2e2 - When Outsourcing Goes Wrong
Barnet Council have been having trouble with their IT infrastructure for some time. Back in 2011 an internal report identified that the Council was having difficulties with their IT Infrastructure Supplier, 2e2, stating that:
“2e2 contract was put in place to transfer the operational management and risk of core infrastructure to a private provider. 2e2 no longer feel responsible for this and have passed all risks back to the council, on the basis that all equipment has reached EOL (End Of Life)”.
The report identified that a key risk was that, “2e2 will pass all risk back onto the council and not deliver to their contractual arrangements” and that to mitigate that risk the council should, “Improve the relationship with 2e2 and look into terminating the 2e2 contract early and bringing services and staff, under TUPE, in‐house, if necessary”.
Unfortunately, Barnet ignored its own advice and continued to engage 2e2 at a cost of over £1 million a year, including an annual up-front payment of £400,000. In January 2013 2e2 went into administration and withdrew its services. This leaves Barnet £220,000 out of pocket for the unused up-front fees and scrabbling around to find someone else to run the IT infrastructure, without which the council would struggle to function.
To get themselves out of a hole quickly, Barnet Council have appointed Capita, without any form of tender, on the basis that it was an emergency and they had already had discussions with Capita to take over the running of this service. This new contract will cost £72,595 per month.
The Council states that they did undertake a risk analysis of 2e2 in January “using Experian reports” and that “the report stated the company was satisfactory”. However a quick check on the internet would have shown that suppliers have not been able to get credit insurance on goods supplied to 2e2 for some time and that 2e2 were handed a number of County Court Judgements in 2012.
If Barnet had simply followed its own risk register advice back in 2011 and brought the service back in house, we would not be in this position. It also shows the massive risk that comes with outsourcing key services and that even large companies can go bust.
Barnet need to stop taking risks with our services and abandon One Barnet now.