A UK council is set to use up to £25 million ($31 million) from the sale of capital assets such as property to fund an Oracle-based transformation project that has seen expected costs mushroom from £2.6 million to around £40 million ($50 million).

West Sussex County Council is taking advantage of the so-called "flexible use of capital receipts scheme" introduced in 2016 by the UK government to allow councils to use money from the sale of assets such as land, offices, and housing to fund projects that result in ongoing revenue savings.

An example of the asset disposals that might contribute to the project – set to see the council move off a 20-year-old SAP system – comes from [1]the sale of a former fire station in Horley , advertised for £2.5 million ($3.1 million).

[2]

Meanwhile, the delays to the project, which began in November 2019, forced the council to renegotiate its terms with Oracle, at a cost of £2.4 million ($3 million). The council [3]had expected the new SaaS-based HR and finance system to go live in 2021 , and signed a five-year license agreement until June 2025. The plans to go live were put back to 2023, and in the spring of 2024 delayed again until December 2025.

[4]

[5]

According to council [6]documents published this week [PDF], it has "approved the variation of the contract with Oracle Corporation UK Limited" to cover the period from June 2025 to June 2028 and an option to extend again to the period June 2028 to 2030. "The total value of the proposed variation is £2.377 million if the full term of the extension periods are taken," the council said.

Last year, [7]The Register reported that the total budget is set to be more than 15 times the figure initially forecast going from £2.6 million ($3.26 million) to nearly £40 million ($50 million) after a two-year period during which the project was not fully costed. DXC was appointed as systems integrator in 2021, but was given notice in July 2023 as there was "no real prospect of a deliverable plan being agreed" with the supplier. The council reviewed the project in 2024 and [8]inked a new £5.8 million ($7.2 million) SI contract with Infosys in November last year.

[9]

To accommodate the staggering increase in expected costs, the council has turned to using the sale of capital assets for projects expected to save money and improve efficiency.

A document, prepared for a meeting of the council's Performance and Finance Scrutiny Committee this week, said it intended "to apply £5.5 million of capital receipts in 2024/25 to fund" the Oracle transformation project. The money was earmarked for "investment in a transformational project that supports HR, procurement, and finance processes to enable automation and improved efficiency."

[10]UK council still hadn't fully costed troubled Oracle project 2 years in

[11]Someone's finally taking on £10M Hull City Council ERP deal to replace Oracle

[12]Brit council fumbles Oracle Fusion launch, leaving SAP to die another day

[13]Oracle Fusion rollout costs 15 times council's estimates in SAP rip-'n-replace

Long-term savings are expected through "automation and enabling more tasks to be undertaken via self-service," [14]the document said [PDF].

As well as the initial £5.5 million ($6.8 million) fund, the council intends to use the flexible use of capital receipts scheme to fund up to £20 million ($24.8 million) in projects in the next financial year, 2025/26. It names the Oracle project as "one major project likely to qualify for the capital receipts flexibility."

Ordinarily, the sales of capital assets are used to fund more capital projects: building infrastructure communities need, such as schools and fire stations.

[15]

The government began allowing councils to use the sale of capital assets to pay for other projects in 2016 and has extended the scheme until March 2030, [16]a move councils have welcomed .

Last year, the Local Government Association, a representative body for councils, warned that capital receipts "are not 'free money' and they can only be spent once."

[17]It said : "They cannot be used to fund long-term ongoing revenue pressures. Using them extensively to finance revenue costs is also likely to have a negative impact on capital investment by local authorities."

West Sussex County Council will be hoping its Oracle project achieves the savings it promises.

In a statement sent to The Register , West Sussex CC spokesperson said:

"In certain cases, when supported by a robust business case, local authorities can allocate a portion of capital receipts to revenue-funded projects, particularly when it enables transformational service improvements. Purchase and implementation of new software is a long-term investment for the Council that is set to modernise working practices and bring associated efficiencies."

Regarding the Oracle contract extension worth £2.377m, the council did not get third-party support in negotiating with Oracle.

"This was not required as the Council’s commercial team led the discussions, which resulted in a saving of [circa] £1m over the extension term when compared against renewals on existing terms," the spokesperson told us. ®

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[1] https://www.sussexexpress.co.uk/news/politics/council/former-horley-fire-station-site-is-to-be-sold-by-west-sussex-county-council-4487145

[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z5dnXTK4FuHbq-6fef7cYgAAAMA&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[3] https://www.theregister.com/2021/12/14/west_sussex_county_council_faces/

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z5dnXTK4FuHbq-6fef7cYgAAAMA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z5dnXTK4FuHbq-6fef7cYgAAAMA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[6] https://westsussex.moderngov.co.uk/documents/d2038/Printed%20decision%20Contract%20Extension%20for%20Oracle%20Fusion%20Licences%20-%20OKD302425.pdf?T=5

[7] https://www.theregister.com/2024/11/26/uk_council_oracle/

[8] https://www.contractsfinder.service.gov.uk/notice/bc90016f-a41d-48d4-9c23-be284cc2c5da

[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z5dnXTK4FuHbq-6fef7cYgAAAMA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[10] https://www.theregister.com/2024/11/26/uk_council_oracle/

[11] https://www.theregister.com/2024/10/18/workday_erp_hull_city_council/

[12] https://www.theregister.com/2024/05/23/east_sussex_oracle/

[13] https://www.theregister.com/2024/04/30/uk_council_sees_cost_of/

[14] https://westsussex.moderngov.co.uk/documents/b13119/Item%205%20-%20Council%20Plan%20and%20Budget%20Report%20Pack%20Wednesday%2022-Jan-2025%2010.30%20Performance%20and%20Finance%20.pdf?T=9

[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z5dnXTK4FuHbq-6fef7cYgAAAMA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[16] https://www.local.gov.uk/parliament/briefings-and-responses/lga-response-call-views-new-local-authority-capital

[17] https://www.local.gov.uk/parliament/briefings-and-responses/lga-response-call-views-new-local-authority-capital

[18] https://whitepapers.theregister.com/