Councils' private sector partnerships risk failure due to lack of crucial in-house skills

Local government organisations are putting their outsourced IT contracts at risk by not retaining enough skills in-house to...

Local government organisations are putting their outsourced IT contracts at risk by not retaining enough skills in-house to manage the relationship and the contract effectively.

That was the finding of a report from local authority IT managers group Socitm and public sector accountancy organisation Cipfa.

The report into private sector partnerships, published last week, said, "We have found many examples where the council found that its initial view about the client team was unrealistic, the team being just too small, or, amazingly, in some cases non-existent.

"There is a strong tendency to underestimate the amount of contract management work to be done."

Martin Greenwood, programme manager of Socitm Insight, the organisation's consultancy arm, which produced
the report, said some public sector bodies were "unbelievably naive" about the skills they need to retain in-house to manage the relationship with the private sector IT partner. He said in some cases councils dedicated a half-time role to running the contract.

"It is not simple to balance the needs of the organisation and keep a positive relationship with the supplier. You need a lot of nous and experience to handle it," said Greenwood.

The report recommended that councils "closely question the motives of those existing employees who do not want to work for the commercial partner and seek a client role".

Greenwood explained that some people who do not transfer are seen by the supplier as "misfits", yet councils trust them with such a critical role. "This reflects a lack of understanding of the real importance of IT in service improvement," he said.

The report said skills for managing contracts and relationships are rare and advised councils to recruit from outside if skills are not available internally.

Effective due diligence before signing IT partnering contracts is also a problem for councils, the report found. "Our research shows that due diligence is not done well," it said.

"Many councils are content to leave the due diligence process to their supplier. We think this approach carries risks for the council if the supplier does not do the work diligently."

Greenwood said pressure from council members or chief executives to sign partnering contracts before a deadline created pressure to cut corners on due diligence.

"It is a mistake not to realise how important due diligence might be. Councils can be faced with unexpected costs after the contract is signed if it is not done properly," he said.

The report also found there were too few attempts in partnering contracts to motivate suppliers in a positive way through bonus payments for outstanding performance, as opposed to penalising contractors through tightly enforced service level agreements.

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