The full written response (in blue) to UNITE questions raised at the Full Council meeting on the 20th July 2016.

Contracts with SCC – have we learned the lessons?

 

Statement on planned Learning Disabilities Service Outsourcing,

Somerset County Council, July 2016 to Dimensions (UK) Limited.

Executive Summary

X Flawed risk assessment

X Dangerous reliance on business growth

X Ignore market message of one bidder at your peril

X Dimensions contract losses

X High transaction and upfront contractual costs

X Questionable value for money

X Democratic accountability and transparency

X In-house option and capability sidelined at the start

X The public cost of ideology

X Objectives ignore reality and make sweeping assumptions

X User/community preference ignored

X Quality of jobs, terms and conditions

X Sustainability of a social enterprise model

X Overall impact on users, Council and economy not assessed

Recommendations

 

Flawed risk assessment

The nine-risk assessment (Appendix G) is fundamentally inadequate in scope, because it is focused on procurement. It excludes strategic, transition/rationalisation, democratic governance, contract management and important operational risks, such as quality of service, performance, financial sustainability, business expansion and employment policies. Furthermore, the allocation, likelihood and impact of risks, essential for good practice risk management, are absent.

ld-programme-ri

2016-july-11-item-5-paper-a-appendix-g-future-commissioning-of-services-by-learning-disabilities-provider-service

Response:

I do not accept that the risk assessment is flawed. The Risk appendix attached to the Cabinet report was a summary of the risk log kept by the programme. This document does follow the accepted practice referred to in the question. The risks are primarily focused on the procurement and establishment of a social enterprise but do also include other potential risk areas. The programme manager has briefed trade union representatives on the risks of the programme earlier this year and went through each risk in detail.

 

Dangerous reliance on business growth

It is a grave mistake to assume business growth and income generation. It has been an abysmal failure in 65 PPP Strategic Partnership contracts (£14.2bn value) and in care trusts and arms length companies. It was a prime reason why savings targets were not achieved by transnational and national companies or local non-profit organisations. There is also a common mistaken belief that there are multiple sources or ‘pots of money’ that a social enterprise will be able to access.

 

Response:

I do not accept this is a fair comparison to make. The decision taken by Cabinet was about creating new social enterprise, not a Public Private Partnership (PPP).  This social enterprise will be free to trade with the wider population, which will be an additional source of income to it, however in terms of business growth we have taken a cautious approach and only assumed new business in terms of replacing any business lost – i.e. a steady state. If the new social enterprise wins additional new business over and above this, this can only increase the savings value, not reduce it. 

 

Ignore market message of one bidder at your peril

The fact that the Council received only one bid is, in effect, a signal that the market considered the proposed contract to be too large and/or complex. It eliminates competition, because the Council does not even have a comparator improved in-house option as this was rejected two years ago. It places the Council in an uncompetitive and weak negotiating position, which gets weaker as the project proceeds, because the County Council needs Dimensions more than it needs the Council.

 

Response:

This has been a unique procurement in that stakeholders were very clear in their feedback in 2014 that the new organisation needed to be a social enterprise and that they did not wish to see the service “broken up”, which would have resulted in multiple smaller contracts.  This inevitably limited the number organisations that were likely or able to respond.  Although the number of organisations involved reduced during the process following the initial Pre-Qualification Questionnaire, at each point this was for reasons outside of the control of the Council. It was not as a result of the way the procurement was undertaken, beyond the contract size and social enterprise requirement.  It did not place the Council in a weakened negotiating position as, while a competitive procedure with negotiation was used, at the points at which these negotiations took place there were two organisations within the process.  The fact that only one bidder remained at the very last stage did not affect the pricing as this had already been submitted at the point at which the field was reduced to a single bidder, and the subsequent reductions referred to by Stephen Chandler at the Cabinet meeting were as a result of the clarification process.

 

Dimensions contract losses

Dimensions lost contracts in Doncaster and Windsor and Maidenhead in 2013/14 and Wakefield in 2014/15. It took a singularly financial approach to the Wakefield loss – “This contract was loss-making so the loss did not significantly reduce surplus” (Dimensions

(UK) Limited, Annual Report 2014-15). Somerset’s risk assessment does not even mention contract termination or contract renewal issues.

 

Response:

While the Council cannot comment on procurement exercises undertaken by other Local Authorities which are, by their very nature, commercially confidential it is not a cause for concern that an incumbent organisation has lost some business elsewhere.  Dimensions is a significant provider of services for customers with learning disabilities and autism nationally and will inevitably not retain every contract it holds when a retender happens, in the same way as not every incumbent provider retains a contract retendered by Somerset County Council.  The statement regarding the Wakefield loss has been taken from page 6 of the publicly available “Dimensions Accounts 2014/15”, and therefore it is neither a surprise or concern that a statement of this type has been made in a what is formal financial report.

 

High transaction and upfront contractual costs

We have seen no evidence of actual transaction and contractual costs, but they will be significant. They must include procurement costs up to contract signing (3%-5% of contract value); mobilisation of the contract and staff transfer costs; investment/rationalisation costs included in the contract; and annual contract management and monitoring costs (1%-3% of annual contract value).

 

Response:

The overall cost stated at the Cabinet meeting is based on activity levels supplied by the Council to Dimensions.  With the exception of the crisis support and employment support services the Council will only be paying for actual activity that is delivered by the new social enterprise at the rates including in the commercial submission from Dimensions.  These rates include all costs, including those referred to in Mr Behan’s question, which were rigorously checked by Somerset County Council finance staff. 

 

Questionable value for money

"I'm here to pay you to tell me how much I have to pay someone else."

“I’m here to pay you to tell me how much I have to pay someone else.”

“The bid received from Dimensions is forecast to provide a lower overall cost than the cost of continuing with the service provided by SCC, but in the early years of the contracts there is a higher profile of cost whilst the service modernises and undergoes transition to the social enterprise” (Cabinet report, 11 July 2016).

  1. This confirms the comparison with the current SCC service was not a like-for-like comparison between an improved in-house service and a proposal from an external bidder.
  2. It is not a rigorous and transparent value for money assessment.
  3. The lack of savings suggests the Council is funding the rationalisation programme.
  4. The attempt to fund a social enterprise provider is almost certain to lead to

increased public costs in the short term, opening the Council to challenge on

grounds of value for money, flawed options appraisal and/or fiduciary duty.

  1. In these circumstances, rationalisation will be ‘financed’ by cuts in services, job losses and changes to terms and conditions.

 

Response:

It does not mean that the comparison with the current SCC service was not a like-for-like comparison as suggested by Mr Behan.  All known costs, plus a realistic and objective assessment of potential in-house service modernisation costs, were included in this comparison which was rigorously undertaken in order to fully and objectively test the submission from Dimensions in comparison with continuing to retain the LDPS in-house.  The result of this work was that, based on maintaining not rationalising or cutting current levels of activity, it was concluded that moving these service to a new social enterprise was likely to result in a modest financial saving in addition to the broad range of other benefits outlined in the report to Cabinet for customers, carers, staff and the Council of transferring these services to a new social enterprise.  While we have always said that some customers may see changes delivered by the new social enterprise, this is because these changes would need to have been made regardless of the outcome of this procurement process, and we have repeatedly emphasised at every opportunity that the services the LDPS provides would need to evolve over time, in the same way in which they always have. 

 

While, as stated in the Cabinet papers considered on 11/07/2016, there is expected to be an increase in the costs in the early years of the contract, the whole life costs of the contract have been assessed as lower than continuing to provide these services directly.  In undertaking this comparison over the life of the contract the Council has not left itself open to challenge, and has fulfilled its fiduciary duty.

Mr Behan also makes reference to a “flawed options appraisal” and lack of “transparency”, and both of these statements are flawed in themselves.  Firstly, there is no new options appraisal to be flawed as the continuance of delivering these services in-house was explicitly rejected by Cabinet in February 2014 ,and the decision taken on 11/07/2016 was to award contracts, not reconsider this previous decision.  Secondly, in terms of transparently, we have shared significantly more information than would normally be the case where we are procuring a service.  Where we have not shared information it relates either to commercial aspects of the Dimensions bid and/or approach to bidding that could adversely affect either the new social enterprise or Dimension’s ability to retain or compete for future work locally and/or nationally given the competitive nature of the market for these services.  Included within this commercially confidential information is the detailed cost comparison between the new social enterprise and continuing to provide these services in house as, while we have stated the overall difference, the detailed information would immediately give the new social enterprise’s competitors an advantage in this highly competitive market.

 

Democratic accountability and transparency

Somerset County Council should be acutely aware that outsourcing erodes democratic accountability and transparency and limits effective public scrutiny of contracts and contractor performance. There is a danger that a social enterprise is not regarded as a ‘contractor’, but legally, financially and operationally that is precisely what it is. Comprehensive governance, contract management, monitoring and scrutiny arrangements must be put in place and costed.

 

Response:

The majority of Adult Social Care services commissioned by the Council, including those for customers with learning disabilities are already provided by external organisations.  The Council has significant long term experience of successfully managing a broad range of contracts for the delivery of these services with provided large and small, with officers accountable to members for their management.

 

In-house option and capability sidelined at the start

The Council was negligent in failing to prepare a forward-looking in-house proposal inclusive of a Public Service Innovation and Improvement Plan. This should have been jointly prepared by the Council, staff, trade unions, families, service users, carers and community organisations and would have cost a fraction of the procurement costs. It could have better addressed needs, improved capabilities, increased effectiveness and efficiency and enhanced public service operational delivery.

 

Response:

The Council has not been negligent as suggested by Mr Behan.  A comprehensive options appraisal was considered by Cabinet in February 2014 and this explicitly rejected the option of retaining the LDPS within the Council for a wide range of reasons which were stated in the Cabinet paper and appendices.

 

The public cost of ideology

The Cabinet and public appendices (11 July 2016) confirm the absence of savings and the potential increased costs. The continuation of austerity policies, increased poverty and inequalities are likely to increase demand for Learning Disability services. Meanwhile, Dimensions increased its ‘cash at bank and in hand’ by 28% to £18.2m in the 2014-15 financial year, which raises the question why it holds large reserves of cash?

 

Response:

As previously stated, while savings are expected to be modest, they are not absent as Mr Behan suggests.  In terms of the ‘cash at bank and in hand’ held by Dimensions that Mr Behan refers to, this statement is potentially misleading when quoted out of context.  As stated in the publicly available accounts to which Mr Behan refers, Dimensions prudently has a policy of retaining two months payroll costs in cash reserves, and on checking these accounts it is these reserves to which this figure relates with a statement in the text below the table that “Cash reserves represent approximately two months of payroll costs”.   

 

Objectives ignore reality and make sweeping assumptions

There is a fundamental gap between the Council’s aspirational objectives (Appendix A) and the second column that describes Dimension’s plans, proposals and statements as facts, but devoid of any awareness that they may not be achieved or fulfilled. It indicates a bonded and trusted relationship between Somerset managers and the contractor, which is usually regarded as poor procurement practice.

 

Response:

The Council’s objectives both accept the reality of the position we are starting from, and are rightly aspirational as to how we wish to see the way we support customers with learning disabilities developing in the future – anything else would be a disservice to them.  The appendix makes clear statements that “the proposal from Dimensions was evaluated as meeting” each objective in question, and then goes on to summarise what the proposals were.  This neither represents poor procurement practice, nor is there any inference in anything that is stated in this appendix that the Council will not be monitoring whether the proposals by Dimensions are fulfilled, as it will.

 

User/community preference ignored

90% of responses to the Learning Disability consultation in 2013 said they preferred

Option 1 – “Leave things as they are. The Learning Disabilities Provider Service would continue to be owned and run by the County Council” (Learning Disability Services in

Somerset: Summary of Responses, 2013). The percentage in favour would have been even higher if it had been presented as a ‘new, improved in-house service’ instead of a negative ‘business as usual’ approach. Responses to the transfer of all or some services to a new publicly owned trust or not for profit organisation (76%) or to other care providers (56%) would have obtained even less support.

 

Response:

The “User/community preference” has not been ignored, and the figure of 90% quoted by Mr Behan is factually incorrect.  The Business Case considered by Cabinet in February 2014 objectively compared a range of options, including the Council retaining the LDPS within the Council to alternatives, outlining both the benefits and limitations of each option.  The fact that this objective assessment did not reach a conclusion that Mr Behan agrees with does not make it invalid.  Neither did this option describe this as a ‘no change’ option as it clearly stated that “this would not be a ‘no change’ option as the Service would continue to need to change and develop over time in order to meet the challenges of demographic changes and the increased personalisation of services.”

 

Quality of jobs, terms and conditions

A common pattern is evident in outsourcing adult social care services irrespective of the organisational status of the contractor (for example, Your Choice Barnet). It consists of cuts in service provision despite assurances; new or increased user charges; job losses in direct provision and support services; downward regrading of jobs for existing and new staff; reduction in earnings; enforced switch from defined benefit to defined contribution

pension scheme.

 

Response:

At no point has there been any statement from the Council that the services that customers receive will be cut as a result of this decision.  While we expect services to evolve over time, this is something that would have had to happen anyway in response to customer demand.

For example, the new service specification for day time support that was coproduced with customers and carers in advance of the procurement is very clear that they wanted to see change in a service that was offering limited operating hours and activities, and was often delivering these in segregated environments.  In some parts of Somerset services are already being delivered in different ways that enable people to access other facilities that are available to the general public, and this is how we wish to see services evolve in the future.  However, it is our expectation that buildings will continue to play a part for the foreseeable future, particularly where someone needs specially adapted facilities.  While we can’t guarantee that these will be the same buildings as now in every case, where changes are made we want them to be for the right reasons, and for customers and carers to be involved throughout.

In terms of pensions the paper considered by Cabinet, clearly states that “The new Social Enterprise will become an Admitted Body of The Somerset Pension Fund. This will mean that SCC staff transfer to the Social Enterprise and will be able to continue their membership within the Local Government Pension Scheme.”

 

Sustainability of a social enterprise model

Outsourcing does not secure the long-term sustainability of the services. It does so only for the contract period and sustainability is highly dependent on contractor performance. What happens if the social enterprise fails to retain the contract when it is retendered and it is left with significant pension liabilities? Will there be clarity over the ownership and 4 revaluation of assets after the rationalisation programme is completed? These are

important issues that must not be lost in political expediency to outsource the service.

 

Response:

As previously stated we are not expecting services to be rationalised, and have taken a cautious approach to potential growth by assuming that business levels will be maintained rather than increased during the contractual period.  In terms of contract end all of the areas raised by Mr Behan have been considered and addressed where appropriate, and while it is difficult to foresee how both the local and national the health and social care market will look at the end of the contractual periods the new social enterprise will be providing services to meet customers assessed eligible needs under the Care Act (2014).  It is therefore possible that the Council will need to re-commission some of the services provided by the new social enterprise at the end of the contracts.  However, as the services delivered are expected to have been transformed during this period, with significantly increased numbers of customers commissioning their own services, any re-commissioning exercise would be likely to very different to the one undertaken to create the new social enterprise.

 

Overall impact on users, Council and economy not assessed

Outsourcing/privatisation of Learning Disabilities will involve 1,200 staff, the largest transfer undertaken by the County Council to date. Except for a very limited equalities impact assessment, there is no evidence that the Council has taken account of the potential impact on the Somerset economy. For example, job losses and reduced earnings will have a negative impact on local economies; the proportion of the rationalisation programme expenditure spent locally; changes in supply chains; and the extent to which Learning Disability surplus/profits remain in Somerset.

 

Response:

The paper considered by Cabinet on 11/07/2016 included a comprehensive equalities impact assessment in relation to the awarding of this contract.  As previously stated, we are not expecting services to be rationalised, and organisations were required to submit detailed proposals for organisational sustainability and supply chain management as part of their bids.  The submission from Dimensions was evaluated and scored well in this area.

In terms of any surplus generate the accounts of the new social enterprise will identify any surplus generated.   As a holder of the Social Enterprise Mark a minimum of 50% of the surplus generated will then be transferred to a designated reserve for the purpose of achieving the social objectives of the organisations.  In order to ensure that this money is put to the very best possible use, Dimensions will establish a Strategic Partnership Board to provide thorough local governance of how any surplus is managed. The Strategic Partnership Board will comprise of a selection of local stakeholders from the Board of the new social enterprise and Management, Customers and Families (Friends) as well as the Council, Clinical Commissioning Group and any other local stakeholders that the Board wants to involve. The Strategic Partnership Board will be responsible for designing a Social Value Return Plan for the new social enterprise, and then make grants from the designated reserve to support local social objectives that it identifies in-line with the Social Value Return Plan. The remaining reserves will either remain within the new social enterprise to support its on-going operation and investment in services, or be used to support the social objectives of the not for profit Dimensions group of organisations, of which it will be a member and which, due to the nature of both organisations, we expect to consistent with the social objects of the new social enterprise.

 

Recommendations

  1. Elected Members should call in the Learning Disability report to Cabinet, 11 July 2016.
  2. Adopt a much more rigorous negotiating position supported by critical analysis and

Gateway reviews at key stages.

  1. Immediately draw up an in-house Public Service Innovation and Improvement Plan to provide an alternative strategy.

http://www.european-services-strategy.org.uk/news/2016/statement-to-somerset-county-council-on-outsou/unite-somerset-essu-statement.pdf

Professor Dexter Whitfield

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Contracts with SCC – have we learned the lessons?

Contracts with SCC – have we learned the lessons?

 

Statement on planned Learning Disabilities Service Outsourcing,
Somerset County Council, July 2016 to Dimensions (UK) Limited.
Executive Summary
X.  Flawed risk assessment
X.  Dangerous reliance on business growth
X. Ignore market message of one bidder at your peril
X.  Dimensions contract losses
X.  High transaction and upfront contractual costs
X.  Questionable value for money
X. Democratic accountability and transparency
X. In-house option and capability sidelined at the start
X. The public cost of ideology
X. Objectives ignore reality and make sweeping assumptions
X.  User/community preference ignored
X. Quality of jobs, terms and conditions
X. Sustainability of a social enterprise model
X. Overall impact on users, Council and economy not assessed
✔Recommendations

Flawed risk assessment

The nine-risk assessment (Appendix G) is fundamentally inadequate in scope, because it
is focused on procurement. It excludes strategic, transition/rationalisation, democratic
governance, contract management and important operational risks,such as quality of
service, performance, financial sustainability, business expansion and employment
policies.Furthermore, the allocation, likelihood and impact of risks, essential for
good practice risk management, are absent.

Dangerous reliance on business growth

It is a grave mistake to assume business growth and income generation. It has been an
abysmal failure in 65 PPP Strategic Partnership contracts (£14.2bn value) and in
care trusts and arms length companies. It was a prime reason why savings targets were not
achieved by transnational and national companies or local non-profit organisations.
There is also a common mistaken belief that there are multiple sources or ‘pots of money’
that a social enterprise will be able to access.

Ignore market message of one bidder at your peril

The fact that the Council received only one bid is, in effect, a signal that the market
considered the proposed contract to be too large and/or complex. It eliminates
competition, because the Council does not even have a comparator improved in-house
option as this was rejected two years ago. It places the Council in an uncompetitive and
weak negotiating position, which gets weaker as the project proceeds, because the
County Council needs Dimensions more than it needs the Council.

Dimensions contract losses

Dimensions lost contracts in Doncaster and Windsor and Maidenhead in 2013/14 and
Wakefield in 2014/15. It took a singularly financial approach to the Wakefield loss – “This
contract was loss-making so the loss did not significantly reduce surplus”
(Dimensions (UK) Limited, Annual Report 2014-15). Somerset’s risk assessment does not even mention contract termination or contract renewal issues.

High transaction and upfront contractual costs

We have seen no evidence of actual transaction and contractual costs, but they will be
significant. They must include procurement costs up to contract signing
(3%-5% of contract value); mobilisation of the contract and staff transfer costs;
investment/rationalisation costs included in the contract; and annual contract
management and monitoring costs (1%-3% of annual contract value).

Questionable value for money

“The bid received from Dimensions is forecast to provide a lower overall cost than the
cost of continuing with the service provided by SCC, but in the early years of the
contracts there is a higher profile of cost whilst the service modernises and undergoes
transition to the social enterprise” (Cabinet report, 11 July 2016).
  1. This confirms the comparison with the current SCC service was not a like-for-like comparison between an improved in-house service and a proposal from an external bidder.
  2. It is not a rigorous and transparent value for money assessment.
  3. The lack of savings suggests the Council is funding the rationalization programme.
  4. The attempt to fund a social enterprise provider is almost certain to lead to increased public costs in the short term,opening the Council to challenge on grounds of value for money, flawed options appraisal and/or fiduciary duty.
  5. In these circumstances, rationalisation will be ‘financed’ by cuts in services, job losses and changes to terms and conditions.

Democratic accountability and transparency

Somerset County Council should be acutely aware that outsourcing erodes democratic
accountability and transparency and limits effective public scrutiny of contracts and
contractor performance.
There is a danger that a social enterprise is not regarded as a ‘contractor’, but legally, financially and operationally that is precisely what it is.
Comprehensive governance, contract management, monitoring and scrutiny
arrangements must be put in place and costed.

In-house option and capability sidelined at the start

The Council was negligent in failing to prepare a forward-looking in-house proposal
inclusive of a Public Service Innovation and Improvement Plan. This should have been
jointly prepared by the Council, staff, trade unions, families, service users, carers
and community organisations and would have cost a fraction of the procurement costs. It
could have better addressed needs, improved capabilities, increased effectiveness and
efficiency and enhanced public service operational delivery.

The public cost of ideology

The Cabinet and public appendices (11 July 2016) confirm the absence of savings and the potential increased costs.
The continuation of austerity policies, increased poverty and inequalities are likely to increase demand for Learning Disability services.
Meanwhile, Dimensions increased its ‘cash at bank and in hand’ by 28% to £18.2m in the
2014-15 financial year, which raises the question why it holds large reserves of cash?

Objectives ignore reality and make sweeping assumptions

There is a fundamental gap between the Council’s aspirational objectives (Appendix A)
and the second column that describes Dimension’s plans, proposals and statements as
facts, but devoid of any awareness that they may not be achieved or fulfilled. It indicates
a bonded and trusted relationship between Somerset managers and the contractor, which is usually regarded as poor procurement practice.

User/community preference ignored

 90% of responses to the Learning Disability consultation in 2013 said they preferred
Option 1 –
“Leave things as they are. The Learning Disabilities Provider Service would continue to be owned and run by the County Council”
(Learning Disability Services in Somerset: Summary of Responses, 2013).
The percentage in favour would have been even higher if it had been presented as a ‘new, improved in-house service’ instead of a negative ‘business as usual’ approach. Responses to the transfer of all or some services to a new publicly owned trust or not for profit organisation (76%) or to other care providers (56%) would have obtained even less support.

Quality of jobs, terms and conditions

A common pattern is evident in outsourcing adult social care services irrespective of the
organisational status of the contractor (for example, Your Choice Barnet). It consists of
cuts in service provision despite assurances; new or increased user charges; job losses
in direct provision and support services; downward regrading of jobs for existing and new
staff; reduction in earnings; enforced switch from defined benefit to defined contribution
pension scheme.

Sustainability of a social enterprise model

Outsourcing does not secure the long-term sustainability of the services. It does so only
for the contract period and sustainability is highly dependent on contractor performance.
What happens if the social enterprise fails to retain the contract when it is retendered and
it is left with significant pension liabilities?
Will there be clarity over the ownership and revaluation of assets after the rationalisation programme is completed? These are important issues that must not be lost in political expediency to outsource the service.

Overall impact on users, Council and economy not assessed

Outsourcing/privatisation of Learning Disabilities will involve 1,200 staff, the largest
transfer undertaken by the County Council to date. Except for a very limited equalities
impact assessment, there is no evidence that the Council has taken account of the
potential impact on the Somerset economy. For example, job losses and reduced
earnings will have a negative impact on local economies; the proportion of the rationalisation programme expenditure spent locally; changes in supply chains; and the extent to which Learning Disability surplus/profits remain in Somerset.

Recommendations

1. Elected Members should call in the Learning Disability report to Cabinet, 11 July 2016.
2. Adopt a much more rigorous negotiating position supported by critical analysis
and Gateway reviews at key stages.
3. Immediately draw up an in-house Public Service Innovation and Improvement Plan to
provide an alternative strategy.
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Audit Committee Public Question Time 28th July 2016

 

imagesHG59MX7M

This Question Relates to Item 7 Paper C Partial Audit Contract Management (and the Unite/ESSU statement submitted to the County Council Meeting on Wednesday 20th July 2016)

http://www1.somerset.gov.uk/council/board1/Summary%20of%20Outcomes%2020%2007%2016.pdf

 

Q1 Given the critical audit reports on contract management and the High Risks involved in transferring the Learning Disabilities Provider Service (LDPS) to an external provider, I would ask the committee to note the recommendations in the attached critical report by Professor Dexter Whitfield and to commission SWAP to conduct an audit of the LDPS commissioning project to date, to ensure compliance with SCC corporate Risk Management standards and also to ensure best practice is being followed as this project moves into the contract letting phase?

 

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Statement made at Cabinet PQT Mon 11/7 Item 5 LDPS Outsource to Dimensions UK


Way Signs "Outsourcing - In-House Solutions"Last week we had the Chilcott report on the 2nd Iraq War.

How is that relevant to the Learning Disabilities Service?

This Conservative administration runs Somerset as a “Commissioning Council”, which now appears to me, to be a policy designed to privatise as many public services as possible.

Does this produce a culture amongst Senior Officers that “Commissioning” really means “Private Good” and “Public Bad”? I think that it does.

Chilcott reported that there was a lack of challenge in the decision making that then led to disastrous outcomes. I believe that is the case here too.

The Council started out by over-turning a free vote by those in the care of the Council, their parents and carers for this vital service to stay in-house. A second vote was arranged with targeted advocacy to get “the right answer”.

Can you imagine the uproar if we held another EU referendum just because those in power didn’t like the results of the first vote?

We can’t check the secret Business Case for impartiality even though this is said to be Not for Profit and a Social Enterprise.

How can we tell if the financial case for outsourcing is genuinely made?

How do we know whether risky savings and benefits assumptions have been made, as they were for the failed Southwest One contract with IBM?

I do not see the rigour in the published Risk Assessments to safely outsource this care service for vulnerable people.

The aspirations are laudable but why doesn’t this Council have the leadership and management capable of taking the in-house service forward.

If you can’t lead and manage the in-house service under your direct control, then how will you safely manage a contractor providing this complex care service to vulnerable people?

The robust challenge necessary for a good outcome needs an unbiased comparison with a competing in-house service bid which incorporates innovation and improvement.

We then need an Open Business Case for proper oversight, accountability and public confidence.

For those reasons, I strongly recommend that the Cabinet does not approve this outsourcing proposal for Learning Disabilities today.

"I'm here to pay you to tell me how much I have to pay someone else."

“I’m here to pay you to tell me how much I have to pay someone else.”

DAVID ORR ,Somerset taxpayer

https://dwfoh96rza0z7.cloudfront.net/wp/wp-content/uploads/2015/12/12104214/Dave-Orr-Paper2.pdf

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The Learning Disabilities Service. Cabinet 11th July 2016 at Somerset College in Public Question Time

Item 5 The future commissioning of services currently provided by the Learning Disabilities Provider Service – Paper A

 

Statement and Further Questions

We are speaking today about the Future of the Learning Disability Service. There are many similarities with the ISiS Programme (which led to Southwest One) and this proposed privatization. Professor Dexter Whitfield produced a list of main risks prior to the letting of the contract to IBM.

 

thGJ0JEXF0ISiS faces five main risks

 

  • Operational failure to meet the performance and investment requirements.
  • Partnership failure
  • Shared services failure
  • Savings smaller than planned
  • Inward investment lower than forecast

 

 

We believe based on the evidence (or rather lack of) that these apply in this case to privatise a large part of Somerset County Council. SCC has produced “Lessons Learnt” reports based on the controversial Southwest One contract. Have these Lessons Learnt been rigorously applied to this programme? We have listed below further questions about the procurement process and the need for an In House Service Improvement and Innovation Plan.

 

Appendix G (Risks) is not to that standard of Risk registers that are regularly reported to the Audit Committee. There are no likelihood and impact figures in the format that SCC uses.

signpost

 

There are also key risks missing, in particular, the likelihood of new business and the associated costs and impact on the Business Case.

There is no clarity either on the impact and uncertainty of services likely to be affected by this proposed outsource in other parts of SCC.

We are asking you today to defer the decision and have a serious look at an In House service improvement and innovation plan.

 

Q1 Paper A states (Financial Implications)) that:

 

“The recommendation to award the contracts would result in a forecast small reduction in the expected cost to SCC for this service over the 6 year life of the contract. However, the contracts would bring more certainty to that cost and will bring service improvements.

There is an increase in costs in years 1 and 2 of the contracts as the service is in transition and begins to modernise some of its arrangements, but some of this cost can be funded through transformation budgets and capital receipts. The Council will need to increase its planned programme to generate capital receipts to do this and these can come from any asset sales and are not linked to assets providing services for LD. There is an implication that some SCC overheads will need to be reduced due to a reduction in the head count of staff directly employed by the Council.”

money-down-drain-370x229a) 1) At Scrutiny it was announced that the upfront funding in the proposed early years was £4.9m. Was this £4.9 million also used in the comparative costs of continuing to run the service directly?

2) What is the purpose of giving this money to the sole bidder (Dimensions) and how will you know it has been effectively spent?

 

b) At Scrutiny it was also announced that they expected savings of £8m over the 6 years of the proposed contract. How much of the forecast savings in the business case is from new business from other local authority areas and within Somerset? If no new business is won will the business case remain viable? Has the cost of a fully resourced client function for 6 years of the contract been included in the Business Case?

c) How much of the savings are based on staff salary reductions and downgrading of staff?

d) Will service users carry the risk if there is no new business and how has it been evidenced that somehow a Social Enterprise that does not exist will be able attract new business?


Way Signs "Outsourcing - In-House Solutions"e) Why hasn’t the existing in house service been allowed to innovate and improve to meet the requirements?

f) If a Social Enterprise is set up then Scrutiny recommended that “surplus” should remain in Somerset. An in house service would ensure that all funding is spent in Somerset. How will the contract guarantee that Surpluses made in Somerset Stay in Somerset?

g) Why is the Business Case hidden from public view if there is only one bidder, the proposal is Not for Profit and this is taxpayers’ money?

h) What happens if the savings are, like Southwest One (SW1), slower to be realised and less than forecast?

 

Q2 Paragraph 2.1 Paper A states:

 

“The financial submission by Dimensions has been evaluated against the known costs for the LDPS and how the Council would take that service forward in the future.”

freedom-informatio_2431517ba) When will the known costs of the In House LDPS be released so that we can check them?

b) Will the costs and associated information be released into the public domain immediately?

 

Q3 Appendix A “Objectives”

Documents with redacted informationa) Has a Risk Assessment and a Sensitivity Analysis been produced and updated to accompany this document? If so, why are they Commercially Confidential?

b) When will there be a Gateway type Review and will it look at the inherent risks?

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Questions for Audit Committee – Public Question Time 3rd May

Audit Committee   Tuesday 3rd May 2016
Please note that this meeting has been postponed – the revised meeting date will be confirmed as soon as possible http://www1.somerset.gov.uk/council/board9/CancelleationAudit.pdf

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Statement (with questions) to Audit Committee – Agenda Item 4 Paper A – Partial Audit Assurance – Contract Management

 

(And the Future of the Learning Disability Provider Service)

 

I commend our SWAP auditors and this committee for bringing these, frankly, surprising findings for oversight and rectification.

 

Apart from services that remain in-house, most forms of “commissioning” require the effective letting and management of complex contracts, over long periods of time, when unforeseen changes will inevitably occur.

 

This committee has repeatedly been assured that the lessons of the controversial contract with IBM for South West One have been learnt, yet here is another example of those lessons not being disseminated effectively around the council on a service by service and contract by contract basis.

 

The lack of corporate best practice and consistent performance management of high-value contracts for frontline services is a potentially serious failing for a “Commissioning Council”.

 

I have documented a series of questions below that I hope will add value to the committee discussion and follow-up actions:

 

Q1. In the “New Operating Model” for this “Commissioning Council” where does the management responsibility lie for enforcing contract management best practice?

A1: This currently sits within service area where contract management is undertaken however as identified in the recent Audit Report Commercial Advisory and Client Management Team have been asked to develop contract management framework and provide additional support and guidance to help strengthen contract management across the Organisation.

Q2. Does SCC hold a central contracts register for all key contracts (especially where the contacts are of high value (e.g. adult social care)), or where there are safeguarding/harm risks (e.g. Learning Disabilities Provider Service)? If there is a central register will it be published on the intranet and will the recognised Trade Unions have access to it?

A2: The Authority records all Contracts in Pro Contract

Q3. Why didn’t the SCC Risk Management processes detect these key contract management anomalies that clearly place SCC at risk of reputational damage, financial loss (including undetected fraudulent claims for work not carried out or sub-standard work) and other potentially harmful outcomes? Should the SCC Risk Register now additionally assess and hold current information for key contacts?

A3: We are not sure what is meant by the statement ‘contract management anomalies’ but can confirm that major contracts will be assessed for risk and placed on the SCC Risk Register accordingly.  

Q4. Will this committee ask SWAP to undertake additional contract management audits for key contracts with high value or core to SCC’s reputation or where there are safeguarding/harm risks?

A4:  SWAP have always included contract management audits as part of their work programme and SCC are keen for this to continue.

Q5. Will the proposed Learning Disabilities Service Provider contracting out to Dimensions UK be independently reviewed to ensure that all of the contract letting and management issues raised here today have been assessed and openly reported?

A5: Since the new operating model has been place SCC has ensured that a programme structure is put in place where a new service delivery models is required eg set up of SSL, Heritage Trust and in this case the LD SEV.  This ensures that implementation and transition plans are developed with the level of resource identified to deliver it and governance and reporting structures are defined as part of the contract arrangements.  In addition SCC have brought in external legal support to help review the contract management and performance governance arrangements for this new contract..

Q6. Will SCC introduce a final Gateway Review immediately before all key contracts are let or re-let, to ensure that the resources and skills are in place for effective and safe contract management?

A6:  Since the new operating model has been place SCC has ensured that a programme structure is  put in place where a new service delivery models is required.  This ensures that implementation and transition plans are developed with the level of resource identified to deliver it. SCC agrees that a commissioning gateway is needed and that an important part of its role is to ensure that appropriate levels of resources and skills are in place.

Q7. Had Scrutiny for Policies, Adults and Health been receiving performance reports for Somerset Care then the lack of Key Performance Indicators (KPI) oversight would have come to light. Should each relevant Scrutiny Committee have additional contract management oversight and performance management reporting to complement the proposed corporate oversight? Will the Councillors require additional training for this role?

A7:  In line with the principles of the Operating Model  the focus on performance needs to be led by outcomes linked to the commissioning intentions, rather than inputs and this will remain a key focus in our reporting. Contracts will be managed by contract holders and any outcome deviation from  that which has been commissioned will be appropriately reported.

http://www1.somerset.gov.uk/council/meetings/results.asp?ccode=%25&SMonth=January&SYear=2016&EMonth=December&EYear=2099&sort=Meeting_Date+DESC&searchpage=1&Input=Search

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To All Somerset County Councillors and Senior Officers

 

To All Somerset County Councillors and Senior Officers

 

28 June 2016

 

Dear Somerset County Councillor

 

Learning Disabilities Services Procurement

 

In February 2014 Cabinet considered a paper regarding the future commissioning of Learning Disabilities Services.  Cabinet decided to explore the creation of a Social Enterprise Partnership to potentially deliver these services in the future.  Given that the consultation exercise conducted by the Council had identified that the vast majority of customers and carers “…preference is for the continued direct provision of the services they receive by the Council.” with “…overwhelmingly positive feedback…” from service users, the rationale for this focused on the suggested limitations of retaining the service in house.

 

UNISON has been working closely with Somerset Council staff both Learning Disabilities Senior Managers and the Procurement Leads, including the involvement of UNISON Stewards in the evaluation of potential bidders.  Despite this close working and repeated requests for information UNISON does not have clarity regarding how the bidders have addressed the suggested limitations in the 2014 Business Case of retaining the service within the Council.

 

UNISON is obviously concerned about this, particularly given that “… there was significant support from both customers and carers for the existing service …”.  Furthermore, the Business Case identified the majority of respondents (54.1%) in the consultation with customers and carers stated that they would prefer that the service remain with the Council, with only 33.8% indicating a preference for the service to be delivered by a new organisation legally independent from the Council such as a Social Enterprise.  Furthermore, customers and carers were encouraged to select this second option as it was promoted that only a service delivered outside of the Council could address the identified ‘limitations’        

 

Limitations

 

No information has been shared with UNISON despite repeated questions including a Freedom of Information request, to identify what the bidders propose in relation to addressing these limitations.

 

The paper identified the limitations of retaining the service as:

 

  • The service is not attracting young people into its current provision due to the age profile of many of the people already using its services.  Most of the buildings used by the service incorporate shared living rooms, kitchens and bathrooms which exacerbates this problem as younger people usually prefer to opt for self-contained accommodation with on-suite facilities and minimal shared space. The result of this is vacancies that the Learning Disabilities Provider Service cannot fill, particularly in Supported Living and Residential Care services, as young people are not choosing to live with older customers. This impact of this is already being felt. For example, as at December 2013, there were 53 vacancies within Residential Care and Supported Living Services provided by the Learning Disabilities Provider Service.

 

  • The service has difficulty setting up new services as the processes to raise money and make investment decisions within local government are not agile and flexible enough to respond to customer and market needs.

 

  • The service is difficult to cost on the same basis as the rest of the sector as its overhead costs, for example for things like human resources and information technology, are spread across the Council. This make it both difficult to cost services for the purposes of supporting people who want to use a Personal Budget, and to compare value for money with the rest of the sector.

 

  • The service cannot trade with the wider population.

 

UNISON hopes that as decision makers you have greater clarity regarding evidence that demonstrate whether the bidders have fully addressed these issues.

 

Purpose

 

We believe that Cabinet should reflect on the purpose behind the decision to explore how Somerset Learning Disabilities Services should be delivered:

 

“This stated purpose was about ensuring sustainable high quality services for people with a learning disability into the future, and the implications of this on the management and ownership of these services. It is not about the future of any specific service that the Council funds or provides, and there are no savings targets associated with this decision. This report provides an update on the results of the consultation and market engagement authorised by Cabinet on 11/09/2013, and seeks a decision on the preferred option for the future commissioning of the Learning Disabilities Provider Service following due consideration of the impact assessment.”

 

Vision

 

And the vision for these services was:

 

  • People with learning disabilities and their families will have more control over their services;
  • People with learning disabilities and their families can make more day to day choices;
  • People with learning disabilities are helped to have the same opportunities as everyone else;
  • The buildings people live in are high quality and fit for purpose;
  • Services are good value for money.

 

It is important to determine whether sufficient evidence has been provided to establish whether this purpose and vision together with the stated outcomes the Council wanted achieve for these services;

 

  • Services that are sustainable – both now and in the foreseeable future;
  • Services that actively engage and involve customers and carers at every level;
  • Services that embed a person centred approach and ethos in everything they do;
  • Services that people choose when using a Personal Budget;
  • Services that can respond flexibly to meet current and future demand;
  • Services that have the skills and capacity to support people in crisis.

 

Benefits

 

Benefits of retaining in house include:

 

  • The Learning Disabilities Provider Service is a good service. It has successfully remodelled elements of its provision, most notably employment support, over the last year. It has received positive feedback in a recent customer experience survey undertaken by the Council’s Customers and Communities team. Anonymous visitor questionnaires (offered to any visitor to a service) have also provided overwhelmingly positive feedback.
  • Recent developments are;
    • LD services have attracted ½ million pounds of new business in Future 4 and domiciliary care services.
    • Service reconfiguration project, residential services to supported living.
    • Building reconfiguration and upgrades project.
    • Made savings of £700K over a 2-year period in sickness absence, this figure also takes account of the cost of the First Care system and the backfill cost for absent staff and in addition supporting staff with fast track appointments and smoking cessation clinics.
    • Made improvements to the LD recruitment strategy for example the use of social media and online DBS at local level.
  • A majority of customers and carers have told us that their preference is for the continued direct provision of the services they receive by the Council.
  • It would have a low, or no short term impact on customers and carers.
  • It would retain skills, expertise, knowledge and existing service levels.
  • There would be no additional or double funding of council-wide overheads, including Southwest One or any succeeding arrangements
  • It would not incur any short term change costs
  • Maintaining the in-house provision avoids the risk of market failure, with its consequent dangers for vulnerable people and the Council’s ability to meet its statutory responsibilities, as well as cost and reputational implications.

 

What would be achieved by contracting the service out to a Social Enterprise, rather than retaining the service in house?  The significant costs of setting up a Social Enterprise (previously estimated to be in the region of £750,000) could be put to better use to remodel the service to deliver a service that has already in its current format received a resounding endorsement from the customers and carers that it serves.

 

Unisons concerns recommending awarding the contract to Dimensions.

 

Stakeholders have been informed about Dimensions bid via their aspirational statements. However, in practical terms, despite numerous requests over the last 18 months, we have not received information on how the social enterprise, set up with Dimensions will deliver the service.

 

It is also of concern that in February 2012 UNISON were in negotiations with Dimensions who found themselves under financial pressure due to austerity measures and the cut by government to local authority and health trust funding. This led to an erosion of terms and conditions for staff who had been transferred from the public sector under the TUPE regulations into Dimensions. This was presented by Dimensions under an Equal Terms Proposal.

 

The UNISON Somerset branch has commissioned three reports from APSE. The third report has highlighted that in Dimensions accounts and annual report that Dimensions provide services under contract from other local authorities and that in some areas this has now ceased. It would therefore be judicious to understand the reasons that led to this. Were contracts terminated or were Dimensions unsuccessful in a competitive bid with other providers?

 

The business case states that an external provider would be in a better position to secure finance and funding. They would also be advantages of securing suitable accommodation and upgrading current stock to appeal to a younger generation. The report also recommends UNISON seeks clarification on three points;

 

  • Is it any clearer what the arrangements will be?  Will properties be sold or leased? What would the implications for this be if the Council no longer wished to contract with Dimensions?  
  • Will the proposed arrangements meet legislative requirements around the obligation to obtain best consideration for assets?
  • What sources of funding and finance would be available to Dimensions that would not be available to the Council?  Has the Council considered the fact that, as a local authority, it is likely to have access to capital funding on more favourable terms than those available to a non-local authority body?

 

It is also not clear with regard to the ownership and governance of the new social enterprise. During the early stages of the project emphasis was made on the procurement of a partner in order to form the SEV. However now that the project is reaching its conclusion there appears to be a shift in direction. Dimensions would be contracted to set up the new SEV and then contracted to deliver the service?

 

In conclusion the report recommends that UNISON seeks clarification from the council in the following areas;

 

  • Dimensions as a service provider and how the Council is working with them to establish a Social Enterprise Vehicle to deliver the LDPS
  • Why customers would be any more likely to choose to use the new service than the Council LDPS, particularly if more work were done to modernise the Council LDPS’s delivery
  • Organisational structure and governance
  • Finance
  • Asset transfer and ownership
  • Use of profits
  • Risk

 

UNISON therefore requests that councillors consider these points when evaluating the recommendation to set up a new SEV to deliver the LDPS in Somerset.

    

 

Kind regards

 

Belinda Burton

Branch Secretary

Somerset County UNISON Branch

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