Agenda item

12.1

The Executive Director, Resources submitted a report in relation to the Business Services Resourcing Strategy.

12.2

RESOLVED: That Cabinet:-

(a)

notes the content of the report;

(b)

approves the continuation of the Capita provision of the following managed services for a six year period from January 2016, with break points in January 2018 and January 2020:

-       Information and Communication Technology (with flexibility within the contract to market test elements of provision with other suppliers)

-       Revenues and Benefits transactional services

-       Human Resources transactional and payroll services

-       Finance business transactions;

(c)

approves the development of a strategy/ies, in line with the Council’s Corporate Plan, to set out the Council’s future requirements for these managed services, and other currently outsourced contracts, in order to inform subsequent sourcing decisions, in time for the first break point in the contract in 2018;

(d)

approves the move in-house (i.e. from Capita to Sheffield City Council) the delivery of the Revenues and Benefits front office (contact centre and face to face) from January 2016, and to integrate with the Council’s Customer Services function;

(e)

accepts Capita’s guarantee of revenue savings from January 2015 onwards, in line with the schedule set out at paragraph 8.1 of the report, the guarantee on Council Tax collection rates set out at paragraph 8.3 of the report, and notes the potential additional savings arising from business change activity, also set out at paragraph 8.3 of the report;

(f)

delegates authority to the Interim Executive Director, Resources, in consultation with the Interim Director of Commercial Services and the Interim Director, Legal and Governance, and the Cabinet Member for Finance and Resources to enter into final negotiations with Capita on this basis, and to finalise the relevant changes to the current contract;

(g)

delegates authority to the Interim Executive Director, Resources, in consultation with the Director of Human Resources, Director of Customer Services, the Interim Director of Finance, and the Cabinet Member for Finance and Resources to make arrangements to secure a robust transition of the services set out at (d), including ensuring compliance with relevant legislation to minimise the risk of disruption to the organisation or public; and

(h)

delegates authority to the Interim Executive Director, Resources to establish the revised governance arrangements set out in section 7 of the report and to make arrangements to monitor the performance and delivery of the contract over its lifetime.

12.3

Reasons for Decision

12.3.1

Each element of the proposed package has been considered on its merits. The proposals are being recommended as providing an appropriate balance between:

·         Providing quality services, which meet the expectations of customers (both internal customers and the public)

·         Making a considerable, and ongoing, contribution to the Council’s savings target, over and above what was envisaged as part of the 2008 contract

·         Maintaining risk (financial, legal, reputational and delivery) within acceptable limits

·         Being affordable and representing best value to the organisation within the short and long term

·         Supporting the organisation to transform its services and deliver differently

12.4

Alternatives Considered and Rejected

12.4.1

For each element of the proposal, a number of other options were considered. These are noted at the relevant sections of the report, along with the recommended option.

12.4.2

The option recommended in each case depends on the particular circumstances of that element, and evaluated in line with the principles set out in paragraph 5.3 of the report. In broad terms, the options for each element were:

·         Proceeding with the proposal made to the Council by Capita (with or without amendments following negotiation)

·         Retaining in-house delivery, or moving delivery in-house from the current provider

·         Moving delivery of a service currently provided by Capita to a new provider either as a block, or as part of a multi-source arrangement;

12.4.3

For services currently managed by Capita, there was a do-nothing option as the contract would expire in January 2016, with no contingency arrangements in place, resulting in critical (and in some cases statutory) services not being capable of being delivered.

12.4.4

In March this year the Council completed an external benchmark of Capita services via an independent organisation – Information Services Group (ISG) which revealed that, all existing services represent ‘value for money’ and that HR and Payroll could already be considered ‘upper quartile’. ISG forecast that market would reduce approx. 4% year on year and Capita’s new proposal has bettered this position. Therefore, this reinforces the view that continuing with Capita provision of the existing managed services represents good value for money with the authority.

12.5

Any Interest Declared or Dispensation Granted

None

12.6

Reason for Exemption if Public/Press Excluded During Consideration

None

12.7

Respective Director Responsible for Implementation

Eugene Walker, Executive Director, Resources

12.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

Overview and Scrutiny

12.1

The Executive Director, Resources submitted a report in relation to the Business Services Resourcing Strategy.

12.2

RESOLVED: That Cabinet:-

(a)

notes the content of the report;

(b)

approves the continuation of the Capita provision of the following managed services for a six year period from January 2016, with break points in January 2018 and January 2020:

-       Information and Communication Technology (with flexibility within the contract to market test elements of provision with other suppliers)

-       Revenues and Benefits transactional services

-       Human Resources transactional and payroll services

-       Finance business transactions;

(c)

approves the development of a strategy/ies, in line with the Council’s Corporate Plan, to set out the Council’s future requirements for these managed services, and other currently outsourced contracts, in order to inform subsequent sourcing decisions, in time for the first break point in the contract in 2018;

(d)

approves the move in-house (i.e. from Capita to Sheffield City Council) the delivery of the Revenues and Benefits front office (contact centre and face to face) from January 2016, and to integrate with the Council’s Customer Services function;

(e)

accepts Capita’s guarantee of revenue savings from January 2015 onwards, in line with the schedule set out at paragraph 8.1 of the report, the guarantee on Council Tax collection rates set out at paragraph 8.3 of the report, and notes the potential additional savings arising from business change activity, also set out at paragraph 8.3 of the report;

(f)

delegates authority to the Interim Executive Director, Resources, in consultation with the Interim Director of Commercial Services and the Interim Director, Legal and Governance, and the Cabinet Member for Finance and Resources to enter into final negotiations with Capita on this basis, and to finalise the relevant changes to the current contract;

(g)

delegates authority to the Interim Executive Director, Resources, in consultation with the Director of Human Resources, Director of Customer Services, the Interim Director of Finance, and the Cabinet Member for Finance and Resources to make arrangements to secure a robust transition of the services set out at (d), including ensuring compliance with relevant legislation to minimise the risk of disruption to the organisation or public; and

(h)

delegates authority to the Interim Executive Director, Resources to establish the revised governance arrangements set out in section 7 of the report and to make arrangements to monitor the performance and delivery of the contract over its lifetime.

12.3

Reasons for Decision

12.3.1

Each element of the proposed package has been considered on its merits. The proposals are being recommended as providing an appropriate balance between:

·         Providing quality services, which meet the expectations of customers (both internal customers and the public)

·         Making a considerable, and ongoing, contribution to the Council’s savings target, over and above what was envisaged as part of the 2008 contract

·         Maintaining risk (financial, legal, reputational and delivery) within acceptable limits

·         Being affordable and representing best value to the organisation within the short and long term

·         Supporting the organisation to transform its services and deliver differently

12.4

Alternatives Considered and Rejected

12.4.1

For each element of the proposal, a number of other options were considered. These are noted at the relevant sections of the report, along with the recommended option.

12.4.2

The option recommended in each case depends on the particular circumstances of that element, and evaluated in line with the principles set out in paragraph 5.3 of the report. In broad terms, the options for each element were:

·         Proceeding with the proposal made to the Council by Capita (with or without amendments following negotiation)

·         Retaining in-house delivery, or moving delivery in-house from the current provider

·         Moving delivery of a service currently provided by Capita to a new provider either as a block, or as part of a multi-source arrangement;

12.4.3

For services currently managed by Capita, there was a do-nothing option as the contract would expire in January 2016, with no contingency arrangements in place, resulting in critical (and in some cases statutory) services not being capable of being delivered.

12.4.4

In March this year the Council completed an external benchmark of Capita services via an independent organisation – Information Services Group (ISG) which revealed that, all existing services represent ‘value for money’ and that HR and Payroll could already be considered ‘upper quartile’. ISG forecast that market would reduce approx. 4% year on year and Capita’s new proposal has bettered this position. Therefore, this reinforces the view that continuing with Capita provision of the existing managed services represents good value for money with the authority.