Archive: July, 2018

More of my mess for less

Much has been said about public sector outsourcing since Carillion went into liquidation in January this year, me included. The House of Commons Public Administration and Constitutional Affairs Committee report on the matter, After Carillion: Public sector outsourcing and contracting, published on 3 July 2018 pulls no punches.

So what did I learn from reading the report? Below are some interesting facts and quotes:

“The UK Government spends £251.5 billion per year on outsourcing and contracting.”

“The UK spends 13.7% of GDP on public procurement, which is not significantly different from countries such as Denmark (14.16%) or Germany (15.05%).”

“It is unclear how and why the Government decides whether to outsource a particular service. The Government has a process, set out by the Treasury, to make decisions about how it should deliver services and run projects, including evaluating options about whether and how to use the private sector. However, the Government does not always follow its own process. Moreover, the evidence used to support these decisions is thin or non-existent.”

“The Government has deliberately promoted an aggressive approach to risk transfer to the private sector – often even attempting to transfer risks that the government itself has completely failed to analyse or to understand.”

“Government failures in this area have forced government repeatedly to renegotiate contracts with the private sector. Even in the months since the beginning of 2016, departments have already had to renegotiate over £120 million worth of contracts with the private sector. This reflects poorly on government’s effective ability to let and manage contracts.”

“The Government must improve its skills in the negotiation and management of contracts…These commercial skills cannot be seen in isolation either but must be integrated with other skills such as costing, project management, IT capability and financial planning, along with deep and relevant subject knowledge and expertise.”

“The Government admits that its data about contracts internally is poor…which can lead to blind reliance on what companies tell the government, instead of a genuine exchange of information and a continual appraisal of the contractor’s performance over the lifetime of the contract.”

“Contracting and outsourcing with the private sector is a permanent feature of governments in mature economies across the world and it will remain so, whichever government is in power.”

So if the vast, sprawling organisation that is the public sector wants to improve then it must first find a better way to work together.