Government outsourcing contracts – who’s to blame for the failures?
In the last few years several companies have suffered (G4S and Serco to name the most recent who have made the headlines) through poor delivery of public sector contracts. These contracts have covered the whole breadth of the public sector from transport to health to the Olympics security debacle.
These organisations have been blamed for cutting corners and not meeting their obligations and therefore “wasting” public money. However, realistically are they completely culpable?
The current Government has been adamant in their desire to cut costs so much so that the influence of overzealous procurement departments have ‘driven down’ bidders costs (who are keen to win the contracts) to such an extent that suppliers aren’t able to make a profit and deliver a decent service with what they are being paid! Therefore these companies are falling short of government expectations and unfortunately this is not a rare occurrence.
When will Government wake up to the fact that if they want a decent service they are going to have to pay for it? Of course, there are budgets to adhere to and no-one wants to pay through the nose for a service, but they must realise that in order for these suppliers to do the job they have been engaged to do they must dig a little deeper to ensure that a service which is of quality and ultimately, benefit to the Government can be implemented properly. After all, these business are commercial organisations and need to find ways to cover their costs and make a profit like any other commercial operation.
Equally, on the other side, the outsourcers also have to learn to walk away when they realise they cannot deliver the service profitably!
I have heard of many instances when over-keen sales teams have promised great service for a low cost, only for their delivery counterparts to then have to work out how to make money out of the contract!
There are only a handful of companies that can take on these big contracts and if they fail, Government will lose the ability to run competitive tendering exercises as the number of suppliers able to provide the service at a reduced cost will diminish – something has to give!
I’d be grateful to hear your thoughts on this. Please post your comments below.