A pioneering shared services deal has been delayed, after its key private sector supplier was dropped over contract concerns.

Liberata, used by both local and central government for back-office services, was due to sign a contract with Charnwood and Rushcliffe borough councils on 1 November. The agreement was unusual, with its partners coming from different counties – Leicestershire and Nottinghamshire.

But the deal was pulled at the last-minute amid claims Liberata had failed to meet the councils' contract conditions.

Charnwood BC said it had ‘learned Liberata will not be able to satisfy some of these conditions'. It said reports were currently being prepared for both cabinets to consider their position, including ‘the option of opening dialogue with the reserve bidder'.

Charnwood BC leader, Cllr Richard Shepherd, said: ‘The investment in the process to date has provided the councils with extensive documentation and a solid legal and commercial framework within which the councils can talk to a future bidder.' The plan was for Liberata to deliver information technology, finance, human resources and benefits and revenues for both councils, as part of a shared services partnership.

Founded by the Chartered Institute of Public Finance and Accountancy, Liberata has undergone turbulent times recently.
Chief executive, Robert Gogel, left in September, after selling Liberata's Financial Services business to HCL Bermuda.
And Richard Webster's tenure as acting chief executive has already been dogged by controversy over the company's contract to administer the Government's Educational Maintenance Allowances (EMA).

A spokeswoman for Liberata refused to comment on suggestions that the firm was struggling financially.

But Pendle MP, Gordon Prentice, demanded answers last week, after 100 temporary workers lost their jobs at Liberata's EMA administration offices in Nelson, Lancashire, just five weeks after securing them.

And this week, a further 200 staff employed at Liberata's Coventry office, also dealing with the EMA applications, suddenly found themselves unemployed.