Amey ends £104m council deal amid profit shortfall

6 July 2005
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07 July 2005 | Rebecca Ellinor

Amey has pulled put of a 10-year deal with West Berkshire Council after only three years because it had not made the expected profit.

The local authority is to resume responsibility for all its support services after the £104 million contract came to an end last week.

In 2002, West Berkshire outsourced services including customer resources, administration, HR, highways and social services call centres to Amey.

The deal had the option to negotiate for a further five years taking the price to £168 million.

However, in a joint statement issued on 20 June, both parties said they had agreed to terminate the partnership from 30 June.

It stated: "It became clear that the original objectives for the partnership, set by both the council and Amey, cannot easily be realised."

An Amey spokesman told SM: "Amey has not experienced the level of business growth expected at the outset, nor the returns."

But he declined to discuss the reasons or the returns expected.

However, Peter Howarth, chief executive of the Society of Procurement Officers in Local Government, said: "If that's the reason, it is not a valid excuse. The company should be looking at ways of making the contract work.

"If the private sector enters into a contract with a local authority aware of all the facts, it should be duty bound to complete it.

"It's very unfortunate when this happens because it puts partnerships in a bad light."

Howarth said the local government community deserved an explanation from both sides.

The council said Amey had made procurement savings and delivered £11 million of technology investment, including a customer contact centre.

Amey, which has a number of other council contracts, claimed: "There will be no effect on other local government work."

Its largest deal is a £350 million partnership with Hertfordshire County Council to deliver highways maintenance and services.

SMjul2005

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