The Slow Death of Public Sector Procurement (part 4)

Last week we looked at the decline in procurement workload and numbers in the public sector as organisations look for more and more outsourcing of different types. (We said last week that today would be the last in the series but turns out, there’s one more after this). Can – or should – we resist it?

I’m going to sit on the fence. I believe public procurement is getting close to unmanageable, given the regulatory requirements and conflicting priorities. Meanwhile, there are skills issues exacerbated by the salaries on offer, recruitment freezes and so on. Hence I can see the attraction of outsourcing.

But there are real issues of accountability. As we said last time, and just as an example, we can’t apply Freedom of Information in the same way. So, while it might not be appropriate to fight this move, we’d suggest there should be some further serious thought, and safeguards put in place, before this goes too much further.  What do we need? I’d suggest these as a start.

  1. Proper analysis up front of the implications of outsourcing, a strategic understanding of what is being done and why.
  2. Supplier selection (of outsourced service providers and Prime Contractors) must include a strong focus on the procurement and supply chain management elements of the work.
  3. Robust, skilled management of the service provider. (See Chris Lonsdale’s article here).
  4. Flexibility – when outsourcing takes place, we need to ensure we have future  contestability of the work – we’re not locked into a particular supplier for life.
  5. When contractors are acting purely on behalf of a public body, FOI should apply and there must be clear accountability back to the to the taxpayer, resident, service user..
  6. Conflicts of interest properly managed – see the Southampton Capita case for an example of how NOT to do this!

And we do need more debate about this. If I go back to my time as the first Departmental Procurement Director for the Department of Social Security in 1995, we had some serious discussion – up to Ministerial level – about what, at the extreme, could or couldn’t be outsourced. The conclusion we came to was this.  Everything could be outsourced except:

1.         The very highest level policy advise to the Minster, which had to be seen a totally impartial, professional and independent.

2.         Procurement and contract management of (as a minimum) the more important, strategic and significant contracts that the Department let. “If we outsource everything, we still have to manage the service providers” was the philosophy.

Otherwise, we felt that contractor managing contractors led to a loss of accountability; arguably, all the delivery of DSS services could be contractualised, but the Department had to retain ownership of those contracts and therefore the accountability for delivery.

Now, I’m not averse to that debate being re-opened. And clearly some of the partial or category level outsourcing (in contingent labour for instance) isn’t necessarily a conceptual problem. But it seems to me that we’re drifting into a situation where some basic principles are being tested, and that should be driving some sort of public debate.

Tomorrow it really will be the last in the series, as we look at the implications of all this for various stakeholder groups.

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