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The perils of outsourcing

(100 Posts)
Mamie Tue 17-Jul-12 07:01:29

This is a powerful article - and I couldn't agree more. It is a national disgrace and it just gets worse and worse. I feel furious on behalf of the police and the troops who are having to rescue Olympic security from the latest mess.

JessM Tue 17-Jul-12 07:33:25

It is a good article. Outsourcing has been around a very long time - new labour even invented "academies" and started outsourcing schools! I can understand some frustration in whitehall about an expanding public sector. And she is right, it should not be done for ideological reasons.
Pity it does not extend to the cabinet themselves - they all have their own ministries with huge teams of civil servants working on ever more complex legislation. I am currently doing a bit of work on the training implications of aspect of one such bit of legislation - they have made it so complicated that they, the civil servants, seem not to understand it any more.
And the private sector do it a lot as well as the public sector. I was working for headquarters of a car company for a while - only a small number of the staff in the building were actually official employees of the company - about a quarter I'd guess. The rest worked for the likes of Reed, Serco etc
Trouble with government outsourcing is that the projects are so huge. The other problem is that the civil service do not have the expertise to commission them. In part because they don't recruit in commercial expertise like other organisations. They are just all generic civil servants and the cleverest ones are in treasury and the foreign office. To manage these huge contracts they need a poacher turned gamekeeper, or two. HOdge complaining yesterday - but if the contract conditions included transparency of accounts that would be a start wouldn't it.
The current security problems are not an outsourcing issue. This could never have been done in-house by any part of the state. It is just a huge nightmare of a recruitment project. The more sensible strategy that locog could have adopted is NOT to give the whole project to one company. The O.Park would have been enough. If they had contracted smaller, local companies to deal with individual venues then they might not be in this mess. I have managed recruitment projects. This one was doomed to fail - too huge, too short term (not offering a proper job), no ramping up of the team. Many of them will have been interviewed and trained months ago. The company were stupid to undertake to find the additional numbers and locog did not look properly at the risks. When you give the project to someone else the problems become 'theirs'

Greatnan Tue 17-Jul-12 07:49:44

Contract after contract awarded to a company that has manifestly failed - I wonder if anyone involved in awarding the contracts has enjoyed any 'hospitality' from them?
Michael Gove shared a holiday at the home of a 'mutual friend' with a partner in the company he then commissioned to provide a review of school meals.
Something is rotten in the state of Denmark!

Mamie Tue 17-Jul-12 07:59:30

I don't agree with your statement Jess, "They are just all generic civil servants and the cleverest ones are in treasury and the foreign office." My daughter is a senior civil servant in another department and she and her colleagues come from all sorts of different backgrounds. I think you are thinking of the "fast stream". I don't think that is the issue though, if you haven't got the civil service you want then you have to change recruitment policy. You don't have to outsource.

Greatnan Tue 17-Jul-12 08:25:55

I confess to having been a 'fast stream' entrant to the civil service - Inland Revenue. I was 50, the age limit having been raised because of a recruitment crisis. I was worried by the attitude of some of the 'whizz kids', straight out of university with their PhDs, etc. I had run my own business and understood the difficulties faced by many tax payers, but some of the younger recruits seemed to think their job was to get the maximum tax, rather than the correct tax. For example, I said that we should always inform people of any allowances they could be claiming, such as depreciation on equipment, and some of the other trainees took the view that if the tax payer did not know about it we should not tell them. Fortunately, the tutor agreed with me.
I was also a mature entrant to teaching, at 31, and again I was unhappy about the attitude of some of the young students who came straight from sixth forms at 18 with no experience of life. Perhaps training for some careers should not start until entrants are 25.
The ability to pass exams is not necessarily a good indicator of success in any particular walk of life.

whenim64 Tue 17-Jul-12 08:32:12

G4S have always been greedy for contracts that they can't fulfill or want to provide on a shoestring whilst creaming off massive profits. They eat up competitors and get involved in security without understanding the enormity of what they're taking on. They lose prisoners, underestimate staff training needs, recruit without doing proper checks, fail to act on tagged offenders who breach their curfews and lose documentation. You try to phone them and it's a 40 minute wait when you're dealing with an emergency. Nightmare company!

jeni Tue 17-Jul-12 08:47:01


Annobel Tue 17-Jul-12 08:55:29

Yes, ATOS is a terrible example of outsourcing. 40% of appeals against their assessments for ESA have been successful. What a waste of money.

Lilygran Tue 17-Jul-12 08:59:44

I understand that civil servants (and ministers) are restricted in which bids they can accept. I can understand how a big organisation can win a contract which they then can't fulfill. What I can't understand is why they get more contracts having screwed up. Many recent examples, A4E Welfare to Work, Capita (Private Eye is always having a go at them) for the cock up over interpreters for the Justice Department and now G4S. When the private sector screws up, the much-maligned public sector is always required to come to the rescue - and does!

Ariadne Tue 17-Jul-12 09:03:06

I'd forgotten Capita! It seemed that everywhere I turned in education, there was Capita, running fairly in efficient systems and courses etc.

Greatnan Tue 17-Jul-12 09:15:38

Pressdram, publishers of PE, have to be very careful to avoid being sued but they are now becoming bolder about their not-so-subtle hints about corruption in high places. They have mounted a campaign against David Hartnett, CEO of HMRC, for the way he has done deals with very large companies which have cost the UK millions. They are also very good at exposing the 'revolving door' between ministers/advisors and top jobs with companies when they retire.
They are also on the track of the Serious Fraud Office and the Public Accounts Committee. They exposed the way the person appointed to audit public spending was himself not above suspicion.
If you are at all interested in seeing corruption exposed, I recommend a yearly subscription!

whenim64 Tue 17-Jul-12 09:31:31

Capita are 'clever' - their staff leave to work in statutory agencies, get trained up, learn how to navigate the bureaucratic systems, then lo and behold....they're out to lunch with their Capita colleagues and back in the fold at a management level above where they left off! Sleazy!

JessM Tue 17-Jul-12 09:33:21

I am saying mamie that the civil service need to insource some serious commercial capacity in order to equip them to deal with such contracts. How many of your daughter's colleagues have had experience at a high level - e.g a big engineering company, bidding for major contracts and then delivering them?
The civil service is not itself a commercial organisation and therefore does not provide the right kind of experience to develop the necessary skills to deal with all this outsourcing.

Annobel Tue 17-Jul-12 09:43:58

I could say the same about local government. Jess. I experienced an awful example of contract mismanagement when I was chair of governors at a primary school undergoing a complete rebuild. It set the work back at least six months while they got another contractor on board. The Director of Education was 'hurt' by the letter I wrote him, but subsequently some of his staff had re-training in contract management.

Mishap Tue 17-Jul-12 10:17:10

"Outsourcing" - even the word just gives me the creeps. Look what it has done for education, the health service and social services - no proper quality control, no commitment, no sense of vocation, no sense of working together as a team to provide a true service - just give a low quote, take the money and run; never mind giving a good service.
It has been a disaster for this country - thank you Maggie.

Mamie Tue 17-Jul-12 11:10:34

My daughter has been in four major departments with Secretaries of State and she has worked with people from all sorts of different nationalities, ethnicity and backgrounds. Lots of people from business and industry have come in at a senior level, including those who have handled large contracts. I think it does depend which department you are in though. Many of her colleagues have left the service to work in industry and business as well. I think the profile has changed enormously over the last ten years.

Lilygran Tue 17-Jul-12 11:23:48

It's so easy to blame the civil servants for everything that goes wrong - that's what ministers do, after all. We are told that what is needed is the 'expertise' of the private sector to bring them up to scratch. The private sector experts like the ones in G4S, HSBC ( laundering drug money in the USA), Barclays?

Mamie Tue 17-Jul-12 11:24:12

Having said that, though, I really don't think this is about the Civil Service. It is about the notion that "the market" is somehow better than anything that the state provides. It is about people taking large salaries and profits, but letting the taxpayer pick up the bill when things go wrong. It is about cutting the salaries / wages of the people doing the job to make money for shareholders. I can't imagine what is going to happen when all this really hits the health service; I can see what is happening in education already.

AlisonMA Tue 17-Jul-12 11:44:30

I think the article was quite shallow and biased, sorry!

If work is outsourced it is incumbent on the people choosing the contractor to ensure they are suitable and then to monitor progress of the work they undertake. It is unreasonable to just select a contractor and then let them get on with it without proper supervision. The contract should have appropriate and suitably onerous penalty clauses.

I don't understand what is wrong with said contractor making a profit? That's what makes the world go round. If they can be more efficient for less money what's wrong with that?

I worked for a company run for public secotor employees where the directors were all members of the public sector. In 1999 I took over the IT contract which they had taken on and was appalled. The contractors were based in N. ireland and we were in Surrey so every time they came over we had to pay air fares and hotels. There was no provision for the millenium bug which was widely worried about at the time and there was no cap on costs and no end date. It was a fiasco! You can't blame the contractor for taking on such an open-ended contract.

I speak as someone whose last job was outsourced to Poland but that was private sector. The company was happy to accept a lower level of service because of the cost saving.

JessM Tue 17-Jul-12 12:27:43

I stand corrected Mamie I am glad that the cc is becoming less of a long term career and opening up the doors to people with other experience. Hopefully the management of contracts will improve as time goes by.
In fairness the Olympics is a huge project and the end date has absolutely no slippage in it. Suspect locog were more interested in the construction side of it.

I wish the ccs that have come in from other backgrounds could get the message over that you can't just say "oh the market will take care of it" - which seems to be the current delusion amongst politicians.
lilygran please do not make the mistake of tarring everyone who works in the private sector with the same brush. Most are reputable, ethical, hardworking people. If they did not run profitable, successful. law abiding businesses then there would be no public sector at all would there. Because the country would be flat broke.

Lilygran Tue 17-Jul-12 12:35:52

Watching the Select Committee hearing with managers of G4S. Those of you who have expressed doubts about the competence of civil servants should watch this fine example of expertise in the private sector. Could they manage the contract? Could they manage a pxxxup in a brewery? hmm

JessM Tue 17-Jul-12 13:28:13

Aren't the select committee MPs lilygrand?
It is not a case of private sector = good, public sector = bad lilygrand.
There are good examples of outsourcing in both and bad ones. There are good and bad managers in both. There are honest and dishonest people in both.
I have worked in public, public and voluntary sectors and dishonesty is rare. Incompetence less rare.
Oh well, back to the lash up that I am trying to work on. Civil servants and their lawyers came up with it. Too many cooks will inevitably create something complicated.
Another example is the health bill - professors of public health saying they could not understand it, great.

Mamie Tue 17-Jul-12 13:34:24

It isn't the MPs, Jess they are doing a pretty good job. It is the two directors from G4S, who are deeply unimpressive (to put it mildly.)

Lilygran Tue 17-Jul-12 15:32:30

So have I, Jess. I agree with what you say. What I disagree with is the idea that there is some weird collection of managerial skills that is found only in the private sector and that it (the private sector) is always superior to the public sector. There are principles embedded in the best of public service which have nothing to do with personal or organisational profit.

JessM Tue 17-Jul-12 18:31:50

Mamie I know who is in the select committee. I was not picking up on *lilygran"'s sarcasm first time. Missing that all important tone of voice.

I agree lilygran that there are some great managers in the public sector. Running schools for instance. But if you want someone to deal with a commercial contract it is not management skills you need but specific commercial skills - a different thing - plus the ability to stay one jump ahead of the very clever folk that you are dealing with. I know some great public sector managers who do not have a commercial bone in their bodies.
The history of outsourcing major projects by the cc has not been impressive over the years.
But the idea came up, originally, because of unreasonable behaviour by some unions. This still lingers on in certain industries. I know someone who manages a large outsourced workforce in a major industrial setting. Permanent staff are allowed 20 days paid sick leave a year. Every man jack of them takes all 20 days (on top of generous holidays, flexitimeetc). I put this down to a combination of "strong" unions and poor management over the years
Outsourced workforce rarely take a day off at all. 1 or 2 days a year average. If that particular business was still running on a majority of permanent contracts it would not be a success, but outsourcing has allowed it to become so.