A potential contract dispute between Birmingham City Council and its IT and call centre company Service Birmingham has been headed off after the contractor agreed to foot a £4.3 million bill for new server equipment.
Birmingham’s ruling Labour group refused to pay for the new server at their first cabinet meeting in June.
Upon investigation it was revealed the council is indeed liable to pay for the hardware that software developed by Service Birmingham uses. The current equipment is at six years old, which is, in IT terms, archaic.
By the time the report was presented again this week it had emerged that Service Birmingham had found some cost savings and will, over the next six years, pay for the server.
In his report to the committee strategic director for resources Paul Dransfield said: “It may be a surprise to members that, despite its cost, the joint venture agreement with Service Birmingham does not include the provision of hardware for the servers or storage that the ICT systems use.
“The responsibility for these in the contract rests with Birmingham City Council who owns it and the cost of its replacement is also not part of the contract with Service Birmingham.”
Or as one councillor muttered under their breath: “It’s like giving Service Birmingham your watch then asking it the time.”
It is the second time the new contract has left political leaders stunned.
Last summer a row erupted after it emerged that dozens of IT developer jobs were being off-shored to India, at a time when Birmingham is suffering from high-unemployment.
The political fallout saw this part of the contract renegotiated – which will cost the council an additional £12 million by 2020.
The cabinet member in charge of contracts Stewart Stacey said: “As I discover more about Service Birmingham I am more and more amazed by the terms and conditions of the contract.”
Two years ago the Capita-run contractor signed a five-year extension to its Service Birmingham agreement with the council taking it to 2020. As well as cutting the cost to the taxpayer it required considerable renegotiation of the terms.
Labour has launched an independent audit of the £1 billion Service Birmingham contract which is due to reveal its findings later this year.