Cornwall Council and BT to meet in court over botched outsourcing deal

Cornwall Council and BT will meet in the High Court in December 2015 as the council attempts to end its £260m outsourcing deal with the company

Cornwall Council and BT will meet in the High Court as the county council attempts to end its £260m outsourcing deal with the company.

The two parties are to meet in court in December 2015 after Cornwall Council announced it wanted to terminate the contract with BT, to which the company responded by filing for an injunction to stop the authority.

BT was contracted to deliver IT services, document management, payroll and telehealth and telecare services on behalf of Cornwall Council. The company also promised to create several new jobs in the county.

A spokesperson from Cornwall Council told Computer Weekly the authority considered BT to be in “material breach of this contract, having failed to meet its performance obligations in respect of ICT services or to achieve its commitments to create new jobs in Cornwall”.

“The council also considers that BT Cornwall has failed to deliver key projects effectively or on time.”

The divorce: Injunctions, fines and court dates

The council announced in June 2015 that it wanted to terminate its deal with BT following a Strategic Partnership Review published in April 2015, which criticised BT’s failure to fulfil the promises it set out in the deal.

“At present, of the guaranteed new jobs in Cornwall, BT has delivered less than a third of the figure promised and no additional jobs over and above the contractual guarantee, but which were committed to, have been created,” the review said.

BT was contractually committed to deliver a minimum of 197 jobs, 111 of them in the first two years, but the review found that only 35 jobs had been created.

According to the review, BT also committed to deliver a further 240 jobs, none of which had been delivered. 

The review found that, overall, the delivery of IT services had been “generally downward” with only 38% of service transformation targets being delivered.

In May 2015, the council fined BT more than £100,000 for contract failures and the council entered a standstill agreement in an attempt to facilitate negotiations to terminate the contract.

According to a council report published this month, two meetings took place between BT Cornwall’s senior management and senior council officers during this time, but they could not come to an amicable agreement

 In August, BT applied for an injunction with the High Court to prevent the council from terminating the deal.

The council report said that, after the August hearing, the court agreed to have an expedited trial, which will take place on 1 December 2015.

“The council wants to ensure that staff and councillors receive adequate support to enable them to deliver public services and that the taxpayers of Cornwall receive value for money,” the council’s spokesperson said.

“The council, therefore, provided BT Cornwall with notice of its intention to terminate the contract and bring the services in-house."

A BT spokesperson told Computer Weekly that, as it had “commenced legal action to ensure fair and proper handling of the issues which have arisen about BT Cornwall”, it would be inappropriate to comment on the situation.

The council spokesperson said that there were two likely outcomes to the hearing.

“Either the contract will continue or part of the contract will be terminated and services and relevant staff will transfer to the council,” the spokesperson said.

 If the council wins, it could claim damages and legal costs from BT, however, should BT win, the council will be required to pay the company’s legal costs.

A rocky start

When the 10-year deal was originally signed in 2013, it had already caused a degree of turmoil. The original proposal for the deal included an £800m strategic partnership with BT, but it was put on hold in 2012 after councillors against proceeding until the contract had been debated and approved by a meeting of the full council. 

Later that year, the council voted on several revised versions of the deal and ended up with a scaled-down version, which involved transferring fewer council staff and services than originally planned, but still included the transfer of 300 staff from the council to BT.

The deal was intended to deliver a range of benefits, including cost savings of £17.6m over the contract period, providing new jobs, and improving service delivery.

Some telecare services are also provided under the contract, and the council’s spokesperson said the council did not anticipate any changes to those services and that it “expects BT Cornwall to to inform service users of any changes and will work hard to ensure that there is minimal disruption”.

The telehealth parts of the deal are delivered in partnership with Cornwall Parthership NHS Foundation Trust and Peninsula Community Health CIC. The dispute does not involve the telehealth services, the council’s spokesperson said.

Third strike for BT

This is not the first BT outsourcing deal with local government that has come to a premature end. In 2013, Sandwell Council issued BT with a 30-day termination notice on its 15-year £300m outsourcing contract, six years into the deal.

Last year, Liverpool City Council also cancelled its £70m-a-year IT joint venture with BT and decided to bring services back in-house. 

Read more about Cornwall and BT’s outsourcing saga

Cornwall County Council rejects privatisation of services and opts for BT outsourcing plan. 

Cornwall County Council votes for scaled-down BT joint venture.

Read more on IT outsourcing

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