County councils to enter new shared services agreement

9 May 2007
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10 May 2007 | Antony Barton and Paul Snell

Northamptonshire and Cambridge-shire County Councils plan to work together on a shared services project covering finance, HR and procurement, after withdrawing from another project to avoid breaking EU rules.

Caroline Stanger, who is directing the programme for both councils, said the project will initially focus on sharing transaction services. She confirmed the councils were hoping to create a formal joint venture with a commercial body to develop a programme that could eventually be used by other public bodies. Cambridgeshire County Council has budgeted to save £1 million through the project in 2008-09, she added.

The councils had hoped to enter NHS Shared Business Services, a joint venture between the Department of Health and outsourcing firm Xansa. But although the framework precludes the need for a tendering process, it does not specify whether councils can use it to buy, so they withdrew. The contract was drawn up before new EU framework directives and legal bodies warned the councils they could be open to challenge.

Stanger said just because the two councils had rejected the option, it didn't mean others should do the same.

She told SM: "Because the EU directives haven't been tested in court, there is no precedent, so nobody is saying that if we had bought through that contract it would have been illegal. Our advisers could not inform us that it would not be challengeable."

Paul White, head of procurement at Northamptonshire County Council, denied the experience had dented confidence within his department: "I'm delighted that the council took heed of the correct procurement rules and it's actually helped morale in procurement in that sense."

Meanwhile, auditors have criticised the purchase of an IT deal at the centre of Swansea council's e-government scheme.

Resource@Swansea had been designed to use IT to improve purchase-to-pay, strategic sourcing and HR systems at the council.

It was expected to cost around £159 million over 10 years, but savings from strategic sourcing were expected to be over £17.3 million, and purchase-to-pay over £7 million. Yet so far only £1.4 million and £2.6 million respectively have been achieved. It is now also expected to cost an extra £2.5 million.

Paul Smith, chief executive at the council, admitted there were "serious weaknesses" with the project.


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