Claims don't match reality of 'strategic partnerships‏'

As Edinburgh's unions fought off a bid last week for partnership (privatisation) of the council's Environmental Services, the latest European Services Strategy Unit/PPP Database shows "evidence of a large credibility gap between the claims of strategic partnerships in procurement and the reality of high-cost, high-risk, and low performance contracts", according to Dexter Whitfield. http://www.european-services-strategy.org.uk/ppp-database/

Among the findings of this year's PPP database were that the new Strategic Partnership Performance Ratio was 22.7% (combining contract terminations, major reductions in the scope of contracts, and significant problems in contracts).

The database shows Newcastle also won an in-house bid but that contracts worth £9.6bn had been awarded across the country since 1998, affecting over 19,000 staff. It also found that a new trend has emerged with private companies offering inducements, usually publicly funded, to establish funds to train apprentices and/or fund community projects. Offers of apprenticeships was one of the elements in the Enterprise bid in Edinburgh.

The main bullet points of the database are:-
• 48 strategic partnership contracts have been awarded since 1998 with a total value of £9.6bn and employing over 19,000 staff when the projects commenced.
• 44 contracts are currently operating, three were terminated (plus one pending termination) and one completed the contract term but was not renewed.
• A further 14 projects are in procurement – 6 ICT, corporate and technical services; 4 highway services and 4 waste contracts.
• The new Strategic Partnership Performance Ratio is 22.7% (combining contract terminations, major reductions in the scope of contracts, and significant problems in contracts).
• Three companies – Capita, BT and Mouchel dominate the rankings in all three categories with a 59.9% market share by contract value (63.7% in 2009). The same three companies, but in reverse order, have a 63.1% market share based on the percentage share of staff employed.
• 56.6% of staff were TUPE transferred with a further 3.8% transferred under TUPE Plus. 31.0% of staff were seconded to a joint venture company between the authority and contractor, and a further 6.2% are TUPE transferred to a joint venture company.
• 50% of the current operational contracts are in the North (North East, North West and Yorkshire and Humberside regions). The North West of England has the highest concentration of strategic partnerships by number, value and the number of staff employed.
• One local authority (Newcastle City Council) submitted an in-house bid, which was successful.
• Eleven other local authorities developed strategic partnership projects, in many cases reaching the procurement stage, but ultimately rejected this approach. One of these authorities later retendered and established a strategic partnership.
• A new trend has emerged with private companies offering inducements, usually publicly funded, to establish funds to train apprentices and/or fund community projects.
• 40 waste management contracts are in operation, virtually PFI projects valued at £23.3bn, of which 9 include collection of household waste and other local environmental services.
• 40 waste management contracts are in operation, virtually PFI projects valued at £23.3bn, of which 9 include collection of household waste and other local environmental services.

Five-year trends
A comparison of the 2011 and 2007 PPP Databases reveals:
• A 37.1% increase in the number of strategic partnerships in a five-year period.
• The total value of contracts increased 32.2% and the number of staff involved increased by 22.0%, indicating a decline in the average size of contract with lower number of staff.
• Capita, BT and Mouchel retain their position as the three largest contractors by number of contracts, value and number of staff, but their share by value has declined from 65.4% in 2007 to 59.9% in 2011. Their share of the number of staff employed in strategic partnerships has fallen from 70.2% to 63.1% in the same period.
• Ten projects were in procurement in 2011 compared to four in 2007.

Dexter Whitfield said “The 22.7% Strategic Partnership Performance Ratio is evidence of a large credibility gap between the claims of strategic partnerships in procurement and the reality of high-cost, high-risk, and low performance contracts.”