Freesteel Blog » Liverpool Direct Contracts and inquiries

Liverpool Direct Contracts and inquiries

Thursday, January 20th, 2011 at 12:41 am Written by:

Since July 2008 I have been in pursuit of the Liverpool City Council’s crappy IT outsourcing contract which has delivered several hundred million pounds of local money into a pockets of large multinational company whilst spilling barely a crumb of business to the local IT sector that certainly has the capability of providing a cheaper, home-grown, more beneficial service.

On 20 May 2009 I got first sight of a heavily redacted copy of this bloated contract.

Here, for example, is Clause 22:

(For reference, you can get this copy from someone else’s FOI request where the files aren’t zipped.)

After years of mucking around with “commercial confidentiality” allegations I got a Decision Notice in my favour from the Information Commissioner on 9 December 2010, which contained statements like so:

So I got a huge paper ring-binder of the contract delivered to me, and I spent a long Sunday afternoon sorting and scanning it in. You can get the files here.

Let’s just have a look at that formerly redacted Clause 22:

Hmm. I wonder why they didn’t want us to know this? The fact that when the contract was going south, and there was evidence of massive over-billing, with profits from the so-called Joint Venture somehow never coming back to shareholders (specifically, the Council) that same Council was perfectly within its rights to go in and find out what was going on any time and anywhere in the business.

We do know that the Council used this contractual right to hire three most satisfactory investigators from AKA Limited, as you can see from this testimonial:

Anna put together an excellent specialist team which enabled significant improvements to be made rapidly in financial organisation and planning. She is dynamic and has an outstanding track record of getting results for her clients. It was a pleasure working with her and her team and I can thoroughly recommend her.

Colin Hilton CBE
former Chief Executive
Liverpool City Council

The team of three completed approximately 6 to 8 months of work from end end of 2009 to middle of 2010 at the cost of £566,237, and the Council assures me that the totality of their output was a 25 page report.

Now I don’t believe this for a minute, and neither should anyone else, but we are fortunate that this 25 page report was given to the Liverpool Echo or no trace of it would have come to light, because the system is geared towards providing those who will suffer the most damage from disclosure of information the absolute power to suppress it.

Nevertheless, there were enough questions raised by the summary report (for which the full report does not exist), such as the following excerpt:

“Continuous Benchmarking” sounded like a bit of jargon to me, so I checked what it said in Schedule 22:

The Continuous Benchmarking and Fundamental Reviews undertaken will take account of:

  • the net charges, scope and scale of the relevant Service;
  • the use of new and up to date technology in the equipment, network services and software used to provide the Service;
  • the features and functionality available;
  • the dregree of equivalence between the Service and any service which is to be used for the purpose of comparison (including contractual provisions);
  • the status of an alternative supplier, including whether the alternative supplier is an established bona fide supplier of comparable services;
  • availability of alternative suppliers’ prices;
  • traffic patterns and volumes;
  • method of providing the Service (including as appropriate the Joint Venture Agreement and the Secondment Agreement);
  • the quality of the Service (including performance and Service Levels);
  • any rebates that have been or will be paid to the Authority by the Contractor; and
  • the cost of transferring the Service Element(s) to an alternative supplier (including any termination charges).

Here is the clause (vi) that those sharp-eyed consultants raised an issue about.

In other words, the contract says that the Council was signing over this huge lump of IT work to BT on the understanding that they were not going to get ripped off. There was going to be an annual report made which would prove that they were not getting ripped off — and in ten years of the contract’s operation, no such report has been produced to any satisfaction.

I could not believe this was the case, so I had to check it out. The claim appears to be true, and I am currently appealing for a copy of the one report that was delivered late.

Indeed, if these benchmarking reports had actually existed, they would have made interesting reading, following stories like this one from 2006 where it was discovered that BT was charging £2,000 per councillor’s laptop per year for ten years.

Now they could have gotten a brand new top-of-the range sexy MacBook and dropped it in the river every 8 months at that price, but instead they probably got some bog-standard piece of crap, while BT pocketed the difference, and nobody asked any questions.

Had the contracts and all the associated reports been freely available to the public, it would not have be as easy for officers to so conveniently overlook their duties.

But there’s more.

The city council is supposed to be governed by directly elected councillors who look after the people’s interests and see that the officers are doing their job. What were they doing during all of this?

These councillors and their political parties fight very hard, break laws, and deliver deceptive leaflets in order to win seats on this body that has the power to monitor and control the functioning of the public authority.

And then they get there and do nothing. They explain that they are powerless. The council officers keep them in the dark. There is nothing they can do. Whine, whine, whine, moan, moan, blah, blah, blah. All they can do is is sign anything that is put in front of them and make excuses for it.

None of this is true.

But just as the Council redacted the parts of the above contract which proved that they were not powerless in the face of BT’s misbehavior, our elected councilors similarly waste our time explaining that they cannot take control of any state of affairs, when in fact they could if they wanted to.

The main excuse I have heard over the years is something called the “Need to know” principle. If the councilor does not Need to know about any evidence of maladministration of a significant item of expenditure of public funds because their signature does not happen to be required for the relevant invoice or cheque to be cleared, then they are not to be told.

Who decides what councillors do or do not need to know? You can imagine some scandal going on inside the office, and the people in charge of the debacle muttering to themselves, “Well, I’m sure no one needs to know about this.”

Most people take an official’s word on matters of expertise, but I actually bothered to ask what was the basis.

I was told to look for it in the Liverpool City Constitution:

Now, what exactly are the functions of Councillors?

Looks like they really do need to know about the serious operating issues of an expensive contract that is coming up for renewal if they are to be involved in decision making, doesn’t it?

But… but… but… what if it is confidential information? If an elected councillor gets to see it, they’ll blather about it to the public, won’t they? So they can’t be trusted with anything sensitive, even if it does relate to the governance of the Council.

Well, let’s see about this.

Please refer to Paragraph 4 of the Standards for England Code of Conduct.

If a councillor breaks this Code of Conduct and discloses confidential information, a complaint should be made in writing to the standards committee. You can go here for some of the case examples of councillors who have been busted for misconduct under the Code.

It doesn’t happen very often. Which either means they don’t routinely break the trust regarding confidential matters, or they don’t seek — and the council officers don’t give — any confidential information that might relate to the process of being “involved in decision making”.

What I am looking forward to now is last year’s annual audit letter from the District Auditor. That’s a whole other story I don’t have time to write about. But if there was any attention paid to the quality of his report, he should be in a difficult position now because this year he has cannot avoid referring to the information in the leaked 25 page report about the long-term issues to do with the Liverpool Direct/BT contract, which will immediately call into question what the heck he was doing with his time in all those previous years.

An admission that his job has been a complete and useless waste of space that has provided the appearance of good governance where there is none would be too kind.

Meanwhile, the story to watch is about this senior official who appears to have been involved in the Liverpool Direct investigation and was suspended for gross misconduct at the time the head of Liverpool Direct was promoted to the post of Chief Executive of the Council. The dismissed official is now taking the Council to an employment tribunal.

The million dollar question is whether the people in the Council who would be embarrassed by fighting this case have enough discretionary control over the funds to bribe him to withdraw his complaint with an arbitrarily large wad of cold hard cash.

Cover-ups cost money. If you can stop the money you can stop the cover-up.


  • 1. Matt replies at 20th January 2011, 6:37 pm :

    I just wanted to say that you should be very proud of your work in exposing this utter disgrace, abuse of power and waste of public money.

    You have never given up, even when the city council tried to exhaust you with their delays, excuses and feeble mis-use of their power.

    The real culprit, of course is Sir David Henshaw who, as chief executive of the city council, negotiated the deal with BT which allowed them to rip off the city, and his henchman David McElhinney, who Henshaw fixed up with the job of chief exec of LDL, where he could abuse his power and waste public money with impunity.

    The Lib dems allowed this to happen and then tried to cover it up for fear that it would expose their ineptitude and incompetence. We shall wait and see whether Joe Anderson, the new Labour leader has more courage and does anything remotely significant to right the wrongs.

    But once again, congratulations for all your hard work and determination in exposing this corrupt deal, which will cost the people of Liverpool for decades to come. Very well done.

  • 2. Tweets that mention Frees&hellip replies at 20th January 2011, 9:22 pm :

    […] This post was mentioned on Twitter by Francis Irving, Adrian McEwen, Ross, Karl Walker, MattFinnegan and others. MattFinnegan said: REQUIRED READING: TERRIFIC RESULT FOR JULIAN RT @rossjones: If you live in #Liverpool, this ( ) makes very grim reading […]

  • 3. The Bickerstaffe Record &&hellip replies at 9th February 2011, 4:37 pm :

    […] few days later he provided his first analysis, and it certainly makes for interesting reading.  It does look as though BT has been squeezing the […]

  • 4. artful dodger replies at 14th February 2011, 11:34 pm :

    Interesting to note the new CWO’s first decision in his new job????? to hand back the reins to LDL Dave. What is the CEO getting paid for and isnt this a duplication of work?

  • 5. John replies at 23rd February 2011, 9:41 pm :

    Good work. This is such a disgraceful abuse of power and waste of public money. Please note that it isn’t only Liverpool Council Tax – every council is funded 80% out of general taxation (income tax, VAT etc). Therefore we are ALL being ripped off by these people.

    I understand that Mr McElhinney is still working at the Council, even though the new Chief Exec has arrived. Disgraceful. BT pocketing 10 million pa over the odds while frontline services are cut.

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