NOA Cultural Survey

Outsourcing: the bigger issues

11 November 2013 | John Tizard
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Tags: Cabinet Office | G4S | Outsourcing | private sector | Serco | Southern Cross.

Recent public sector outsourcing scandals have prompted a government review. It needs to go much
further than currently envisaged, and question many of the assumptions surrounding contracting
Senior executives have resigned and now the Cabinet Office is undertaking a review of all UK public sector
service contracts involving Serco and G4S following recent scandals and some very serious allegations
which are now the subject of Serious Fraud Office and other investigations. This review is being led by the
governments chief procurement officer, Bill Crothers.
He is already reported as saying that there has been poor contract management in a lot of areas. He is also
reported as stating that government departments get the suppliers that they deserve. This repeats many of the
findings of a report by the Institute for Government earlier this summer Making public service markets work.
Whilst there is certainly much truth in the accusation that many government departments and some other
parts of the wider public sector are weak in terms of procurement and contract management skills, we need to
acknowledge that there are wider issues at stake here.
It would be wrong, for example, to assume that all the problems with the high profile Serco and G4S public
service contracts are the fault of poor procurement and public sector contract management. And it would
wrong to simply assume that there would have been no such problems if there had been better client
management. Equally it would be both nave and prejudiced to assume that the public sector client had no
responsibility for what has happened.
The reality is that as yet, we just do not have all the evidence but much has already been published that will
cause many to question those involved (providers and clients) and the underlying outsourcing model.
We do, however, know that there have been other allegations and, indeed, actual instances of false returns
being made by other contractors. We also know that there have been some spectacular performance failures
across a range of public sector outsourcing contracts over the last few years. And of course, there have also
been some major service failures within directly managed public services.
Meanwhile, the government seems intent on outsourcing more and more public services, as do so some (but
by no means all) local authorities. Many politicians, advisors and public sector executives are seeking to push
outsourcing beyond back office support, IT and related administrative services into the core of the NHS,
education and other complex personal services (social care having led the way with some very mixed results).
Given this mixed and confused picture, I wonder if it might not be prudent for government and the wider public
sector to pause and consider the outcome of these various cases and investigations before proceeding with
major outsourcing procurements, especially in unchartered areas such as probation and rehabilitation
services.
I would suggest that the current review of contracts, public procurement, contract management capacity and
capability should be accompanied by a much more strategic and fundamental review to address wider
matters. These would include issues in respect of public service outsourcing such as how to ensure:
accountability of providers, clients and the continuing accountability of the public sector and politicians
transparency including the application of the Freedom of Information Act
service user and wider public involvement in strategic commissioning and public procurement processes
and all aspects of related decision making, including initial make or buy decisions
social and public value as well as value for money and public service
opportunities for social enterprises, staff and user-led mutuals, voluntary and community sector
organisations and SMEs; and to explore how such organisations can deliver public services through
collaborative arrangements with the public sector and not only via competitive procurement processes

NOA Cultural Survey

the most advantageous application possible of the proposed new EU procurement regulations to secure
public policy goals and social value
decent employment conditions and terms for staff delivering outsourced services
methodology to determine the appropriate risk transfer between and management by both clients and
providers given that in practice, most risk cannot be moved away from the public sector
the means to take into account a providers previous track record, including wider ethical and performance
issues, its remuneration, and tax policies and practices
an opportunity to consider providers proposed business models and their potential implications for service
quality and sustainability as part of a procurement process, and have some control over any significant
changes to either a providers business model and/or ownership post-contract award (think Southern
Cross)
Such a review could also consider the impact and effectiveness of public service outsourcing over the last few
decades, and whether it is more or less appropriate in certain sectors and specific services; and the wider
macro-economic and social impact of this policy and practice. The latter would require some complex
economic and social research and analysis but given the political desire to extend the volume and scope of
public service outsourcing, it could provide the long-absent evidence base.
Some testing of public opinion on outsourcing public services to the business and social sectors would also be
very timely, and help inform public policy and management.
Over the next few years, public expenditure is going to be very constrained, with more cuts across many parts
of the public sector and many services. There is a real danger that politicians and public sector managers will
turn to very crude price driven public procurement and outsourcing in the hope of making the available money
go further, and in so doing will undermine service quality and public confidence.
The government and other political parties have to be bold and consider the broader issues now, rather than
assuming that everything will be alright if only the public sector client function was stronger. I suggest that this
is the time for some fundamental questions about both practice and principle of traditional public service
outsourcing.

About John Tizard

John Tizard is an independent strategic adviser and commentator on public policy and public services. He works with a range of
public, private, third and academic organisations. He was the founder director of the Centre for Public Service Partnerships and
before then a senior executive at Capita and at Scope. He has been a councillor and leader of a county council. He holds various
non-executive and trustee appointments including at Navca, Tomorrows People, Action Space and Collaborate. He is chair of the
Isle of Portland Aldridge Community Academy.
View all posts by John Tizard