The Chamberlain News

Bailey v Ward row goes ‘toxic’ as Service Birmingham-Capita contract row rumbles on

Deputy Birmingham council leader Ian Ward, has been accused of “sailing close to the wind” by declaring that he still doesn’t know how much it will cost to terminate the city’s ICT contract with private outsourcing firm Capita.

Cllr Ward confirmed to BBC Midlands Today that he was considering “all options” in an effort to reduce the £120 million a year the council pays Service Birmingham-Capita to supply and run its computer systems, oversee a call centre and pay the wages of town hall staff.

He promised negotiations would definitely result in a cut of £20 million in the core contract.

Cllr Ward also admitted that a clause allows the council to cancel “at will” its deal with Capita, but he insisted there is no figure setting out exit costs in the contract.

He added that he will publish a version of the contract with “commercially sensitive information” redacted by the end of February, raising speculation that the document may not be available until three days before the council’s crucial budget-fixing meeting on March 4.

In the latest chapter of a row that is becoming increasingly bitter in the Birmingham Labour Party, the man behind a campaign to force the council to publish its Capita contract said he found it odd that Cllr Ward did not have a firm estimate of how much it would cost to walk away from the deal with Service Birmingham.

Aston University Professor David Bailey said he was confident that such contracts would set out a formula by which the parties can work out termination costs. And since Cllr Ward and his colleagues had been considering the matter since the summer of 2012, it was ”not good enough” that a cost estimate was unavailable.

Describing the deputy leader’s remarks about the absence of a cancellation fee as “toxic”, Prof Bailey said: “Councillor Ward seems to be sailing very close to the wind in stating that there is no exit cost figure. He may be technically right in that there may not be one global figure written down in the contract.

“But surely there must be different ways in which the contract can be terminated, including through the ‘at will’ route, and a termination cost formula must apply to each with a global figure then associated with each?”

Cllr Ward told the BBC: “There is no figure in the contract for termination. We are involved in negotiations with Capita as to what that figure would actually mean.”

Pressed further about the absence of a termination figure, Cllr Ward replied: “There is no number in the contract, no. We have an agreement about termination of the contract and there are various conditions set around it.

“It would not be normal, I think, to put an actual number in the contract.”

Although Cllr Ward stated that all options are on the table, including terminating the contract, he was careful to stick to the line agreed by the city’s Labour leadership which is that the partnership with Capita “is value for money”.

Insiders expect Cllr Ward and council leader Sir Albert Bore to conclude that Birmingham would be better off sticking with Capita rather than taking ICT provision in-house or awarding fresh contracts to local firms.

Prof Bailey, who launched a petition calling for the contract to be published, said: “Perhaps of most toxic significance for the council, Cllr Ward stated that there is no explicit exit cost factored into the Service Birmingham contract, and that this is what the council is trying to figure out.

“The current administration has had nearly two years to ‘bottom out the figures’. What on earth has it been doing in that time? Or is it now only just getting round to looking at the Service Birmingham contract in detail?

“If the council is really serious about looking at all of the options as it has claimed, then it will have had legal advice on what the cost of cancellation at will means in a global sense.”

Prof Bailey does not believe details of exit fees can be considered commercially sensitive. He argues that the people of Birmingham “have a right to know”.

He added: “Putting the exit cost figure or formula out there does not in any sense affect your negotiating position. In fact it could well strengthen it – as Capita will then know that we know, and hence that the council can’t be manoeuvred into paying more.”

Urging Cllr Ward to “show how much you love us Brummies”, Prof Bailey urged the deputy council leader to publish the contract by February 14, St Valentine’s Day.

Prof Bailey added: “Publication by the end of February isn’t nearly quick enough. If the contract was published on the 28th February, say, that gives the people of Birmingham just one working day to look at the contract and make a judgement was to whether it should be kept or scrapped, and how either impacts on the spending decisions that go in the 2014 budget.”

Negotiations with Capita about publishing the contract have been taking place since last October, according to Sir Albert Bore. However, Cllr Ward, who is in charge of the negotiations, did not step down from the board of Service Birmingham until the first week of January 2014.