The Audit Commission has given its approval to the way Somerset County Council set up a 10-year £400m IT contract with IBM.
The council has blocked journalists' attempts to disclose details of the contract, after IBM said any disclosure would break commercial confidentiality requirements.
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But the Audit Commission report has cleared the process that led to the creation of Southwest One, a joint venture company initially set up between Somerset County Council, Taunton Deane Borough Council and IBM.
The Avon and Somerset Police Authority joined the contract as a partner soon after it was set up.
The Audit Commission concluded that the Council's procurement and governance arrangements were "robust" and that "the councils have identified and appropriately assessed the main service and financial risks associated with the contract".
The Council said the Commission recorded its highest level of confidence in respect of the Council's risk management arrangements, and stated that "the present contract management arrangements provide a good starting point for managing a complex contract".
But the Commission pointed out that performance needs to be monitored in order to achieve the cost reductions, increased efficiency and improved services that Somerset County Council and Taunton Deane Borough Council aim to deliver through Southwest One.
The Commission says the £200m savings target from the Joint Venture is achievable.
Councillor Dave Greene, Somerset County Council's portfolio holder for resources and finance, said, "This report, from a highly regarded and independent body such as the Audit Commission, should give everyone in Somerset confidence in what Somerset County Council and Taunton Deane Borough Council have done and are achieving through Southwest One."