Procurement to be brought back 'in house' after joint service fails to deliver the goods

The Brent Cabinet will be asked to approve a proposal to bring procurement back in-house after a joint service with Harrow failed to deliver the envisaged benefits. A shared service with Harrow and Buckinghamshire was first discussed in January 2016 and at the time I noted the lack of clarity in the proposals LINK.  Officers claimed that a joint service would save Brent £272,000 in 2016-17.

Buckinghamshire dropped out and in  September 2016 Brent Tuped staff over to the joint Harrow-Brent  service followed by Brent Housing Partnership staff just over a year later in October 2017. Now less than 18 months after the first transfers they will be transferred back to Brent.

The Officers' report LINK recognise that this doesn't look good:

Reputational damage: To end the Shared Service so early into its life could potentially be seen as a failure by a range of stakeholders and potentially cause some reputational damage although this should be mitigated by getting member level approval for the dissolution.

The report suggests that the recent resignation of the Harrow Divisional Director of Procurement and Contracts gives an opportunity to review whether to continue the Shared Service and recognises that a decision to end it is best done before the arrangement between the two boroughs becomes more entwined and complex - a case of 'get out now before it's too late!'

The report states:

We are now just over 1 year into the Shared Service and a number of difficulties have been identified. At present Brent requires a level of service that is beyond the resourcing initially envisaged by the parties and available within the funds contributed to the Share Service following the restructure.

In addition it has proved difficult to recruit to many posts in the shared structure and continuity has been difficult to maintain. This has put additional pressure on the Shared Service and levels if service and satisfaction are therefore below what some service areas are expecting.

Reading beyond the mild civil service language it is clear that the joint service was just not paying people enough. Rather than the savings first envisaged it looks likely that costs will increase:

Despite a lengthy recruitment exercise, the ability of the Shared Service to recruit appropriately skilled and experienced staff into a number of vacancies has proved to be challenging. The poor recruitment results are thought to be in the main due to the salaries on offer being £5k below the market average together with a buoyant London jobs market for those individuals.

The regeneration/development area is significantly under-resourced. Although the Shared Service has flexed some resources to support this area. This is barely adequate and not sustainable in the long term. Consideration therefore needs to be given to interim resource(s) to support Capital projects (funded by the Capital programme) over and above the business as usual resourcing requirement.

The report states that for the Shared Serviced to meet these short-comings there would need to be a Head of Procurement dedicated to Brent and a rise of approximately £5k for each of the non-management grades totalling an additional annual contribution of £150,000.

The report is notably vague about the costs of leaving the Shared Service:

Should Brent leave the Shared Service the financial implications would need to be developed as the new organisational structure is designed. Initial  estimates however envisage that it would be of similar magnitude to remaining in the Shared Service.

Any increase in budget will have to be offset by a saving elsewhere in the department, the Council (sic) including greater achievement of procurement savings.

If the original proposal to enter a Shared Service lacked clarity then it appears that the proposal to leave has similar shortcomings, particularly on the financial implications. Can the Cabinet make a decision on the basis of this flawed report?