The UK government is pushing ahead with plans to outsource more government services despite the growing evidence that the UK public sector is nowhere near capable of managing the large contracts involved.
Those plans were given a boost by Brussels ratifying the new outsourcing rules that are to be introduced by all EU member states within two years. The UK however intends to lead the way and introduce the changes as soon as it can. The new EU rules are to open up a £450 billion a year market across Europe to smaller contractors and allow governments to outsource services more quickly. The rules also allow governments to blacklist contractors and other suppliers who have failed to deliver on contracts and suffered sanctions like termination as a result. All will not be lost for these contractors however as co-operating with the authorities, paying compensation and taking steps to prevent repeats of any wrongdoing will mean they can be allowed to bid again.
They are also designed to increase cross-border competition for contracts above £626,000. Bidders will not have to produce such onerous piles of documentation early in the bidding process – such as insurance policies – as they do now. The average contract size in the UK is double that of France and Germany and the rules will encourage dividing contracts into ‘lots’ that smaller firms can pursue.
All of this sounds very good. But the problem of doing more outsourcing remains – the public sector does not have the commercial skills to manage it properly, as another news story in this issue illustrates. The Cross Government Contracts Review looks like the clearest evidence to date that the civil service is not up to the task. The Financial Times called the report ‘another day of shame for Whitehall contract management’.
As reported in our news story, the government is taking steps to improve things. Cabinet Office Minister Francis Maude told Parliament that the problems of commercial capability and contract management were being tackled as part of the Civil Service Reform programme. A new Crown Commercial Service (CCS) has been established and its head, the newly created Chief Procurement Officer, will be part of the Cabinet Office.
Two days after the damning report was released, the Friday before Christmas, the Cabinet Office announced that the new organisation, which brings together the Government Procurement Service (GPS), which is no more, the commercial functions of the Cabinet Office and the services procurement and commercial management previously undertaken by individual departments, was now up and running.
The new Chief Procurement Officer is in place and senior staff have transferred across from the GPS and the Cabinet Office to be joined by commercial specialists from the private and public sectors. Th e vision for the new organisation is to be a world leading buying organisation, delivering value through outstanding commercial capability and quality customer service. Th ere is obviously a long way to go before that ambition is achieved.
Nick Barrett
Editor