The Lord Chancellor’s department has started a ‘revolution’ byices contract to CSL. outsourcing its accounting services in a #130m Private Finance Initiative deal.
The contract, to develop and operate a system which will meet the new resource accounting standards, has been won by CSL, a subsidiary of Deloitte & Touche.
David Bowles, CSL director, said: ‘This is an important development in the market. It’s a sign of things to come, not just in other government departments, but in local government, as authorities look for best value. It is exactly the kind of thing Hilary Armstrong (local government minister) is looking for.’
With some departments struggling to meet the resource accounting deadline – they are supposed to have prepared their first set of resource accounts by April – similar deals may be struck soon.
‘It is a big chance for us,’ added Bowles. ‘The current systems may struggle to cope with a move to full-blown resource management and output costing.’
The Department of Trade and Industry, which already uses CSL for some of its financial services, is believed to be in discussions about the potential for a PFI financial services contract.
CSL will be paid around #130m by the Lord Chancellor’s department over nine years, but will be penalised for late delivery of major financial, human resources and information systems. CSL will also have to meet the cost of replacing equipment and ensuring year 2000 compliance. Around 85 accounts staff will transfer to CSL.
The job will be made more difficult as the department’s accounts were qualified for the seventh successive year by the National Audit Office. But Bowles denied this would be a major problem.
‘This is a revolution,’ he said. ‘Obviously it is going to take time to get where people want us to go, but we have huge incentives to get it right. This is not a consultancy deal where we can walk away if things don’t go as we want.’
He also denied the qualified accounts had given CSL an upper hand at the negotiating table, pointing out that Coopers and KPMG had provided tough competition.
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