Birmingham City Council’s financial agreement with its private sector IT provider is being questioned again after it emerged that the local authority faces an additional £4.4 million bill for new computer hardware.
The council has a joint venture agreement and contracts worth £1 billion with Capita-led Service Birmingham – a company formed specifically to deliver efficiencies and cut costs by transforming outdated Council House IT systems.
But the deal does not commit Service Birmingham to cover the expensive task of installing new server and storage infrastructure, which will have to be paid for through council borrowing.
A cabinet report stressed the urgency of replacing the hardware, which is “ageing and approaching the end of its life” six years after being purchased.
The document’s author, Strategic Resources Director Paul Dransfield, admitted that most councillors probably had no idea that Service Birmingham had not been tied into an agreement to replace computer hardware.
He said: “It may be a surprise to some members that despite its cost the joint venture agreement with Service Birmingham does not include the provision of hardware for the servers or storage that the IT systems use.
“The responsibility for providing these in the contract rests with Birmingham city council who owns it and the cost of its replacement is also not part of the contract with Service Birmingham.”
The cabinet report was withdrawn by deputy council leader Ian Ward without any decision being taken pending further investigation.
Coun Ward (Lab Shard End) has already confirmed that independent financial experts will be asked to probe the council agreement with Service Birmingham. The aim was to conduct a “health check” and make sure contracts provided value for money, he said.
Appointing Capita to head up Service Birmingham was one of the first major decisions to be taken by the former Conservative-Liberal Democrat coalition after taking control of the city council in 2004. The company’s contracts were extended after studies showed that Service Birmingham was meeting most of its performance targets.
However, scrutiny committees have often been critical of the company’s performance and questioned whether the council gets value for money from the deal.
Coun Ward hinted that the council’s new Labour leadership wanted a fresh start with Service Birmingham.
He said: “This is a partnership and we need to move forward on the basis that it is a proper partnership with openness and transparency on both sides.”
The cabinet report revealed that hardware covered by the proposal was becoming increasingly difficult and expensive to maintain. Frequent and prolonged problems with the service were inevitable without new investment.
Savings on maintenance costs through refreshing the hardware are predicted to be £638,000 over five years.
Brum council deal with Capita under microscope again over £4.4m computer bill. @ChamberlainFile