Magazine article Public Finance

Essex Faces Damages Claim after Terminating BT Contract

Magazine article Public Finance

Essex Faces Damages Claim after Terminating BT Contract

Article excerpt

Essex County Council is facing a claim for 'substantial' damages after terminating an IT contract with BT worth at least ?250m.

The row between the council and the telecoms giant comes as Essex moves forward with controversial proposals to contract out 'any or all' of its services in an outsourcing deal worth up to ?5.4bn.

Essex signed the ten-year contract with BTs Syntegra subsidiary in 2002, with 130 council staff and 200 third-party contracts transferred to the company.

The strategic partnership contract, valued at ?25m a year when it was signed, extended well beyond basic IT services.

A 2003 report on the deal by IT industry analyst Gärtner highlighted the central elements as transformation projects to re-engineer internal processes and customer services, and the plans to identify opportunities to provide services to other councils. Transformation projects included the introduction of new payroll and human resources systems.

But the two partners could face each other in court after Essex axed the contract this week.

Neither side would confirm whether the deal had a break clause, but the Gärtner report reveals that it had one formal break point that allows it to be terminated in the seventh year' - 2009 - as well as provision for a two-year extension. …

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