Thursday, 26 July 2012


The main topic of conversation with my friends this past week has been the G4S fiasco, or meltdown as one candidly put it. Along with other massive global organisations such as Serco, most agreed that outsourcing is privatisation by the back door and none was happy with the concept.

However Martyn Hart disagrees:

'Outsourcing is far from privatisation – done properly, the client remains in control at all times.'

Whilst I understand his reasoning - which looks good on paper - the reality is that governments are unable to draw up sensible contracts. Here in Scotland the Edinburgh trams disaster shows clearly that government - although in this case it's local government - is sadly lacking in the quality of employees required to design complex contracts.

Why is this?  Why do so many government contracts have multitudes of errors and why can't governments recruit adequately qualified personnel?

I suggest there are highly qualified civil servants capable, if pushed, to undertake water-tight contract compiling, but because their livelihood is seldom, if ever, on the line there's no incentive to 'get it right'.  Who accepted the responsibility for the Edinburgh trams mess?  Indeed a few did but were rewarded with massive pay-offs.

Outsourcing, in some of Martyn Hart's examples, may work well at times but companies like G4S are not delivering a quality service in many cases.

A few months ago I had a conversation with someone who has experience of G4S.  He is ex-military and applied for a senior position in security. He left after two years because the standard of employee he was expected to train was well below his expectations. One comment he made was: "Squaddies are always thought to be thick but in comparison with the people I was expected to train they're really smart."

Businesses which offer outsourcing services require to make profits for their shareholders and how they do that affects the pay and conditions they offer their employees.  The security industry, like the catering industry, has always been regarded as a low paid area which doesn't encourage the brightest and the best.

But should G4S take all the responsibility for the Olympics fiasco?  No.  The Westminster government made big changes to the contract just a few months before the event and - stupidly with a large dose of arrogance - G4S agreed to them.  No doubt heads will roll within G4S but will we see any heads rolling out of the hallowed doors of the Home Office?  I doubt it.

Billions of pounds of taxpayer's money has been spent on poorly designed outsourcing contracts over the years and gross errors have been kicked into the long grass under the 'lessons learned' mantra.

If one lesson is to be learned from this latest cock-up, it is that civil servants and politicians should be forced to resign their posts if they are found to be lacking the necessary skills. Public servants should be treated the same as any private sector employee and only then will we see a rise in standards in all areas of government, not only those in the Home Office who write contracts.


pa_broon74 said...

Having seen this from both sides, in the NHS and ICL or what is now Fujitsu, two things spring to mind.

Firstly, when its not your money its very easy to read a contract and think, 'well, that doesn't seem fair... Meh, we'll look at that later...' and never do. I see that often in the NHS although I would say, its much better now than it was, (it used to be terrible.)

The other thing is vested interest, if I get a pen from a supplier I have to declare it, I can keep it but I need to fill in a register. I have no idea how John Reid for example, managed to give the contract to G4S then get a job with them, that I think is the biggest problem.

I can say, The Scottish Government have really tightened things up over the past few years, I normally delete those kind of internal emails with out reading, but occasionally I skim over them, there have been real savings at government level, the health boards & councils (who negotiate the kind of PFI contracts in question) on the other hand have a lot of catching up to do.

Joe Public said...

1. Outsourcing is a godsend for public-sector managers.

They have enormous difficulties sacking poor-performing employees, but can terminate a poor-performing company's contract immediately.

2. "The Westminster government made big changes to the contract just a few months before the event and - stupidly with a large dose of arrogance - G4S agreed to them."

On the contrary Rosie, G4S immediately recognised it as a legitimate excuse to ramp-up their fee from £7.3 million to £60 million.

subrosa said...

Pa_broon, thank you for taking the trouble to explain your experiences. I've only experienced outsourcing in a very small way and that was years ago. Sometimes it was excellent but more often poor.

It's pleasing the hear the SG are keeping a tight rein on the purse strings and ensuring quality is maintained.

I don't know about the NHS, but councils could certainly do with a shake up.

subrosa said...

Your first point is a good one Joe.

Your second shows the level of arrogance of G4S. Whoever in government agreed to their excessive fee increase should be sacked.

pa_broon74 said...

I would also say, NHS Scotland is/has been sued by one or two companies over breach of contract, so the idea that its easier to dump crap companies as opposed to crap staff isn't true.

The thing with NHS contracts is, we put suppliers on contracts so we can get discounts, (the supplier knows we'll use them or atleast they'll be in a very small pool of potential suppliers.) However, if for example our customer refuses to use the suppliers we have on contract, it gets sticky.

Generally speaking, we'll try and get the best deals but its not always about who's cheapest and the problem we have is big companies are able to offer low cost goods in the knowledge that what they're peddling is actually a bit crap. We go to the next contract supplier who might score differently (on other criteria outwith cost alone) and the first one cries foul and sues.

Over and above that there are the euro rules which I can't even pretend to understand.

However, contracts have worked and do save the NHS and the tax payer money, we just have to be wise about how we negotiate the various rules & regs.

Brian said...

Royal Mail had some recruitment problems last year for Christmas temps One possible factor was that its recently set-up recruitment agency was part-managed by a private sector company.

subrosa said...

Just a wee thought pa_broon regarding saving money. Has the NHS saved rather than lost money.

I'm thinking of the billions spent on various IT contracts which failed.

subrosa said...

That was quite possibly a result of a poor contract Brian don't you think?

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