Purpose

The KPMG contract for Transformation Management Office (TMO) contract commenced on 21 July 2025 for 12 months, with an option to extend for up to a further 12 months.

(Contract award ref 03/07/2025PB-2526-000009-S-A. Key Decision Ref 0325ACE)

KPMG were commissioned to operate the Council’s central TMO and support delivery of the Target Operating Model (TOM), with an explicit requirement to embed capability so the Council can operate independently at the end of the engagement.

KPMG have stabilised governance, reporting and financial control and provided valued short-term capacity. However, Council service reviews confirm that organisational change and capability transfer outcomes are not yet met, and delivery impact remains uneven. The proposed extension should therefore be treated as a transition rather than a simple rollover.

The proposal is to exercise the permitted extension for up to 12 months from July 2026, including a pared down TMO function, with a view of exiting early as and when the necessary resources / skills can be permanently recruited as part of a wider Croydon permanently staffed transformation unit.

Decision

1. 1.

a)   Agree the exercise of the permitted extension for a period of up to 12 months, from 21/7/26 (noting the council has the ability to terminate for convenience) on 90 days notice, and an increase in the contract value by a maximum of £888,700 from £1,811,300 to £2,700,000 (an increase of 49%) excluding VAT.

b)    Note that the contract was originally awarded for a maximum sum of £1,861,300 in year 1.

1. 2.        Note further that the contract was previously varied in March 2026 and the value of that variation is included in the £888,700.

Reasons for the decision

The Council’s Future Croydon Transformation Programme is complex and will require the continued support of a TMO partner for at least a further 6 months from July 2026.  The Council does not currently have the capability to adequately support the Transformation Programme.  While an extension was always intended as an option in the original procurement strategy, the contract award was for a 12-month initial term and value. Any variations or extensions are subject to further governance and approvals. What the Council requires from the extension is a pared back/slimmed down TMO support service from KPMG and an upskilling of the Council’s inhouse team so that by the end of the contract, be that at 6 or 12 months, the Council has the capability to support transformation by itself.

Note the council has the right to terminate the contract at any time without reason by giving the supplier 90 days written notice.

Alternative options considered

A gateway review of the KPMG TMO contract was undertaken by Peter Gadsdon, Workforce Transformation Lead, on behalf of the Assistant Chief Executive.  The review considered three options.:

Option A – Extend (recommended for consideration if continuity isrequired): agree a time-bound extension with clear deliverables (delivery support plus transition), explicit handover dates, and agreed Council resourcing to absorb TMO/governance, change/comms and BA capability.

Feasibility - very feasible as a continuation of existing delivery model. However, given the £2.7m approved budget, the continuation of current scope would only be affordable for 4-5 months.

Benefits – this would continue the current extensive support to the Transformation Programme, and likely include some of the existing investment by KPMG provided at no cost to the Council

Drawbacks – incurs further expenditure, however, would be within the approved budget additional expenditure

Option B – Do not extend (managed exit): instruct KPMG to prioritise rapid hand back of governance assets, reporting, and in-flight delivery support; agree to a short exit plan and confirm internal/interim replacement capacity.

Feasibility - very feasible before initial end date as minimal resource needed to enact exit, however, see drawbacks

Benefits – no additional contract spend saving the Council £888,700 remaining on the approved budget

Drawbacks – Main drawback is the councils TMO does not have sufficient capacity or the capability yet to take on the KPMG workload.  At least 6 months is required to transfer knowledge and likely require some additional capacity added to the team.

Option C – Partial/targeted extension: extend only for specified workstreams (e.g., transition and governance embed; completion of VAT/contract review; limited housing/digital BA support) to reduce dependency and cost.

Feasibility – feasible if retained and reshaped scope has been discussed with the supplier who is supportive.

Benefits – will either allow up to 12 months of support or a 6-month exit savings to the council circa £400,000

Drawbacks – Reduces significantly the ability of KPMG to provide the ad hoc support, some of it at no cost to the council, that the council has relied on to progress some delivery.  However, this is viewed as creating a dependency risk and hence is not considered a material impact on the council.  Does incur some additional cost, albeit under the approved budget.

Following consideration of the options the Council’s interim Chief Executive and Corporate Director of Resources agreed the optimal way forward for the Council is to extend the contract for up to 12 months, with a slimmed down TMO team and with a view of exiting early as and when the necessary resources / skills can be permanently recruited as part of a wider Croydon permanently staffed transformation unit.  KPMG will, as part of the extension upskill the inhouse team.