The Norwich Connect project — the first full-scale egovernment PFI contract in local government — was approved just days before the May local elections by the previous Labour administration.
The Labour group opted for the project as a way of meeting government targets on making 100 per cent of council services available over the internet by 2005.
Now, the ruling Liberal Democrats have been saddled with a 15-year contract, described as "high risk" by the district auditor, which will lead to 100 job losses and a whopping £5.66 million-a-year bill.
Norwich is the only city in the country to have completely outsourced its Information Technology (IT) services to one contractor over such a long period of time.
The main aim of the project is to allow people access to council information and services around the clock through the internet and public information points. But it is also about changing the management structure at City Hall and sharing profits with the contractor, if savings are made above and beyond targets.
The £85 million contract will be made up of £16.8 million in PFI funding, £40 million of existing council spending on IT staff and facilities and the rest — a staggering £28.2 million — must be made from efficiency savings.
Ian Couzens, council leader, said resources would have to be taken from other areas of the council budget, if significant savings could not be found.
"We were opposed to the contract because we felt it was not the best way to deal with the computer and consultancy issues.
"There are risks involved in entering into a very large contract over a long period of time. Technology can change and conditions can change over a 15-year period.
"The taxpayer should not be worse off but in order to meet the contract price we will have to find savings in core areas such as administration of benefits and housing. Any profits made from the savings would be shared between the council and the contractor."
Mr Couzens said the efficiency drive would inevitably involve job cuts.
"We are now at a critical point. For the first two or three years of the project, the systems and hardware are being changed.
"The consultancy is also identifying the savings to be made and we have to work through those. There will be around 100 job losses as a result."
The Norwich Connect project aims to speed up council responses to inquiries, such as housing benefit applications, to make more accurate responses and ensure questions are answered first time.
The 15-year IT services contract was signed in April with a business consortium made up of IT provider Integris, accountants KPMG Consulting, BT and software firm Comino. The city council's annual spend on IT more than doubled overnight from around £2.5 million-a-year to £5.66 million-a-year.
Integris is now part of IT services group Steria, which also has a £50 million contract to provide IT to the National Probation Service (NPS).
The company has been criticised for charging fees as high as £11,600 for maintaining the NPS computer system at weekends. (see panel)
The city council has already had to find almost half-a-million pounds for the re-cabling of City Hall. New fibre optic cables are needed to enable the new computer systems to be fitted. The current electrical supply in City Hall did not meet national standards and electrical circuits needed to be separated from the computer network cables.
Members of the city council's ruling executive agreed to set aside the money needed for the work from the 2002/03 capital budget. The job is currently being carried out by council contractors CityCare.
Mr Couzens added: "Clearly there are risks associated with these contracts. It is critical that we monitor the contract closely so we don't end up paying for something we are not aware of."
Nick Williams, former leader of the city council, was in charge when the contract was signed. He said he did not regret signing up to such a long contract for such a large amount of money.
"On the information we had, it was a good way of bringing resources into the authority and improving services at the same time.
"That was the contract on offer and we were not in a position to change it. It's clearly now up to the council to implement Norwich Connect and make sure the promises which the contractors have made are met and services are delivered."
Chris Southgate, member in charge of egovernment, insisted the council was keeping a tight reign on the project.
"We want to ensure we are not being told how to run our affairs. As far as possible we have made sure the costs are under control.
"I think it was regrettable we chose this contract. There were several options open to us. One way would have been to use our in house IT team to update the system. Now some of them have gone over to work for the contractor. Some of the savings that are going to be made could have been done by ourselves."
Mr Southgate said the project involved "business process redesign", which would lead to efficiencies.
"It's about making a more straight forward route for the functions we carry out. It's about reducing steps and checks where possible. There is daily contact at the managerial level."
Other local authorities have either opted for in-house IT solutions or short-term IT contracts, or they have also outsourced their IT.
Jim Dillon, corporate director of Ipswich Borough Council, said the authority had decided not to outsource its ICT to a contractor.
"We are keeping our IT services in-house. We are investing in new systems and looking at how we can work in partnership with other authorities. Ipswich has always been very progressive in keeping our IT systems up to date.
"We are confident we will meet government targets about getting services online without outsourcing. Norwich may have had to totally update its systems but £85 million sounds like a lot of money to me."
Cambridge City Council has outsourced its IT services for more than 10 years.
James Nightingale, IT contract manager, said the latest egovernment targets were set by the Government after its latest contract was signed.
"We have been outsourced for a long time and the last contract we signed was in 2000. Everything from support to consultancy is bundled into a big contract with ITNet, which is worth £7 million over the next five years. They will provide us with help and assistance with our email system and PC maintenance but they don't have to meet performance targets to get their funding.
"The delivery of egovernment is down to us. We have the option to commission work to the contractor or to other companies to deliver the egovernment targets."
Vince Weldon, head of management information systems at Peterborough City Council, said the council was almost ready to sign a 10-year IT outsourcing deal.
"The deal will be worth in the region of £100 million but it encompasses much more than just IT. The contract would cover personnel, finance and property services."
Mr Weldon said the council had examined the Norwich Connect project before deciding to explore the possibility of outsourcing IT services.
"The £85 million sum sounds quite astronomical but it's the ball park we are in these days. There is a lot of IT involved in the public sector."
Liverpool City Council has updated its IT systems by setting up a joint venture company with BT. The council owns a 50 per cent share in the company and the deal to meet the Government's targets on egovernment was worth £300 million over 10 years.
A spokesman said: "The council now has a call centre where council employees are employed by BT and all the council's computer systems are now compatible."
IT services firm Steria refused to comment on the details of its contract with Norwich City Council.
Quelle: Evening News24
