Steria contract win – will they run UK Gov services from Morocco? And what would Scotland do?

I had the pleasure of meeting Alastair Merrill, Procurement Director for the Scottish Government,  last week at the CIPS SM Awards dinner and spending a good deal of time with him at the bar afterwards – having serious discussions about the future of public procurement, of course.  (Sadly, that is absolutely true!) He challenged me ( Spend Matters) to be less London focused, which is a very fair challenge  - why don’t we cover Scottish procurement more?

So, let’s make an effort to put that right, although Scotland is really only on the periphery of this piece. But it’s a start. Here’s the question - can you imagine the Scottish Government – or indeed the Welsh – announcing that they were outsourcing a whole load of public sector jobs, and that they might well be offshored to India, Poland or Morocco?

Because according to the FT, the Cabinet Office has appointed Steria as preferred bidder for the UK central government “Shared Services Two” project and confirmed to staff that this will mean rationalisation and (probably) offshoring of work outside the UK.

Now, let’s provide a balanced discussion here. I’ve been pretty impressed with the NHS Shares Services operation, which is a joint venture between Steria and the Department of Health (although I don’t quite know what’s happened to their big e-invoicing initiative)?  But I suspect that success story would have helped them win this preferred bidder status. And I’m no fan of the current shared service performance in Government. It badly needs some sort of step change in terms of investment and improvement.

I’m also be inclination a free-marketeer. And I was drawn to the theory of comparative advantage – which says that everyone prospers if each country does what they are best at – when I studied a bit of economics. However, other academics suggest that breaks down once capital can flow freely to wherever labour is cheapest. And it also relies on every country playing  under the same rules. What happens when the Indian government happily accepts our offshored IT, but won’t let Tesco open supermarkets in their own country?

Coming back to Scotland, I think it is inconceivable that this could happen there. They have placed far more emphasis on “policy through procurement” work, using public procurement to try and promote business, enterprise and localism, whereas Francis Maude confessed to the PASC recently that he just doesn’t believe in it. And, as the FT says, this marks a change in Government policy.

“Chris Grayling, now justice secretary, told parliament in 2011 that he had intervened personally as employment minister to stop a plan by Hewlett-Packard to offshore jobs on one of its DWP contracts. “It is important that we do not see government controlled employment move offshore. We have a job to try to maximise employment in this country... it is by far the best option to see people investing in the UK,” he said.”

I can see all sides of the argument, being boring and well-balanced for a change, but it does feel that this should at least be getting a bit more interest than it currently does. So might this be the case study that brings that debate back into the public eye?  I hope so. What do the Liberal Democrats think about it? And do the Labour Party have any views?

Voices (6)

  1. Andrew - Bright Future Software LTD:

    As a an onshore UK business this is a really interesting thread of views. We fully understand the rigours and pressures being placed on budgets across the country, especially in the public sector. But Britain has all the talent, skill and knowledge needed to provide high quality, cost-effective solutions to the requirements of any UK business. World-class work at competitive pricing is available here in Britain. How we serve the interests of the economy of our business sectors best and manage the budget pressures in the public sector is a tough balance to find. But what is the first thought here in the UK. Is it UK businesses and delivery standard first or do we think cost with delivery secondary?

  2. Dave Orr:

    This production line factory approach to work is the sort of thing that LEAN architect Demming despaired of over 70 years ago.

    Why bother with SMEs, universal credit, minimum and living wages, keeping English & Maths going after 16 (if no GCSE), if you simply shovel Government jobs offshore?

    Much of the IT in the “Universal Discredit” project was offshored by Accenture and IBM, yet costs to the UK taxpayer remained very high (£500/day charged) and quality suffers due to inevitable cultural and communication problems.

    Most of the benefits of offshoring appear to accrue to the contractor in even larger profits.

    Can anyone name me a shared services project in Local Government that actually saved money over the contract term?

  3. Howard:

    I’m curious to know what new evidence you have to be impressed with the NHS shared services operation.

    1. Sam Unkim:

      Howard

      Whilst I am no fan of NHS-SBS, it certainly stands head and shoulders above most of these other projects – in that it hasn’t been a complete disaster

      1. Howard:

        I don’t have enough information to say if it has been a disaster of otherwise. Presumably by complete disaster you mean organisations and people are still getting paid?

        I do know that when Pulse recently announced that Steria’s profits had risen 88% in a single year, the following comments section suggested that things weren’t that rosy. Anonymous comments doesn’t amount to proof, but the information isn’t there either way just yet.

  4. Dan:

    The problem with ‘policy through procurement’ is not that it’s a bad idea, but that no-one is responsible for it. The end result is that a number of government departments all think that procurement can help them with their policy objectives, and there has been no attempt at rationalisation or prioritisation.

    A brief list of these policies are:

    1. Sustainability (this in itself is a nightmare – use of sustainable timber, renewable energies, Code for Sustainable homes etc)

    2. Increased use of SMEs

    3. Employment and training of unemployed people

    4. Increased use of local firms (overlaps with point 2 above, but they’re not totally identical)

    5. Promotion of equality and diversity

    6. Lean procurement practices (e.g. increased use of the EU Open Procuedure)

    7. Non-use of tax-avoiding companies

    8. Implementation of the Bribery Act

    And now, of course, the media are exerting pressure to not use companies like G4S and Serco who are currently under investigation. Not guilty of anything, just being investigated, even though at least some of the blame should rest with the contract managers paying the invoices

    And this, lets not forget, is in the middle of a massive reductions in government revenues necessitating the requirement to find savings – so we’re also indirectly protecting the jobs of front-line workers.

    Scotland and Wales have it a lot easier – the public sector in those countries are a lot smaller, especially in terms of the number of organisations that are around, and procurement is a lot more centralised. They have also, to their credit, seen the importance of procurement given the above and have invested a lot in it. No-one in England seems to have taken responsibility for it, and there doesn’t seem to be a single over-arching strategy for the public sector. It just seems to be lots of different people making it up as they go along.

    Its really no wonder David Shields quit.

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