IBM seeks to stop council divulging £400m contract details

IBM, the world’s largest IT services company, has sought to stop Somerset County Council from divulging important contract details on a £400m outsourcing deal.

For 20 working days each year the council is obliged under the Audit Commission Act to disclose accounts information from the last financial year including contracts, invoices, receipts, and other information, to local electors or anyone paying business rates in the area.

But IBM is attempting to prevent the council disclosing full information about the contract, following requests for details by journalists at broadcasting company ITV West. They have been investigating the deal for months. 

The contract is the first of its type. It brings together two public authorities and a police force into a “strategic partnership” organisation, which delivers IT, finance, HR, property procurement and customer contract centres.

IBM is the majority shareholder in the organisation, dubbed SouthWest One, which is also formed of Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Constabulary. A contract between the four parties was signed in the early hours of a weekend last September.

The council said that “very late in the day” it received a request from IBM and SouthWest One for material from the contract to be treated as confidential. IBM cited Regulation 30 of the Public Service Contract Regulations 1993 – these are the regulations applying the European law under which the contract was let.  

IBM’s approach to the council is likely to renew criticisms of excessive secrecy over the deal. The MP for Bridgwater, Conservative Ian Liddell-Grainger, told Parliament in March 2008: “SouthWest One is an outfit born in secrecy and reliant on secrecy.”

There was an “unprecedented level of commercial confidentiality” during the procurement, according to a  report by Dexter Whitfield, director and professor at the European Services Strategy Unit, for trade union Unison,

The council had planned to give a copy of the IBM contract to journalists at ITV West, based in Bristol. But the council withheld the information from them in line with IBM’s request.

ITV West says it will go to court if its access to the documents continues to be denied.

Somerset said it was obtaining its own legal advice “as quickly as possible” on whether to release the information. A council spokesman told Computer Weekly that if it wrongfully discloses the information it may face legal action from IBM.

But any legal action by IBM would be highly unusual – because the supplier is a partner of Somerset County Council in the SouthWest One joint venture.

ITV West had sought the disclosure of the contracts under the Audit Commission Act which is more powerful than the Freedom of Information Act. The council says it needs advice on whether the legislation cited by IBM over-rides the disclosure requirements in the Audit Commission Act.

The withheld information includes payment arrangements, the service credit mechanism, the financial model, and the Joint Venture Agreement between IBM and the three public authorities.

An IBM spokesman said: “It is IBM policy not to comment on client specifics.”

Critics of the SouthWest One deal including some local councillors are concerned the main benefits will not be achieved. They want genuinely independent advice on whether the deal is too risky.

Somerset officials hope the contract will save about £200m – about half the total cost. They also hope the savings will fund a SAP-based CRM project which is due to be rolled out across the police and the two local councils.

ITV West’s “West Eye View” is due broadcast a half-hour documentary, “Public Money Private Gain”, on the IBM deal on Thursday at 7.30pm.


BBC blog comment on the little-known Audit Commission Act:

“If you want to get really detailed financial documents from your local council, there is a much more powerful tool than the Freedom of Information Act – but blink and you may miss the chance to use it.

“It’s the Audit Commission Act in England, which gives you the right to see the accounts and all the accompanying financial documents for the council’s audit. In Scotland it’s the Local Authority Accounts (Scotland) Regulations 1985; in Wales the Public Audit (Wales) Act 2004; and in Northern Ireland the Local Government (Accounts and Audits) Regulations (NI) 2006.

“But it only applies for a short period each year. You’ve got to know when that is, and strangely enough councils don’t seem to give it enormous publicity.

“Now the Orchard News agency has performed the valuable service on its website of collating the relevant dates for many different councils.

“This is a rarely used public information right. Some time back I produced a documentary for Radio 4 about access to information with my colleague Michael Crick. When as part of it he visited his local council Wandsworth in south London to look at their audit documentation, he found that he was only the second person to have done this in fourteen years.”


SouthWest One – website

SouthWest One – Computer Weekly article (similar to one above)

Police join pioneering SouthWest One deal – Somerset County Gazette

Speech by Bridgwater MP Ian Liddell-Grainger on SouthWest One – in the House of Commons 

Speech by Liddell-Grainger – June 2008

A short film on SouthWest One  – prepared for and shown at the SOCITM Annual Conference 2007

Unison on SouthWest One – union website