In June 2019, the Assembly approved the recommendations within the Future Digital Services policy letter including entering into a 10-year strategic partnership contract with Agilisys Guernsey Ltd for the delivery of States IT services.
A series of reassurances were given about how robust the costings were and the detailed work that had gone into it.
The approved business case for the project projected a net reduction of £675,000 in the contract value in 2021 compared to 2020.
Instead £1.1m. of additional funding has had to be put aside.
‘The starting position was understated by £815,000 due to a number of contracts being omitted from the baseline contract, items included at an incorrect value and omission of contractual inflation increases in the 2020 baseline,’ the 2021 Budget says.
‘Allowance of £260,000 has been made for the 2021 inflation or indexation increases in those contracts.’
Covid-19 has also led to more projects being added and some accelerated, including the track-and-trace system.
Staff were provided with an extra 750 laptops and 250 virtual private networks to enable remote working, plus more than 1,500 Microsoft Teams licences.
There will be an ongoing cost and £425,000 was put aside in the 2021 Budget.
The agreement with Agilisys had two major cost components.
One is fixed for staff and for management of data centres, networks and telephony.
The second and largest component, worth about £10.5m. a year, is the cost associated with all third-party contracts which Agilisys manages on the States behalf.
Within this are more than 400 contracts covering a range of hardware, software and services that the States requires – these already existed when the outsourcing was agreed.
‘It should also be noted that the overall value of this component can increase or decrease as new requirements are commissioned and older requirements decommissioned. During 2020, seven new contracts have been added and this has resulted in an increase of around £140,000 to the baseline.’
The aim is to streamline the number of contracts.
The extra £815,000 comprised of £163,000 of omitted contracts, £127,000 of inflation and £400,000 in other adjustments that included additional software licencing to comply with contracts, costs of leaving old contracts and a one-off spend on extending a healthcare contract.
A further £110,000 was committed to Covid-19 related projects that had not been budgeted and a further £100,000 was required to potentially deal with adjustments to prepayments and recoveries required at the start of the contract.
‘The work undertaken by the team responsible for due diligence was extensive and the team spent over 18 months identifying IT contracts to ensure the contracted baseline was as accurate as possible,’ a States spokesperson said.
‘This enabled the team to establish a single central register for the first time.
‘It is however quite normal for there to be shifts in the baseline costs of complex IT outsourced agreements such as this in the first 12 to 18 months of the contract, particularly given the wide-ranging and complex nature of the States expenditure, which means it can sometimes be difficult to establish whether an agreement should be treated as IT.’
They said that the missed contracts represent around 2% of the total number.
‘It should be noted that these “missed” contracts do not actually represent additional spend but were contracts already in existence in committee areas but which had not been recognised within existing budgets. In order to accurately account for these contracts a budget has to therefore be established moving forward.’
Asked about the inflation and indexation costs, the States is ‘confident’ that the agreement with Agilisys will enable it to outperform underlying inflation on a like-for-like basis over the term.
‘Overall, the expectation in 2021 was for the budget to be lower by around £675,000,’ the spokesperson said.
‘However, it is now expected that costs will overall increase by around £1.1m. As outlined in the budget paper much of this expenditure was unplanned and could not have been foreseen. This includes additional sums relating to support for our Covid-19 response of approximately £425k. Additionally, this includes further cost pressures resulting from the upgrading of Bailiwick Law Enforcements systems in response to the HMIC report and in preparation for the end of the Brexit transition period. However, such costs do not and have not resulted from either mistake or mismanagement of the contract.’
The States report said savings from the project would begin in 2022 with £200,000, moving to £2m. a year annually.
When asked whether these would be delivered as promised, the spokesperson said that the agreement identifies savings in two parts: those that are guaranteed by Agilisys and those that are in addition.
‘During the first year of the agreement, Agilisys has both delivered the guaranteed savings as required and in addition has delivered both additional cash releasing and avoidance type savings. In one case alone, the potential financial exposure to the States was significant and this was successfully mitigated in entirety. In addition, the transition and transformation program identified a further £2m. of anticipated costs that have been able to be avoided.’