Local council drops outsourcing plans

Walsall Council calls off negotiations with chosen supplier

Walsall Council has called off a planned £650m outsourcing deal with Fujitsu Services.

The West Midlands council had planned to outsource its IT operations to help drive service improvements after a 2002 Audit Commission report named it the worst-performing local authority in the UK.

But council leader Tom Ansell says Walsall has managed to make improvements in recent years, and received a ‘good plus’ rating from the Commission’s most recent inspection.

‘When we began looking at this project, the council was in a weak position and uncertain about how service improvements could be made without a partner. Walsall is a very different authority now,’ said Ansell.

Peter Hutchinson, managing director of UK public sector at Fujitsu Services, says he is disappointed and surprised by the council’s decision.

‘We felt that the proposition on the table was one of great benefit to the council, but it is their prerogative whether they go ahead with these things or not,’ he said.

The two sides have been negotiating the contract since December 2004, when Walsall named Fujitsu as its preferred bidder.

Hutchinson believes the council pulled out of the contract because it was worried about cost.

‘Since the settlement of the latest year’s budget allocation with the government they have been quite concerned about their position. I think the budget issue has made them quite short-term in their thinking,’ he said.

‘We’ve known for a few weeks that there was some difficulty, but we still expected that they would approve the deal.’

Ovum analyst Tola Sargeant says the sheer size of the Walsall deal, which had been expected to run for 12 years, meant negotiations had been long and intricate.

‘During that period Walsall has picked up a lot of good ideas and suggestions from Fujitsu, and perhaps they will now try to put some of those into practice on their own,’ she said.

‘Nothing of this size had been tried before, and other contracts of a slightly lower size have also had long negotiating periods.’