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The council said it had decided to 鈥渞adically restructure鈥� the 12-year contract with Mouchel, which began in 2004.

Mouchel was contracted to provide a substantial proportion of the council鈥檚 operational and back office functions.

But the council said: 鈥淚t 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.

鈥淭he proposal involves bringing the services currently provided by Mouchel back to the council and converting the contract between the council and Mouchel into a framework that would run through to 2018.鈥�

The council said it would make an upfront payment to Mouchel, but it would cease to pay the annual fee payable under the existing contract.

Under the new framework, Mouchel would continue to provide services such as software support and other specialist services where it provided value for money, the council said.

David Hill, Milton Keynes Council鈥檚 Chief Executive said: 鈥淢ouchel has successfully delivered significant benefits to the council over the years.

鈥淗owever, 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鈥檚 future requirements.鈥�

Michael Hodgson, Mouchel鈥檚 partnership director said: 鈥淲e have worked closely with the council for many years to help them deliver excellent services to their residents.

鈥淥ver 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.鈥�