Council spends £7m to end IT contract
Kablenet.com
Published: 15 Sep 2005 16:50 BST
Bedfordshire county council has revealed that the cost of terminating its IT partnership with supplier HBS was over £7m.
The council announced in August that it had reached an agreement over ending the £250m IT contract with HBS after identifying "serious faults" with the deal.
According to a review of the service, the IT introduced through the partnership made errors in several areas including invoicing and accounting.
The council now says that it paid a one off sum of £6.75m to reach a settlement with HBS with a further £1m allocated from its reserves to cover transitional management and legal costs. An additional £949,784 was paid to HBS for schools' laptops but this was due regardless of the settlement.
A large part of the sum, £4.7m, is to purchase assets from the supplier including IT furniture and fittings which have been used to provide services to the council. According to a council statement, these assets cost HBS £6.7m to provide.
A further £2.05m is to acquire "goodwill, contracts and services" from HBS which are also to cover schools and other local organisations. Some of these services are said to "generate revenue to offset costs to council-tax payers".
Full details of the settlement with HBS remain confidential, however. Councillor Madeline Russell leader of the council confirmed that the authority has now taken over all HBS services, staff and assets which had come under the partnership.
"We were unhappy that, because of the nature of commercial negotiations, we had to keep the settlement terms confidential but we can now be open about the good deal we have made for Bedfordshire residents," Russell said.
The statement issued by Bedfordshire emphasises that HBS "was in breach of a number of its obligations" under the agreement.
Russell said: "We have taken a critical step in our drive to transform Bedfordshire. We have terminated our contract with HBS not to save money, but to improve quality and performance and work towards our goal of excellence.
"It has taken us less than two months to move from initial action against HBS to an amicable conclusion, and this has been achieved at a cost well within our estimates. We are confident that we've achieved a very good deal for the council and for Bedfordshire residents."
The contract between HBS and Bedfordshire was originally signed in June 2001, and was due to last for 12 years.
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