Outsourcing

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Good article here, "Out of Contract: Time to move on from the ‘love in’ with outsourcing and PFI", http://www.smith-institute.org.uk/book/contract-time-move-love-outsourcing-pfi/

ToDo: This page is a duplicate of Government Procurement. Combine.

Articles

  • Jan.15.2019: Surge in outsourcing after Carillion collapse 'staggering', unions say. Unions accuse government of failing to learn lessons of Carillion’s failure last year. The lifetime value of outsourcing contracts awarded in 2017-18 “rocketed” by 53% from £62bn to £95bn, according to the GMB union, which pointed to nearly £2bn in contracts awarded to Capita and Interserve despite both issuing profit warnings. The GMB said this showed a govt “hell-bent” on privatisation, despite the warning signs given by the collapse of Carillion, which managed public sector contracts to provide services such as prison maintenance and school dinners. A spokeswoman for the Cabinet Office, which manages the outsourcing of public sector contracts and faced criticism over its role in the administration of the bust of Carillion, said "Word Salad". The accounting watchdog Financial Reporting Council, criticised by MPs for being “chronically passive” over the audits of Carillion by firms including KPMG, is still investigating the circumstances of its failure. The Insolvency Service, an arm of the Department for Business, Energy and Industrial Strategy, is also investigating the affair and began interviewing former directors of the company last year. Rob Davies, The Guardian.
  • Nov.19.2018: Public service providers will have to draw up 'living wills'. The Cabinet Office proposals set out to limit potential collapse damage post-Carillion. Companies that provide critical public services will have to draw up “living wills”, to prevent taxpayers being saddled with the cost if another major outsourcer such as Carillion collapses, under plans outlined by the govt. Carillion's failure has cost the taxpayer an estimated £150m to date. They involve greater transparency by public services providers and a promise that outsourcing will act as a “force for good”, with the government required to consider social and economic benefits when awarding contracts. Labour said the plans had come too late. Shadow cabinet office minister Jon Trickett said: “This is too little too late from a government more concerned with defending outsourcing than protecting the hundreds of millions of taxpayers’ money that has gone down the drain in failed outsourcing projects. The Guardian revealed that the govt knew of a plan that could have retrieved more than £360m from Carillion, limiting the cost of its collapse to taxpayers and sparing pension scheme members from cuts to their retirement payouts, but did not encourage directors to pursue it (article link). The plan would have involved breaking up the company, selling the profitable parts and placing the rest into liquidation, avoiding an involuntary collapse. Rob Davies, The Guardian.
  • Sept.16.2018: Is the game over for the giants of outsourcing?. out-sourcing, in its many guises, is in crisis. An industry that started with Margaret Thatcher’s 1980s privatisation wave and was turbocharged under Tony Blair faces what may be its bleakest period yet. Rawlinson thinks one important ingredient was the appointment of Amyas Morse as head of the NAO in 2009. “He believed the private sector was guilty until proven innocent,” he said. “You can trace the decline in the atmosphere between the public and private sectors more or less from that point.” A string of botched deals has worsened the climate. Serco, Carillion, Capita, Babcock International, Applied Value, G4S, Babcock and Fluor (Magnox nuclear power stations / Nuclear Decommissioning Authority), Atomic Weapons Establishment, David Lidington: "we need the industry... we need to make sure the conditions are there for suppliers to make a decent rate of return.” The Cabinet Office said it will soon announce new measures “to ensure a healthy market”. Serco + Jacobs + Lockheed Martin contract to run the AWE... John Collingridge, The Times.
  • Apr.23.2018: Some call it outsourcing. I call it spivvery. All over the country, rows over the likes of Capita threaten to be the Tories achilles heel at the local elections. The Tory councillors of Barnet used David Cameron’s spending cuts as an excuse to outsource large chunks of its public services. Their aim was to turn the borough into a no-frills “easyCouncil”. Carillion repeatedly pulled forward hundreds of millions on profits expected from future work, and paid that cash out to shareholders. As they have grown, the giant outsourcers’ business model has relied more and more on the public sector playing the role of useful idiot – talking up the importance of private-sector efficiency and never batting an eyelid when the likes of Capita tap them up for some expensive loophole in the contract. All this underlines that outsourcing is a political as well as a business issue. Aditya Chakrabortty, The Guardian.
  • Mar.26.2018: After Carillion, outsourcing looks like a dogma that's run out of road. The colossal industry is creaking – and workers such as those at the British Museum have paid dearly for politicians’ blind faith in the model. Since Margaret Thatcher forced compulsory competitive tendering on councils, there has been, astonishingly, no evidence and no research to prove whether outsourcing is value for money. There are no controlled trials, no measuring long-term effects or knock-on costs to the state of lowering pay, finds the Smith Institute. The colossal outsourcing industry grew out of faith-based policymaking. Pressing the accelerator with his Open Public Services policy, David Cameron promised an "end to state monopolies" to "release public services from the grip of state control". Carillion’s lesson is that long-term risk is never outsourced. Yet no one knows how many of the state’s myriad functions are let out to Capita, Interserve, G4S, and the rest. The irony of austerity is that as every penny is super-scrutinised, rigid outsourced contracts often look the worst value for money when public managers can run more agile services themselves. (more...) Linkback: Carillion, PwC, Rachel Reeves, Shield, Imperial War Museum, National Gallery, Securitas, NAO. Polly Toynbee, The Guardian.
  • Feb.06.2018: Crapitalism: & the alternatives to ‘big’ outsourcing. Outsourcing has been presented as a financially astute move, principally for the public sector, which devolves responsibility for labour costs above all, to companies which in turn tend towards the lower end of the scale in terms workers’ pay and conditions. Economies of scale from huge centralised logistics are meant to benefit public procurement and commissioning. But size itself has become the problem. Diseconomies of scale have followed problems with internal complexity, and mismatches between companies from whom financial markets demand the extraction of maximum private profits, and the purpose of delivering maximum public value. Andrew Simms, New Weather Institute.
  • Feb.02.2018: Councils are 're-nationalising' services after Carillion's collapse. From libraries to park staff, councils are taking back control after the collapse of outsourcing giant Carillion. The question now is whether this marks a decisive turn against outsourcing and PFI – and whether these services stay in the public sector for the long run. Of course, we'll have little way of knowing what works better, as the govt abolished the Audit Commission which monitored all this stuff… Josiah Mortimer, Left Foot Forward.