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Finance watchdog warns about being 'seduced' by IT partnerships

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The Audit Commission says councils must be not be "seduced by the warm language of partnerships".

Local government IT partnerships intended to overcome the drawbacks of traditional contracts, often fail to live up to expectations, an Audit Commission report (pdf) reveals.

In an examination of so-called strategic service delivery partnerships (SSPs), long term contracts through which councils buy services from a private sector supplier, the commission found that many SSPs have yet to generated all the intended benefits. These include greater flexibility, economies of scale, innovation and profit sharing.

The report, published yesterday, found that the scope of SSPs varies. Some bundle a range of different services together, for example back office services such as IT, human resources, or financial administration, alongside front line services such as revenues and benefits or other customer services.

Other partnerships focus on a single service area related to very specialist support service, including highways maintenance or school support.

Although some councils said they had benefited from investment in infrastructure, such as an upgraded IT system, others found it difficult to quantify the benefits arising from the SSP.

A key issue identified in the report is that technically complex services such as IT are less amenable to long term specification due to the pace of technological change.

The Audit Commission concludes that councils should enter into these complex partnerships only if they have the high level of expertise needed to get good value for public money, as circumstances change over a long time.

Commission chair Michael O'Higgins warned that all partnerships are risky and two out of every three fail. Local authorities "should not be seduced by the warm language of partnerships", he said.

"Robust option appraisal before being committed, designing flexibility into the arrangements and strong contract management from the start, are the vital ingredients for success."

Alongside its report, the Audit Commission published a framework aimed at helping local government to get better value for money by managing their existing partnerships more effectively, or by weighing the pros and cons of entering a new one.

The framework, which identifies issues that councils will need to consider at the initiation, procurement and contract management stages, draws on the experience of councils that have pioneered SSPs, as well as existing technical guidance.

This article was originally published at Kablenet.

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