Local authorities are becoming increasingly active in setting up shared services with other councils and public sector bodies from health to police. The trend has taken tim to develop since it was declared a virtue in Sir Peter Gershon's Efficiency Review of 2004, as while many supported the idea legal complexities often got in the way.
Not any more, it seems. That is partly to do with a new spirit of pragmatism, and as a result of the emergence of a body of case law which now allows councils to work together without fear of falling foul of procurement law.
"Recent case law on that really has removed concerns about local authorities genuinely working together," says Celia Cullen, head of local government services at international law firm Pinsent Masons. "Now they don't have to procure each other in order to do so. There is a difference between them mutually working together for the public benefit, as opposed to one authority just deciding it is going to become the next IBM or something and trying to make a profit,"
Local authorities should always think about their 'powers' when setting up shared IT services, according to Cullen. "As local authorities are statutory corporations they can only do what they have been given power to do under the acts that set them up. Whenever a local authority is looking to do something it has to identify a power to enable it to do it, otherwise it is ultra vires and the action is void."
For example, Brent's decision to participate in establishing a mutual insurance company, London Authorities Mutual Ltd (LAML), controlled by and run for the benefit of participating London authorities was challenged as being outside its powers.
One way of circumventing legal technicalities for sharing IT has been to form a separate independent company, but this is not essential according to Cullen: "There are ways for authorities to delegate powers to each other. "
One is the lead authority model, where one will enter the contract on behalf of other authorities. "Despite the complications it does form a model liked by the private sector, as it gives them one authority interface for contract purposes with the aim of them not having to get involved in all the background arrangements," Cullen says.
In a more complex lead authority arrangement there will be more detailed governance which determines how decisions on service delivery are undertaken and how the contract is managed, what happens if one authority wants to terminate the contract and the others do not, and what happens regarding shared staff. "There is usually a formal agreement dealing with these matters, but it can be quite difficult to reach agreement in advance and to document the principles – the more parties there are, the harder it can be," Cullen says.
She says this is often what stops shared services going ahead, whereas combining existing leases, contracts and licences is a headache that can be worked through.
Dorset councils, comprising the county and six district and borough councils, became a pathfinder for shared services under the previous government. It entered into a process to rationalise management and ICT in 2009 and came out with a structure of two partnerships, a situation Sara Moseley, PSN strategic lead, describes as "not what we would have all hoped for but progression nonetheless". The county council's wide area network was in need of a refresh, so the new partners decided to do this as a shared service under the umbrella of the emerging PSN programme.
It took a pragmatic approach to the legal governance structure. The county council is the lead authority, partly as it had the most urgent need to procure a new system and because it has the largest spending power. At the same time each of the partners has its own separate agreement with WAN supplier Kcom.
Bernie Dinsdale, technical lead on the Dorset PSN, has also looked after the governance side. "We consulted with our neighbours, Hampshire, as we are doing a lot of collaboration work with them," he says. "From a PSN perspective they have a slightly more formal partnership agreement and I think that is over time where we will move towards. "
He adds: "We are sharing the progress Kcom is making on contracts elsewhere to try and learn some of the lessons and give us guidance as to the (governance) options available in the market so that we are not trying to boil the ocean and cater for everything."
The contractual structure between authorities was put in place with guidance from supplier Kcom and independent legal advisers and continues to evolve. "We are doing the maths around if this is Dorset county council's capital underpinning what we are setting up, how does the cost model look like going forward and how do we reap the benefits from economies of scale in IT?" Moseley says.
European procurement law remains the legal elephant in the room. Moseley says: "We are quite frustrated that current guidance is that we would need to go back to market to renew our framework in four years. Spending two years to get to the point we are now, to think we have to do it again four years from now seems rather drastic."
It may need this to be settled to give the shared services trend further momentum.
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Autor(en)/Author(s): Tracey Caldwell
Quelle/Source: The Guardian, 05.09.2011
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