Milton Keynes Council has agreed a deal with Mouchel to change its 12-year support services contract in a move which will see Mouchel paid an up front fee but the unitary charge under the existing deal scrapped.
The deal began in 2004 whereby Mouchel is contracted to provide operational and back office functions for the council.
The council stated: “It has become evident in recent months that the nature of the original contract no longer allows the council sufficient flexibility to operate most effectively in what is a very different political and economic environment from when the contract was originally conceived.”
As a result, services will be brought back into the council under a new shared framework to run until 2018.
The council stated Mouchel will continue to provide services “where it provides value for money”.
Mouchel announced in March it would close 13 offices and restructure the company into two divisions in a bid to save £18 million and “secure the long term viability of the business”.
It announced it was set to be delisted from the stock exchange in a proposed debt for equity swap aimed at protecting the future of 8,000 staff last month.
David Hill, Milton Keynes Council’s chief executive said: “Mouchel has successfully delivered significant benefits to the council over the years. However, the political and economic environment has changed dramatically over the past nine years and both Mouchel and the council agree that, as a result, the flexibility of the existing contract is insufficient to meet the council’s future requirements.”
Michael Hodgson, Mouchel’s partnership director said: “We have worked closely with the council for many years to help them deliver excellent services to their residents.
“Over the past 18 months we have looked at ways to provide additional benefits and added value through the services we already provide, in order to meet their changing requirements. Under the new framework, we would be in a position to provide the council with greater flexibility to respond to new and changing requirements.”
The council said the proposed new deal will save the council money overall.