Council eyes £150m savings after renegotiating key service contract

Birmingham City Council hopes to save some £150m over a seven-year period after renegotiating a key contract.

The Service Birmingham contract – covering ICT, a contact centre and revenues – is operated through a joint venture between the authority and Capita.

It was set up in 2006 and was extended in October 2010. The contract runs until 31 March 2021.

In addition to the three key contract areas, Service Birmingham has non-exclusive contracts for project management and transformation. The organisation also directly provides services to schools.

Following a review of the contract, a number of recommendations will go before Birmingham’s Cabinet on Monday (30 June).

These include asking for approval of continuation of the ICT and revenues arrangements in return for substantial savings over the last seven years of the contract.

The report before Cabinet also recommends that the contact centre be brought back in-house by the end of 2014, with a new focus on queries being resolved as far as possible at the first point of contact with the authority.

“There will also be agreement to introduce new controls over projects, a joint commitment to create a modern, fit for purpose ICT strategy and most importantly, to agree to identify further savings beyond the £150m figure,” the authority said.

Birmingham said that, subject to the Cabinet approving the changes, heads of terms would be signed “as soon as possible”. Consultation with employees would then take place with a view to the revised contract being signed by the end of September 2014, with savings backdated to 1 April 2014.

Cllr Ian Ward, Birmingham City Council Deputy Leader, said: “We have negotiated an agreement with Service Birmingham which provides a major step forward in reducing our cost base for ICT.

“On balance, the council considers the risk of changing ICT provider at this time, too risky, would take a considerable period of time to procure and would cost additional tens of millions upfront in early termination charges and re-procurement costs.”

He added: “However, we are convinced that by bringing the contact centre in-house we can deliver additional financial savings, but more importantly place customer service at the core of what the council is about. We will be able to work more effectively with front line services to improve customer interaction.”

Cllr Ward sad he wanted both parties “to work harder to make the partnership work, better than it has to date”.