Serco and Lincolnshire County Council under fire over failures in contract before it even started

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Councillors have demanded answers after an independent report exposed a host of problems in the controversial contract between Lincolnshire County Council and Serco – before it had even begun.

As previously reported, the county council signed a high-profile £70 million contract with the international firm to provide a number of services for the authority in March 2014.

Serco began its five-year contract in April 2015 but since then a number of blunders have been highlighted.

In December 2015, Serco formally apologised following a catalogue of errors in paying teachers and other public sector workers.

Four months later, the organisation once again apologised to teachers after meeting with employees from 40 different schools in the county.

Early concerns

A report by global auditors KPMG was presented to the county council’s Audit Committee on November 21, listing a host of mistakes made by both Serco and the council.

According to the report, Serco was only told four months prior to going live that it would be responsible for the payroll of over 200 schools in the county.

A senior member of staff in financial services also claimed that Serco had not had any experience of using the Agresso finance system previously.

Issues between Serco and the council were highlighted as early as January 2015, months before the contract even started.

Complaints from the council about alleged poor performance, missing of project milestones, failure to manage Agresso and an absence of robust contingency planning were acknowledged by Serco.

In February 2015, the county council’s Audit and Risk Manager said that there was “no confidence that the payroll system will have been sufficiently tested,” and that no assurances could be given that the project would be able to start by the agreed contract date of April 1.

Despite this, the council went ahead with the start date.

The report states: “There is a significant amount of evidence that Serco were not ready to perform the services, as follows:

  • Their failure to engage effectively in the build of the system had left them with a deficient understanding of the way the system worked;
  • Their failure in some cases to put in place suitable business processes to reflect the change in the IT system they would be using;
  • Their inability in some cases to recruit suitably experienced and skilled staff particularly in the areas of payments and payroll; and
  • To challenge the council on changes to business processes including the need for approximately 1000 payroll codes.”

Report author Paul Diamond told the committee: “Assurance does not equal delivery. That is why there must be a contingency plan.

But in this case, when things went wrong, the council had nothing to fall back on.

The opposition Labour group has criticised Serco and the county council for its handling and overview of the contract.

Councillor Nev Jackson said: “We are 20 months into this multi-million pound contract and we still have teachers who can’t be completely confident they will get paid on time or the right amount.”

Councillor Rob Parker . Photo: Steve Smailes for The Lincolnite

Councillor Rob Parker. Photo: Steve Smailes for The Lincolnite

Councillor Rob Parker added: “This damning report makes 15 detailed recommendations about how the council should deal with the awarding of future contracts to avoid the very serious problems experienced with Serco over the past three years.

“Many of the failures were predictable and ultimately the Tory led administration must take responsibility.”

Council chief to consider findings

Councillor Sue Rawlins, chairman of the Audit Committee, said: “It is pleasing that the independent auditors found that the procurement of the Serco contract was sound, met all legal requirements and was well designed.

“The responsibility for service failings lies with Serco, which they have acknowledged. However, the report also suggests that there are ways in which the council could have increased our assurance that services would transfer smoothly, and we have asked the chief executive to consider these and report back.

The findings and recommendations will help us when we carry out similar outsourcing exercises in the future.

“In the meantime, I am sure the council will continue to work with Serco to resolve any outstanding problems. I have already spoken with the chief executive and leader of the council to report on our resolutions.”

Richard Wills, monitoring officer at Lincolnshire County Council, added: “Members of the committee had an opportunity to question the author on the report’s findings and make comments of their own.

“The committee resolved to receive the report, noted some specific comments that they referred to the chief executive, who has been requested to respond to the findings and recommendations.”

Here for the long haul

Abi Tierney, Serco’s delivery director, said: “This independent report outlines many of the challenges Serco has faced delivering this contract but also acknowledges the work we have put in to rectify previous mistakes, particularly over the last six months.

“We continue to work tirelessly, alongside the council, to resolve any outstanding issues and improve our performance. We have invested in additional resource to ensure issues are dealt with quickly and effectively.

While significant progress is being made, we know issues remain and are on track to resolve them.

“Serco is here for the long haul and learn from previous mistakes to ensure this contract is a success for Lincolnshire County Council and its workforce.”

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