Southwest One contract dispute cost council £5.9m
- 17 July 2013
- From the section Somerset
Somerset County Council has paid £5.9m to settle a contract dispute with an outsourcing partnership.
Southwest One tried to sue the local authority for £25m, but the matter was settled out of court in March.
Back office tasks are carried out by Southwest One for Somerset county and Taunton Deane borough councils and Avon and Somerset Police.
The council paid £3m for Southwest One services, £800,000 in staffing costs, and a further £2m in legal fees.
The £800,000 staffing costs was spent on bringing staff who were out-sourced back in-house.
The council could have been faced with a £40m bill if they lost the court battle, council leader Conservative John Osman has previously said.
Cabinet member for resources, David Huxtable, said: "In this kind of dispute with a major international blue-chip company you wouldn't want to go forward with inexpensive lawyers."
He added that the firm did make "some savings" for the council, but added: "It was a very complex contract and lots of the savings were predicated on an ever-increasing amount of money being put into public services and we know in the last four years that has gone into reverse."
The contract with Southwest One is due to run for another four years under renegotiated terms.
A spokesman for Southwest One said: "Both parties will focus on continuing to build their long term partnership as Southwest One evolves and delivers services to Somerset County Council and the other joint venture partners."
Opposition leader, Liberal Democrat Sam Crabb, said: " Overall it's got to be good news for Somerset, in that it's impossible to work with a strategic partner where you've got very big disputes going on so getting those disputes resolved is very important indeed."
The contract for Southwest One was signed with cross-party agreement in 2007, with the aim of saving the then Liberal Democrat-led authority about £180m over 10 years.
But last February, after the Conservatives won control of the council, its then leader Ken Maddock said the partnership was failing to deliver on the promised savings, which then sparked the legal challenge.