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Outsourcing – Time for a formal Governmental rethink

Outsourcing – Time for a formal Governmental rethink

A recent Financial Times editorial called for the UK Government to “control its temptation to outsource on all fronts … in those areas where outsourcing is appropriate, government needs to be much smarter about monitoring and challenging of poor performance”. Further that “the growth of outsourcing has outstripped capacity of the civil service to keep providers on their toes”.

There’s the rub. Given the fact that the UK government pioneered outsourcing in the late 80s, after three decades neither the government nor the industry in general, has addressed the comprehensive need for the delivery of intended benefits utilising performance measures, via a strong retained empowered organisation.

European governments looks to the UK experience for inspiration on how to outsource for predictable and even guaranteed results. The largest commitment to externalising such services lies with the Norwegian government which, due to the longer-term drop in oil prices, is committed to an outsourcing programme worth over €25Bn between now and 2017.

Norway has a small number of indigenous service providers to choose from, so expect an influx of regional and global players with little or no local track record to ply their trade. Norway can also learn that despite the UK’s mature market, it is far from an “open market” for example IBM does not compete for government business. Three companies however dominate the UK governmental market. Capita (with 97% on its revenues from the UK) and two others – G4S and Serco. Both of whom have committed a series of fiascos and scandals but remain in the front of the queue to receive more and more UK governmental business. For example G4S’s failure to provide security guards at the Oympic’s, both G4S and Serco were referred to the Serious Fraud Office for billing for tracking offenders who had left the country, were back in prison or even died. Rival Capita was rewarded by picking up these “tainted” workloads.

UK government will resort to the courts when it feels aggrieved, remember the 2011 NHS National Programme for IT (NPfIT) contract, when HM government blacklisted Fujitsu and another IT supplier from tendering for government IT contracts because “they constitute too high a risk”. They also clawed back £1Bn from CSC, with BTGS and Accenture paying similar amounts to exit the NHS contract. Despite these retrieved sums, a Public Accounts Committee (PAC) report has stated that costs will continue to rise above the £9.8bn forecast by the Department of Health (DoH). “This saga is one of the worst and most expensive contracting fiascos in the history of the public sector,” said Richard Bacon MP, member of the Committee of Public Accounts.

So why hasn’t HM government formalised these learnings? Indeed the offences perpetrated by Serco and G4S have been effectively exonerated by the award of additional contracts. The current UK coalition government has taken Labours £45Bn on outsourcing and almost doubled it to £88Bn on privatising services. In November the NOA National Audit Office called for tighter control and scrutiny of governmental contracts. Margaret Hodge, chair of the public accounts committee, has called the privatisation of public services “the most important policy issue of our time”.

The time is here and now for the permanent civil service to come to the fore and show politicians of all shades that Central Government can and must formalise the “monitoring and challenging of poor performance” of outsourcing deals and show the way for our commercial sector and neighbouring governments that the Outsourcing revolution that Margaret Thatcher’s government started, can be perfected and avoid the billions we squandered entrapping future generations near and far.

Norway – the UK’s poor rate of change, means that this falls on you to invest in doing things correctly first time out.

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