Telecoms giant hits back over scrapped council contract

RIPPED OFF: Labour leader Jennifer Mein

RIPPED OFF: Labour leader Jennifer Mein

Bosses at BT have broken their silence over criticism of One Connect Limited by insisting that a scrapped contract would have saved taxpayers £21m.

The communications giant has hit back at a Lancashire County Council (LCC) report which said its partnership with the communications giant had intended to charge a 20 per cent mark-up on a community alarm services deal – costing the authority £1.4m.

When the initial review was published, County Hall’s Labour leader Jennifer Mein said she “didn’t believe we would be ripped off to this extent”.

But following weeks of talks between the two parties about the future of One Connect Limited (OCL), BT has now produced its own damning counter report, which the Evening Post can exclusively reveal.

The seven-page document labelled the LCC report “incomplete”, “inaccurate”, “unbalanced” and “potentially misleading”.

It concluded: “It is worrying that such a report has formed the basis of support for a decision by the leader to forego up to £21.3m of savings, that would have had no impact on LCC jobs and would have been given to OCL to achieve.”w LCC pulled the plug on the deal in September.

It would have seen BT work with a company called Tunstall Healthcare to provide new telecare equipment and a home response service, for example when a resident has an emergency such as a fall.

However, concerns about the negotiations were raised by Tunstall, who did not want to transfer the intellectual property over to BT - a direct competitor.

BT said LCC had asked OCL to produce two proposals, but LCC’s report focused on just one element.

It said OCL quoted a price of £240,000 to create a central monitoring system to deliver the services of the current four providers for telecare and 33 providers for community alarms.

BT explained the second proposal was based on increasing the number of telecare users from 1,100 to 6,900 and moving the 16,579 community alarms users under OCL’s new monitoring service.

It argued even without increasing the number of users, it would have saved £1.3m on telecare services and £5.4m on community alarms – a total of £6.7m.

And it said assuming the predicted growth, the figure of £1.3m would have rocketed to £15.9m – representing a £21.3m saving overall.

BT claimed OCL had shared its pricing principles with the council and the 20 per cent mark-up of Tunstall’s costs, which “make a small contribution to profit” were “mainly to recover overheads such as supplier management, delivery risk and central management” and would contribute to a total profit of 11.6 per cent.

It said: “These mark-ups and overall profit margins must be put into context with the £21.3m saving the council could have made.

“The overall proposal from OCL needs to be considered rather than cherry picking particular items.”

BT said the suggestion the mark-ups equated to £1.4m “did not seem realistic” and said accusations OCL planned to charge inflation on Tunstall’s costs were incorrect.

It dismissed the idea there was a need for the council to invest £2.8m in one-off costs and said OCL had made “no such mention in its proposal”.

BT said: “The conclusion that can be drawn in this case is that the report is implying that OCL is double charging when it is clearly not.

“The further reference to double charging of marketing costs is equally incorrect.”

And it said the report was “potentially misleading” because “it makes unfounded disparaging comments about the Lancashire Procurement Centre of Excellence (LPCoE) and implies without evidence that OCL is overcharging in other areas of the OCL contract.”

The council’s former Conservative leader Geoff Driver, who signed off the deal, called for an independent inquiry into OCL, which was set up in May 2011 to help save the council £400m over 10 years.

He said: “BT are an international company and they are not likely to make frivolous remarks, so their comments should be treated seriously.

“BT are saying one thing, the county council is saying another, and the people of Lancashire deserve to know the truth.

“This is why I have asked for a completely independent, thorough investigation.”

Coun Driver said this should look at the original contract between the council and BT, the way it has been implemented and what results it has produced, and sub-contracts like the telecare deal.

He said: “I proposed something similar in the summer. The Labour group used a part of the constitution that has never been used in the living memory of anybody here at the council now, and asked for the matter to be deferred.

“I am therefore left asking, what have they got to hide? I know I’ve got nothing to hide.

“My proposal would be again for the external auditor to do it.”

LCC said it refuted the BT report’s findings.

Coun Mein said: “We absolutely refute the claims made in this report and have already written to OCL board members explaining why.

“Most importantly, the facts of the situation don’t support the claimed level of potential savings quoted in it. In fact, the figures in the report suggest that the OCL price would have cost the council around £50,000 more each year than our current arrangements.

“The county council will not miss out on savings and we will make sure best value for money is achieved in these services despite the considerable problems with the tender undertaken by OCL earlier in the year.

“The council’s budget strategy for the next four years includes a proposal to deliver savings of £6m over the next four years and £4m every year after that through commissioning telecare services.

“We also refute the suggestion that the 20 per cent mark up on prices was agreed or even transparent. One of the main reasons for creating OCL was to save the council money and adding 20 per cent to our costs certainly didn’t do that.”




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