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Cheshire councils face complaints over proposed 12-year ERP contracts

The Crown Commercial Service confirms two complaints about a proposed joint council IT procurement framework – offering contracts up to 12 years in length – have been raised

Whitehall procurement chiefs are investigating complaints about a proposed framework agreement that could see local authorities across Cheshire embark on IT contracts lasting up to 12 years.

A pre-tender notice, published on 11 August 2016, shows Cheshire East Borough Council (CEBC) wants to establish a four-year framework agreement to “design, build and implement” an integrated finance, human resources (HR) and payroll system in partnership with Cheshire West and Chester Council.

The initial value of the framework is stated as between £16m and £20m. This figure could rise to £38m, the pre-procurement notice states, should the borough councils of Warrington and Wirral opt in to the framework at a later date too.

Under the proposed terms of the single supplier framework, participants will be permitted to enter into call-off contracts lasting a maximum of 12 years.

The mooted contract length has raised eyebrows in IT suppliers circles, given how at odds the proposals are with the government’s ongoing pledge to make large and lengthy IT public sector contracts a thing of the past.

Meanwhile, a spokesperson for the Crown Commercial Service (CCS) confirmed two complaints regarding the proposed framework have been raised through the government purchasing agency’s Mystery Shopper scheme, and are being investigated.

A CEBC spokesperson defended the move to Computer Weekly, pointing out the use of 12-year call-off contracts is permitted under European Union (EU) public sector procurement rules, while framework agreements exceeding four years in length – which this one does not – are prohibited.

The dirty dozen

Speaking to Computer Weekly, Chris Farthing, managing director of public sector procurement consultancy Advice Cloud, said offering a maximum 12-year contact term makes no sense when it comes to purchasing technology products.

“A 12-year call-off period is complete nonsense, because who can predict what their service requirements will be in three years, let alone 12,” he said.

“Why would anyone want to lock themselves into [technology products] for that long? Have user needs even been considered?”

Roger Newman, a senior partner at G-Cloud consultancy DeNové, shared similar misgivings with Computer Weekly, before pointing out how vastly different the IT landscape was a decade ago compared with today.

The contract notice further states that, “owning to the size, nature of the services and to help ensure the best service continuity”, the framework will not be divided into Lots, which Newman cited as another cause for concern.

“The contract regulations clearly state a contract has to be broken up into lots and, if it’s not, a good explanation must be provided,” he said.

“The councils’ claim the contract is too big and complex to do that, but that is precisely the reason why public sector organisations are advised to break such contracts up into lots to protect against them embarking on big, complex procurements.”

Counting out G-Cloud

Computer Weekly understands at least one of the CCS complaints touched on why such a framework is needed, given the services the councils are seeking can be purchased with greater ease and efficiency through the G-Cloud procurement hub.

In a statement to Computer Weekly, a CEBC spokesperson said the council considered using G-Cloud, before concluding it could not cater for the “specific requirements” of the project.

“This framework will be large and complex with a number of call-off contracts, overall worth up to £38m,” the spokesperson said.

“The wish is to procure on the basis of supplier dialogue, over the specific elements of the project and have call-offs up to 12 years in duration. Hence the decision to undertake a dedicated OJEU procurement using the competitive dialogue procedure.”

Inside central government, departments must pursue a “cloud-first” strategy when procuring IT software and services. Local governments, however, are strongly encouraged to follow similar principles, but are not mandated to in the same way.

For this reason, a Cabinet Office spokesperson said the council is within its rights to snub G-Cloud, despite the cost-savings it can provide.

“Local authorities are free to establish their own procurement frameworks, as in this case,” the spokesperson said. “Our figures show G-Cloud is, on average, proving 38% cheaper than like-for-like IT services.”

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