Bedfordshire Council has told HBS it will terminate a 12-year, £250m outsourcing agreement on 15 August unless the supplier makes specific improvements to its services.
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The council said the move, in the contract’s fourth year, was necessary to make improvements demanded by the Audit Commission.
“Our legal advice is that HBS has committed actionable breaches. We have communicated very precisely the nature of the problems,” the council’s deputy chief executive, Jonathan Flowers, said.
HBS administers and manages IT systems for all of Bedfordshire’s key services, including its IT department, call centre, HR department, social services and education departments. Neither Flowers nor HBS would confirm which parts of the outsourcing contract were disputed.
Clive Seddon, IT partner at Pinsent Masons, said, “It would be surprising if the council had determined to serve a material breach notice if they had not decided to terminate.”
The council’s management began to report problems after HBS implemented a SAP ERP system in April 2003. The council failed to issue its accounts for 2003/04 before its legal deadline of 30 November 2004.
In its annual audit letter, the local auditor said, “The strategic partnership is not delivering improvements in services.”
HBS is contesting the council’s claims. “HBS denies that it has committed any actionable breach whatsoever. Furthermore, it is apparent that the decision to terminate the partnership agreement is being treated by the council as a fait accompli,” it said.
HBS has three other large outsourcing local authority customers – Lincolnshire, Middlesbrough and Milton Keynes.