Service Reviews â Outline Business Case - Somerset County Council

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(Cabinet – 2 May 2012) 3.4.3 Disbenefits and any potential mitigations • Initial resource requirements will be high. Due to the complexity of the service and the high levels of operational risk involved in service provision there would be significant costs involved in a competitive tender process, although the tender would be subject to a Part B procurement process. Estimates received from the Strategic Procurement Service are that the costs would be in the region of £1.5m (+/- 500k) and that the process would require a dedicated team of 6 staff. • Due to the size of the service and the need to carefully involve service users and carers at all stages of the tender and evaluation process is estimated that it would take in excess of six months. • There are significant and complex property issue (see page 12 for background), and options to address the associated cost and risk factors need to be developed as part of the full business case. • Robust monitoring arrangements will need to be to be in place to protect vulnerable customers and provide reassurance to carers, many of whom expressed concern about the potential involvement of a “private for profit” provider in the provision of care and support for their loved ones during initial feedback meetings. Many carers indicated that the concept of “not for profit” provision was more acceptable. • There is a potential risk of a service provider offering vacancies in supported living accommodation to people currently living outside of the County, ultimately leading to funding becoming SCC’s responsibility under ordinary residency rules. There could also be additional costs falling on NHS Somerset. There may be opportunities to mitigate these risks through SCC’s interest in the property assets utilised by the LDPS, including those originally purchased using Section 28a funding. These opportunities will need to be considered further in the development of the full business case. • Contracting with a single provider for these services, which currently account for over half of the expenditure, may reduce choice and service quality unless robust contract management processes are put in place and adequately resourced. • The service, as it stands, is in the process of significant reconfiguration that is scheduled to be completed by March 2014, and potential bidders are likely to price the risks associated with completing this into any bid. In the medium to long-term, this would be expected to exceed the short-term costs of accelerating the process so it is completed before any transfer takes place. • A full reassessment of all residential care and supported living care packages is undertaken in advance of any transfer in order to mitigate some, but not all, risks related to cost escalation. This will need to be undertaken in addition to normal care management activity and will therefore incur additional costs. • In the short-term at least there would be double funding of overheads, including some of those associate with Southwest One where they relate to activity that is not releasable. • The risk of the new service provider(s) failing within the contract duration cannot be completely ignored. There would be extremely high levels of risks to vulnerable people as well as operational, financial and reputation risks to SCC should the new provider fail due to the specialist nature of the services provided A - 28
(Cabinet – 2 May 2012) and the limited capacity in the market by other providers to “step in” in a timely manner. • Potential cost of warranties and indemnities provided by the council to the provider in relation to staff, assets and other resources. 3.4.4 Risks associated with this option 26 Option Description of Risk Likelihood Mitigation C and D C and D C and D C and D C and D C and D There is double funding of overheads/back office services due to the externalised /outsourced organisation deciding to make its own arrangements for services currently while costs to SCC remain The effect of the pensions deficit results in the externalisation/outsourcing makes one or both of these options unviable The VAT implications of externalisation/ outsourcing makes one or both of these options unviable Robust contract monitoring capacity is not put in place resulting in issues not being addressed at an early stage, and escalating to the point where there is financial or reputation damage to SCC The use of a single provider for 55% of SCC’s business in this area adversely impacts on competition in the local market for these services leading to escalating costs in the medium to long term The externalised (at the end of the initial period) or outsourced organisation uses excess capacity in the service to accept placements from outside of Somerset which become SCC’s responsibility under Ordinary Residency rules and also 4 Advice received corporately is that some double funding may be necessary in the short term 2 Examine in detail at an early stage of full business case development if these options are taken forward 2 Examine in detail at an early stage of full business case development if these options are taken forward 2 Examine contract monitoring capacity requirements in detail at as part of full business case development if this option is taken forward 3 Examine in detail as part of full business case development if these option are taken forward. In the case of Option D the risk could be partially mitigated by undertaken market shaping to try encourage existing national/regional providers in the market not currently operating in Somerset to participate in the tender 3 Examine in detail as part of full business case development if these option are taken forward. Risk already exists within current market place but will increase under both scenarios, although will be mitigated while an external organisation is operating within 26 This is an initial list of the main potential risks and full risk profiling exercise would need to be undertaken as part of the development of a full business case to identify the full scope of the risks associated with any one particular option A - 29
Page 1 and 2: (Cabinet - 2 May 2012) Somerset Cou
Page 3 and 4: (Cabinet - 2 May 2012) Personalisin
Page 5 and 6: (Cabinet - 2 May 2012) free to prov
Page 7 and 8: (Cabinet - 2 May 2012) 1 Scope and
Page 9 and 10: (Cabinet - 2 May 2012) personalisat
Page 11 and 12: (Cabinet - 2 May 2012) 2 Options fo
Page 13 and 14: (Cabinet - 2 May 2012) securing qua
Page 15 and 16: (Cabinet - 2 May 2012) excels rathe
Page 17 and 18: (Cabinet - 2 May 2012) living servi
Page 19 and 20: (Cabinet - 2 May 2012) • The serv
Page 21 and 22: (Cabinet - 2 May 2012) 3.3.4 Risks
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Page 27 and 28: (Cabinet - 2 May 2012) 4 Impacts of
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Service Reviews â Outline Business Case - Somerset County Council