9 April 2014 | Pedro Paulo
The Public Affairs Select Committee (PAC) recently released its “Contracting out public services to the private sector” report, many of the findings of which were critical of the government’s management and lack of oversight towards outsourcing.
By way of illustration, Atos, G4S, Serco and Capita were interviewed by the PAC and cited as examples of major failures in private contract delivery and management.
The committee made a total of 23 recommendations across five key areas for improvement in the way that the public sector manages its suppliers, both at a national and local level: transparency, contract management and delivery, competition, capability, and public service demands.
Francis Maude, the minister responsible for the Efficiency and Reform Group, admitted to finding himself in agreement with the report’s recommendations, suggesting a real need for their implementation.
The recommendations fell under the two broad themes of including more small businesses in the tendering processes and making public sector contractors more accountable to the public.
Maude reluctantly admitted that, as the system currently stands, smaller suppliers tended to be excluded, further acknowledging that “often the most competitive provider can be a new, dynamic, innovative supplier”. In light of this, the government is already taking steps to improve the situation, by splitting giant, generalised contracts into smaller, more specialised projects, better suited to smaller companies. A high-profile example of this is the HS2 engineering project, recently revealed to have been comprised almost entirely of technology provided by SMEs, procured through the government’s G-Cloud.
The introduction of greater accountability into the outsourcing of public services means a proper auditing process can now take place. This, in turn, will help to avoid situations such as when the government was charged for services not rendered, or unsatisfactorily completed.
In addition, government auditors can engage in a higher level of spend analysis, ensuring greater value for money for the government and the taxpayer, as well as being better able to avoid fraud. Budget holders will have greater visibility of incidents of overspend, where more spending is required, and where accordant adjustments need to be made. And this visibility and level of spend analysis is likely to increase even further once e-procurement is made mandatory throughout the public sector in 2016.
A more competitive market will bring with it advantages in terms of price and service, and the SME ecosystem will enjoy greater support from a more agile supply chain.
Reform of its procurement process is crucial for the public sector to benefit both politically and financially. As part of this reform, and as recognised by Maude himself, the recommendations made by the PAC could prove to be an important step in the right direction.
☛ Pedro Paulo is CEO at Gatewit