IT provider goes bust forcing 'emergency' council contract (From Times Series)

Costly Capita arrangement prevents Barnet Council IT 'catastrophe' after 2E2 goes into administration

12:39pm Monday 11th March 2013 in News By Chris Hewett

Barnet Council is forking out tens of thousands of pounds for “emergency” IT services after its regular provider went into administration.

The authority has been forced into a costly interim arrangement with business processes firm Capita after IT company 2E2 Ltd called in administrators.

Finance officers are now looking at how the authority can reclaim £220,000 in advance payments to 2E2, which passed a council credit check days before it collapsed.

The council is now paying £72,000 a month to Capita compared to the £69,000-a-month contract it had agreed with 2E2, which provided technology services for the council’s security, data storage and communications.

Barnet Labour says the news should act as “a warning shot” to the council over its One Barnet outsourcing scheme, under which it is looking to hand over £700million of contracts to the private sector.

Labour group leader Alison Moore said: “It seems crazy. It shows that putting all your eggs in one basket can be disastrous if the agreement fails.

“The situation highlights the risks of outsourcing and shows that the authority is very vulnerable when it puts its fate in the hands of private companies.”

2E2 informed the council of its precarious financial state on January 29.

Nine days later, the business cancelled its £836,000-a-year contract and ceased provision of all IT services.

The information was released in council papers published on Thursday, in which officers predicted “catastrophic” repercussions if an alternative provider was not found.

Capita had already successfully bid to take on the council’s IT provision in June under the customer service contract tendered within the One Barnet scheme last year.

The decision is the subject of a judicial review, due to be heard at the High Court next week, but council officers quickly arranged an “emergency” contract to ensure IT provision overlapped.

Councillor Daniel Thomas, deputy leader and cabinet member for resources and performance, said: “I’m very pleased with the way officers handled this and we were able to move seamlessly to a new support contract.

“There are obviously costs attached to the contract but there would also be costs attached to an in-house service as well.”