Background Paper for SHARED MANAGED SERVICES TOPIC GROUP –

8 June 2012

1.Background

The Serco Shared Managed Services) SMS contract has been in place now for just over 1 year. This scrutiny is set to examine performance against the original objectives of that contract and potential developments and contributions for the future.

2.Original Objectives of the SMS Partnership and to what extent these have been met?

2.1As set out in the original business case and in the contract documents issued to bidders, the key strategic objectives of the SMS contract were:

  • To maximise efficiencies in the back office and contact service to protect front office service delivery in economically challenging times. To ensure that we get best value for money from such arrangements and to ensure any unnecessary “gold plating” of services were removed.
  • To establish a strategic relationship with a Private Sector partner for delivery of further efficiencies by introducing innovation and “broadening and deepening”the services delivered in line with the scope of the contract. To team up with a provider who would work with us over the 8 year life of the contract to continually improve service efficiency and innovation. A provider that could bring learning and experience from it’s wider portfolio of clients and associated expertise.
  • To respond to the National Government agenda of promoting a shared services approach to more efficient delivery of back office services in Local Government.
  • To maximise the benefits IT can provide in improving efficiency whilst maintaining or even improving service quality for these services.
  • To take advantage of the opportunity provided by existing contracts with Serco, Logica and Vertex either coming to an end or have a break point in 2011, which enabled us to go to market to seek new contracts, benefits and efficiencies.
  • To deliver efficiency savings as part of the Transformation Programme with an appropriate balance between cost and quality of service delivery.

2.2.Progress to date

2.3The SMS contract was awarded to Serco following an extensive competitive dialogue procurement process which included the robust evaluation of bids which was given a relatively high weighting towards price.

2.4The contract has been in place since 1 April 2011 and is now delivering:

  • Human Resources and occupational health transactions;
  • Finance transactions;
  • Information and Communications Technology transactions and projects
  • Customer Services at the contact centrewith opportunities and plans to extend this further under the “Transforming Customer Service” programme;
  • AFacilities Management service for 4 main sites (County Hall, Robertson & Farnham House in Stevenage, Apsley 1&2 and Mundells) and 10 other shared sitesincluding an FM Helpdesk for all HCC (non schools) buildings;
  • Catering services at County Hall, Apsley and Mundells.

2.5The scope of this contract, compared to those it has replaced, is broader and deeper due to the inclusion of:

  • FM services;
  • Occupational Health;
  • IT Systems’ support and development.
  • Additional financial transactions

2.6There is provision in the contract for an ongoing programme of Transformation work to transfer additional elements of services to Serco, where these are supported by valid business cases. To date we have successfully transferred elements of Highways and Adult Social Care services (from January and April 2012 respectively) and further developments are planned in these areas and for Driver Training and Contact Services for Children in 2012/13.

2.7Serco are implementingan internal helpdesk “Ask Us”. This provides staff with a single point of contact for all their back office queries and better management information to identify common issues and drive improved performance from this learning.

2.8Serco are also working closely with the Council to deliver “channel shift” for both internal and external customers which enables the delivery of further savings, i.e. enabling people to carry out more on-line interactions with the Council and thus reducing the more expensive phone, post and face to face contacts. If the council is to become as effective as it could be under such arrangements then this programme of channel shift needs to be supported across services and communicated effectively with the public to ensure that they engage with HCC in the most effective and efficient ways possible.

3.What were the original objectives of the SMS District Framework and to what extent have they been met?

3.1The key strategic objectives for the SMS District Framework were to put in place the ability for the 10 Herts Districts and Police Authority to “call off” contracts to enable them to benefit from the HCC procurement subject to individual business cases..

3.2The SMS contract established a Framework Contract from which Hertfordshire Districts and Police can buy any of the services which Serco are providing to the County Council at rates based on the marginal cost.

3.3Serco have established a lead officer responsible for managing the relationship with Districts and Police, helping with the development of business cases and take-on and delivery of services.

3.4To date the following framework contracts have been either been let or are at business case stage:

Position Statement as at 14 May 2012 re call-off from SMS Framework

Broxbourne /
  • In discussion re ICT services

Broxbourne & Hertsmere /
  • In discussion re joint ICT Disaster Recovery Project

Dacorum /
  • Serco SMS Facilities Management Service commenced on the 2nd May
  • Serco short listed for the OJEU Invitation to tender stage for the Customer service unit. The ITT is expected to be released in June.
  • Serco SMS Occupational Health Service commenced in 2011

East Herts /
  • Serco SMS Occupational health service commenced in 2011

East Herts, North Herts & Stevenage /
  • These Councils are putting a detailed business case to their members in June for the approval of their shared support services covering: ICT, HR and Payroll, Facilities management, print and estates Management.
  • Serco in discussions around provision of FM services, with projected savings of 20%, once overall shared services model is in place.

Hertsmere /
  • Assessing the Occupational Health service

St Albans /
  • In discussion re ICT and Customer services

Watford & Three Rivers /
  • In discussion re ICT services- both via Framework and an open procurement

Welwyn Hatfield /
  • The Occupational Health service is due to go live on 1st June.
  • Developing the Outline Business Case for the HR and Payroll service.
  • Discussing FM Services, leveraging the Mundells hub , with the council in June.

Hertfordshire Constabulary /
  • As part of the Bedfordshire, Cambridgeshire and Hertfordshire collaboration project an Outline Business Case for organisation support is being developed through which the Herts CC SMS call-off agreement is being assessed as a possible route to market

3.5This is a very successful first year for such a framework but clearly opportunities exist for these opportunities to be taken up further by Districts over the length of the Framework agreement.

4.Does Hertfordshire achieve value for money from the Serco contract?

4.1Over the 8 years of the SMS relationship we have contracted for Serco to deliver guaranteed savings of £35m, approximately 19% of the pre-contract costs, with forecast additional savings of around £12m coming from the existing Transformation business cases.

4.2Our competitive dialogue procurement process ensured that the Serco price was extremely competitive against those of other bidders and the broader market. The first year of running has delivered to the savings targets.

4.3The guaranteed savings over the life of the contract also require Serco to deliver a more effective and efficient set of services whilst maintaining the agreed service standards, as set out in a comprehensive, contractual pay and performance mechanism which has teeth. Performance in the first year has been very good in relation to the overall set of Performance Indicators for the services. Where services have not been met in any month Serco have been quick to respond and HCC have implemented appropriate performance deductions. Where there have been failures of KPIs during the 1st year this has resulted in a total of £45k being deducted from the total monthly charges made from April 2011 to Feb 2012.

4.4To ensure continuing value for money there are also provisions within the contract for regular benchmarking exercises, to be undertaken by Serco at their cost (with appropriate HCC oversight) to ensure that the contract price remains competitive over the full 8 years. The HCC contracts team will ensure these provisions are implemented effectively.

5.How successfully has the SMS partnership contributed to the HCC Transformation Programme?

5.1As set out above, the SMS partnership is contributing to the HCC Transformation Programme both financially and through the work on simplifying the customer journey.

5.2The core contract will be contributing savings of approximately £5m per annum towards the Council’s Transformation target of circa £200m by 2014/15, with a further £2m+ per annum coming from the confirmed projects within the Customer Transformation Programme (CTP).

5.3As part of the CTP, HCC and Serco have jointly invested in a new IT platform which includes an e-marketplace. Not only will this support the specific CTP projects referred to above, but will also enable HCC to deliver further efficiencies, and make it easier for customers to do business with the Council, by moving more of its transactions on-line.

5.4The transfer of certain transactional services to the Customer Service Centre (e.g. Driver Training, Adult Care Advisory Service) provides customers with extended contact times and quicker responses thus improving the customer experience.

6.What potential is there for further development of the partnership?

6.1The ongoing programme of Service Improvement Plans (SIPs) for the core services provides the mechanism for Serco and HCC to work together to improve the efficiency of the core services.

6.2Through the Customer Transformation Programme, Serco and HCC continue to work together to identify and develop new opportunities, supported by robust business cases,to improve the customer journey and deliver further efficiency savings.. It is important given the current £33m gapin 2014/15 that we continue to work with Serco to explore further areas for implementation with Services.

6.3Our partnership also affords us the opportunity for Serco to comment on where other improvements could be made outside the bounds of the SMS contract. However, it should be noted that any such developments require appropriate procurement process and cannot be simply delivered by Serco.

6.4Serco will continue to work closely with district and police colleagues to identify opportunities for delivering services to them under the framework.

6.5HCC are exploring the option of Serco taking ownership of some of our larger systems (e.g. SAP and Lagan) and moving to a model whereby HCC buys these systems as a service as required rather than incurring all the costsof ownership. This should reduce costs to HCC by providing Serco with the ability to maximise their investment by selling the software service to other authorities.

6.6HCC continue to engage with Serco and other councils to take what we can of learning from organisations to apply in Shared Managed Services and beyond.

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