Rochdale council is ripping-up its 15-year outsourcing deal with Mouchel after only five years.
The consultant confirmed in a city trading statement this week that: “We are in discussions with Rochdale Council to mutually agree an amicable exit from our Partnership.
“If achieved, the order book will decrease by circa £130M, with negligible impact to operating profit and cash.”
Mouchel is lead partner in the Impact Partnership which signed a 15-year deal in 2006 to take over services including highways and property maintenance across Rochdale.
Services will now be taken back in-house by the council in the New Year.
Council leader Colin Lambert told Rochdale Online: “The reality is that the Impact Partnership was entered into in 2006 by all parties in good faith under very different economic circumstances and since that time the economic climate has fundamentally changed.
“In particular, the contract included targets for the delivery of jobs growth which have become increasingly difficult to achieve under global recession.
“As part of the review, council officers and the Chief Executive have held numerous meetings with the senior management of Mouchel and the Impact Partnership.
“Following consideration of the options, it is proposed that, because it has become clear that the targets for future potential jobs have become increasingly difficult to achieve in property and highways, these services will be brought back in house.
“This proposal is being made in an entirely amicable way. All parties are co-operating to the fullest extent.
“When the final accounts are settled, no element of compensation will be payable. The negotiation of legal agreements is progressing.”
Mouchel has endured a turbulent year but said its expectations for the period to July 2012 remain unchanged.
The trading statement said: “We have continued to win contracts and the actions to right-size the business are well under way, including plans to restructure the balance sheet of the Group within the first half of 2012 and return the Group to growth.”
