership.

4.3 The objectives led the companies towards looking at how the Council could translate its business needs through technological and process changes into improved service. It also challenged the companies to look at the impacts of their proposals across the whole Council not just at those services, which they were proposing to transfer. The Objectives agreed are:

· Improve service provision to residents and customers

· Equip the Authority to deal readily with change, and to manage and mitigate risk

· Improve the Councils ability to develop appropriate Information Systems and Strategies

· Improve the efficiency and effectiveness of all services

· To ensure that substantial and measurable value is added to those Council services which are included in the partnership

4.4 The Principles were agreed to set the tone and communicate the type of arrangement that the Council wanted to develop. They are as follows:

4.5 In January 2003 the Executive received the results of the assessment of the three proposals and chose to appoint HBS Business Services Ltd (HBS) as preferred supplier. This assessment was a three-stage process looking at all aspects of the bidder companies and their proposals. The objective was to know as much as possible about the company and their proposal before negotiations began on the offer, recognising that for a long term arrangement investment in the pre contract stage would lead to a far more robust agreement.

4.6 HSB had carried out extensive research of the Council and engaged fully with the Council and with a wide range of services and demonstrated the potential to make a good long- term partner.

4.7 The Executive acknowledged that there were still some areas in the proposal that it wanted further comfort on so while it delegated the negotiation of the deal it required the draft agreement to be reported back to this meeting.

4.8 Since that appointment the Council and the company have been working very hard to develop the Partnership. The description of the deal in the remainder of the report is the culmination of that work.

5 THE BUSINESS IMPROVEMENT PARTNERSHIP

5.1 The agreement is based around providing additional organisational capacity and expertise to deliver improvements in services across the council. It is based around a process for developing and delivering projects, which have been prioritised by the Council and worked on jointly by the partners.

5.2 The Partnership framework has been developed through the bid period and the negotiation period to address the Council's needs. It acknowledges that the Council has a wide range of objectives to achieve and that there are a wide-range of solutions available which need to be evaluated and then implemented in the best way in which to maximise benefits in all areas.

5.3 Underpinning the Partnership are three services,

· Information Development Services (IDS) - The Council service transferring largely as is at the moment. This will provide a major part of delivering the projects the Partnership will make happen.

· Payroll Service which with the transfer of some devolved Human Resource administration staff will be developed into a "People's Service" dealing with payroll and other administrative Human Resource processes. Streamlining the processes in this area will produce efficiencies that will help to support the additional costs of the partnership.

· The Business Improvement Service - A new service based around the Current Business advisers with the addition of HBS management and an annual commitment to additional consultancy within the core price of the deal. This will support and provide a resource to the whole Partnership Framework.

Each of the services is an integral part of the overall deal

5.4 The IDS and the Payroll HR Admin service have Service Level Agreements (SLA's) setting out the levels of service that the Council is paying for. The SLA's set out the definition of the services to be delivered and specify key indicators (KPI's).

5.5 The Business Improvement Service is designed specifically to do the following:

5.6 The whole framework will be linked into the Council's governance arrangements. Each project will need a Council sponsor and financial expenditure will be within the Council's Financial Plan and budget. Projects will be audited and subject to scrutiny and VFM assessments on an ongoing basis. The Partnership Board will be a joint board with high- level membership from the company and the Council. The Partnership Board will have the following roles:

5.7 The framework introduces a structured process for the development of Projects, which has three stages. Each of the stages will be reported to and commissioned by the Partnership Board ensuring that the resource is being utilised effectively.

· Project Brief - a description of what the project is seeking to do and sufficient information to decide whether it is worth doing more work on. Does it fit with the Council's objectives?

· Feasibility study - if the project were to go ahead, what things would need to be in place, how would it work, what sort of costs would be involved.

· Full Business case - Including an Implementation plan, funding, contingent decisions needed, review mechanism, payment terms

6 PROJECTS

6.1 There are a range of projects offered by the company to kick-start the Partnership and to demonstrate the value it can bring. Much work has also been done on the Projects the Partnership will deliver through its rolling programme. The Projects can be divided into three categories

Category A - Projects to be delivered by HBS as part of the deal where the company cover direct costs

· Meta storm E- Works - A business process management tool licensed for use throughout the Council

· E- Forms - Supply of number of electronic forms for use by the Council

· Executive Work Programme - Supply and installation of a tool for managing and monitoring the flow of Council decisions

· Planning Application tracking - Supply of a online tracking tool for Planning application

· Web content management - Supply installation and configuration of replacement of content management system for Council web site.

· Finance Management system - analysis, process redesign and preparation for a subsequent project to roll out purchase ordering, internal trading and invoice handling functionality and deliver efficiency savings.

Category B - Projects offered by HBS as part of the deal which they believe will add significant value to the Council and which have been developed to the point where they are ready to go. Final approval of these projects will be subject to the availability of Council budgets, albeit all are included within current plans.

· Upgrade to HR/ payroll system - Current system needs to be replaced as support ends April 2004. Project to implement upgrade

· Contact management - Supply of an appropriate Contact management tool for the Council

· Scanning of Plans - A project to enable the electronic handling of plans (planning scanning) to enable customer access and improve processing times.

· Managed Print Service - rationalised approach to printing in Council

· Procurement - An additional resource and plan to help the Council realise significant savings in its procurement of goods and services

Category C - Other possible projects, which will form the basis of the Business Improvement Services initial workplan. Those are in no order of priority. These listed are in addition to existing commitments and work in progress, which the company will complete and in many cases offer enhancement to:

· Knowledge/data management

· Call centre

· Corporate GIS (Data mapping systems)

· Employee, Citizen, Member portals

· Interactive web site

· Systems integration

6.2 The recommendations ask the Executive to approve category A and category B projects for delivery and to agree that category C projects go forward to the Partnership Board for consideration using the procedure outlined in paragraph 5.7.

6.3 Category C projects are the initial series of projects which the partnership will be initiating in the future. Two issues arise here. The first is a need to be clearer about what we mean by a project in this context. Whilst this definition may be revisited at any time, it is suggested that the following definition is used to decide what projects should be worked on by the partnership Business Improvement Service. Those that:-

· Are intended to improve service performance; and

· Are technology-driven; and/or

· Involve BPR and process design; and/or

· Require pump-priming; and/or

· Have cross-service implications and/or opportunities

6.4 The next issue is deciding on what basis the Partnership Board will prioritise the work. The Council set objectives for the partnership which have been drawn into the agreement which provide the basis for this and they are as follows

· Improvement in service provision to residents and customers

· Assistance to the Council to deal readily with change

· Improvement in the Council's ability to develop appropriate Information systems and Strategies

· Improvements in the efficiency and effectiveness of retained services

· Improvement in the efficiency and effectiveness of transferred services

· Deliverability

· Cost

6.5 Whilst the criteria again will continue to be debated and changed, it is suggested that these will suffice to guide the board in its initial stages.

6.6 Council will of course continue to have the final and ultimate sanction over which projects are funded through its financial planning and budget setting process.

6 FINANCIAL BASIS OF DEAL

7.1 The Partnership has been negotiated on the principle that it will cost the Council no more than the existing relevant service budgets. The unitary charge is based around these with an adjustment for future client costs. The following sections break the financial deal into its constituent parts.

8.2 The agreement covers the whole range of performance issues. It is based around the Principle that if there are problems the first response will be to meet and agree how they are going to be rectified. As detailed above there is a Price Performance mechanism linked to key performance measures and there is an annual review process to pick up key problems. The Company will also take a full part in the Council's performance management process producing monthly reports on performance and issues.

8.3 The Contract will include protections for both parties should the arrangements break down for whatever reason. These protections include arrangements to ensure minimum disruption to services and to protect the Council from any unreasonable costs.

9 STAFF IMPLICATIONS

9.1 The Partnership proposal involves the transfer of 70 (to be confirmed) staff to the employment of HBS. These staff are from the Council's Information Development Service (IDS), Payroll and some Human Resource Administration staff currently working within services.

9.2 The transfer of staff will take place under the Transfer of Undertaking, Protection of Employees (TUPE) Regulations. The Company have also offered a range of additional protections to transferring staff. The following is a list of those issues covering the TUPE provisions and the additional HBS offer:

- Conditions of employment

9.3 An HR Framework is being developed between the Council and the Company. This is based around the principles of the Partnership that as far as possible there should be a seamless join between the Council and the Company. It works on the Principle that the culture of the Partnership should be compatible throughout its lifetime. The framework document is attached as Appendix B.

10 STAFF CONSULTATION

10.1 One of the principles of the Partnership has been that it should be based on confidence of all parties, the Council, the Company and staff. This principle has underpinned what has been an extensive programme of consultation and involvement.

10.2 Additionally the Council commissioned an independent ballot and survey of transferring staff to gauge the views of staff and to ascertain what issues remained as a concern to staff. Appendix C provides details on the main issues raised with a response showing how these have been or will be addressed. (The full results will be provided to the Executive as background papers). The Trade Unions have been given the opportunity to provide their views on this directly to the Executive.

11 TIME TABLE, TRANSITION AND OUTSTANDING ISSUES

11.1 The current timetable for the project is that the contract will be signed on July 23 with the agreement beginning on the 1 August.

11.2 The negotiations are well advanced but there are is still some work to be done on agreeing the final price, the values in the Price performance mechanism and the detail of the Risk and reward mechanism. Additionally contractual negotiations are continuing on the termination provisions and warranties and indemnities. The recommendations in the report delegate final sign off on these issues to the Resources Director in consultation with the Council Leader.

11.3 At the time of writing the most significant outstanding issue related to price. Council Officers have stressed the need for the annual price to be within existing budgets but there is a difference between the two parties on this issue at present. Additional information has been provided to HBS to ensure them of the adequacy of existing budgets and further urgent negotiation will take place in w/c 30 June 2003 so that an update may be presented to the Council Executive.

11.4 HBS will themselves be managing transition issues particularly around the formation of the HR admin and Payroll service. This will be worked on with the Council as the retained service is also developed.

12 CLIENT MANAGEMENT

12.1 The transition plan will also build into the future Client management arrangements by the Council.

12.2 Because of the way the Partnership has been constructed there will not be a need for a specific designated client team. There is some accountancy resource in the Council which currently carries out much of this work. The Head of Strategic Resource Planning has the role of IT client now and with some additional support internally and externally the financial and contract management parts of the Partnership will be covered. Any additional Council costs will be funded from within the deal. The Head of Strategic Resource Planning will support the Resources Director in her responsibility for the ongoing development and delivery of the Partnership.

12.3 The Performance management of the partner will in many respects fit into the Council's framework as detailed above in section 9.2.

13 CONSULTATION

13.1 The staff consultation is detailed in section 11 above.

13.2 The Resources and Customer Services Overview and Scrutiny panel will meet on 3 July 2003. Due to circulation dates it is not possible to incorporate their comments into this report and these will be reported separately.

13.3 This process has involved the whole Council, and a series of processes have taken place to engage them in both developing the solutions but also in understanding the deal that has been negotiated with HBS. This will continue into the transition stage.

This version was printed 30-Jun-03 3:32