Faced with moves to competitive tendering, local authority computer departments are having to change their identity

The Guardian (Manchester); 28 June 1990; Claire Neesham; p. 29

COMPETITIVE, cost effective and customer oriented are not terms traditionally associated with local council computer departments. But with central government committed to increasing local government efficiency through competition, and the industry shifting to distributed computing, council-run operations are starting to change. The information technology departments at Cambridgeshire County Council and South Oxfordshire District Council are just two of many operations that will take on a more commercial role over the next few months. Surrey County Council and Birmingham City Council are already assessing the first year of their organisation's chosen routes to independence. Rob Briggs, head of computing at East Sussex County Council and chairman of SOCITM, the local authority computer group, says: ``The drive for independence really started a couple of years ago when the Government indicated that computing would be added to the list of services to be put out to competitive tender.'' Although compulsory competitive tendering (CCT) no longer appears imminent for computer departments, those departments where CCT is used want the best value for money from services such as information technology. The local authorities' response to the changes range from management buyouts, through facilities management (FM) to reorganising IT in a ``more businesslike'' way for example, by setting up direct service organisations. Surrey County Council is one local authority that has opted for the DSO route. In April 1989 it formed Information Systems Services Surrey (IS3) which took on the role of contractor. IS3's main function is to satisfy the needs of the council's customer departments. But it can tender for outside work in the public sector. The council's chief officers are the ``client'' they sanction the IT spending. The client also has full responsibility for the council's Unisys 1100/92 mainframe and network. The majority of Surrey's IT staff stayed on to join IS3. With the DSO approach, departments are free to look outside the council for computing services. And in its first year IS3 did lose one customer (the library service) to a commercial competitor. But Roger Toms, IS3's general manager, expects council work to remain more than half IS3's business. Overall, Toms says IS3's first year of operation has been a success it even made a surplus. At present he is satisfied that the DSO approach is the right way to go. ``I think it gives Surrey the best of both worlds. We are a commercial concern but we still have a strong allegiance to the council.'' Like Surrey, East Sussex's computing services are structured as a DSO. But Rob Briggs has reservations: ``I'm frustrated that we can't compete in the private sector, whereas they can compete with us.'' Some authorities have got round this by putting their services out into the private sector. Birmingham City Council was one of the first to sign a facilities management contract for its computing services. Its IBM 3090 and 3084 mainframes were handed over to a facilities management company, ITNet, last August. ITNet also operates the council's ICL and Bull machines. Terry Wales, the council's head of management information, says that before FM, the city council operated its computer services as a direct service organisation. But ``we decided that a DSO was not sufficient because the business of the council was changing fast, and we wanted an IT department that could keep up with that change.'' Going private can have problems. West Wiltshire District Council opted for a management buyout, but West Wiltshire Information Systems Ltd came under investigation by the Audit Commission and is now in liquidation, with the council taking its data processing back in house. But this has not deterred South Oxfordshire District Council, which will complete its management buyout on 1 July. John McLintock, general manager of South Oxfordshire's IT services, says: ``We decided on this route last December. We were already pursuing external contracts for our geographical information systems skills. This meant we couldn't become an internal DSO and we didn't want to be swallowed up by a big FM group.'' McLintock admits that the situation at West Wiltshire did make his council a little wary, so they asked the Audit Commission to monitor the buyout from an early stage. The new firm, McLintock Ltd, has signed a three-year contract, worth 1,475,000, to run South Oxfordshire's ICL Series 39 and McDonnell Douglas Series 19 machines. When this expires the contract will be put out to tender. Each of the routes to financial independence has its champions, but whatever a council may decide, care has to be taken. Competitive tendering is not yet compulsory, but it is best to be prepared.

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