Love like you’ve never been hurt…outsource like there’s no one watching

The Virgin rail deal and the G4S security contract for the Olympic Games has brought government procurement to the attention of the general public…people who would not normally have outsourcing outcomes on their radar.

Over my career of 30-odd years in the public and private sectors, I’ve been involved on both sides of the fence as contractor and outsourcer…poacher and gamekeeper. We used to say, “this is not our core business, let’s find someone to do it for us”. The assumption would be that a contractor whose business it actually was would have the skills and expertise to be able to do the work cheaper and better than we could.

In those far off days we used to have the concept of the “Intelligent Customer”…this was a tiny group of knowledgeable staff who stayed within the outsourcing body, able to oversee the work of the contractor and to monitor performance.

Roll forward 30 years and as civil servants became more relaxed with having “someone else” do the job the concept of the Intelligent Customer seems to have disappeared…along with any pretence of monitoring and management of outsourced delivery.
Channel 4 News asks “Do you know who runs your world?”…and the answer is probably “No”.

Government departments are now just “kitemarks” with approved contractors wearing the “badge” of the organisation they have replaced….the skills have been lost in government and there is no going back.

Very few people realise that they are now dealing with private business operators and their rights to question the service and get a response have vanished. Transparency is one of the biggest issues…freedom of information does not apply.

Some of the biggest companies…G4S, Serco and Capita have been awarded business to the point that they are bigger than many government departments. The supply chain is deepening and so many public sector staff have been transferred to the new business providers that the culture has been imported along with them…they are becoming indistinguishable from the civil service they have replaced.

In fact, they could well be in a similar position to that of 30 years ago…asking themselves “is this our core business?”

If the difference between public and private sector workers cannot now be seen by the public how blurred has the line become for those who remain behind in government? How close are the links? And can the taxpayer ever know what sort of deal their getting?

Buy Cheap, Buy Twice

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Sir Richard Branson seems hopping mad…and well he might, after losing what had become his “baby”, the West Coast rail contract, after 15 years. Speaking as a Northerner who has lived with West Coast travel through the Virgin years, I can say that the service has gradually improved…the constraining factor seems to have been the track not the trains.

Sir Richard claims that the contract has been awarded on the basis of price, which he thinks will be unsustainable as happened in 2007 and in 2009 when the Department of Transport had to take back the East Coast line because the companies awarded the contract could not afford to run it.

Will this contract fail as many have in the past? I expect it will. I used to get the train into work (if I couldn’t avoid it) and remember the announcements while we were stationary at platforms where staff were trying to crush commuters onto already full trains…”we are not going anywhere until you all move up together”. FirstGroup who have won the bid said that they expect the number of passengers to rise…where do they think these passengers are going to come from?

Government purchasers never seem to realise that cheapest isn’t always best…maybe you’ve heard the old saying “you don’t get sacked for buying X – (enter the name of an international supplier at X). Procurement is mostly about risk transfer…getting the job done cheapest and with minimal risk to whoever is procuring.

A recent example is the G4S fiasco. This is probably a case of the procurement team confusing “blame” and “accountability”…they can blame G4S but they themselves will always be accountable.

Look also at the LSP contracts placed by NHS Connecting for Health…litigation and counter-litigation virtually guaranteed from the start.

SMEs are more likely to be awarded public sector contracts in Scotland than in England and as an SME I’m not surprised by that, considering the level of knowledge amongst the buying community…”big” is seen to be the safest way forward.

But then what is safe? Government have agreed mechanisms to identify suppliers who don’t deliver…which is astounding this late in the game. Most of the population knows how to pick and choose their “suppliers” based on performance…