G4S: Government’s ideological commitment to using the private sector not matched by proper resources

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Well, first of all Northern Ireland Water have a problem tracking contracts with the private sector. Then the Housing Executive. In the midst of all the rest Northern Irish Primary schools have been let off compulsory testing because a £3 million contract failed to deliver a functionable product.

Now it turns out that the UK Department of Justice has been massively overcharged for the services of G4S… Chris Grayling has brought the Serious Fraud Office in to investigate (which is something our boys and girls could learn from). But already it is far too late.

What all these cases have in common is government’s abominably poor handling of external contractors.

Ever since the early 1980s there has been an ideological commitment to using private sector contractors to do public sector work. The problem is that that ideological commitment has not gone hand in hand with a commitment to  sufficient resources, in two regards:

  1. Under resourcing of departments tasked with choosing the best bid often leads to  a culture of choosing the cheapest one. Cheaply structured contracts often leave the service deliverers with little scope to deal with unforeseen contingencies. You also run into the pay peanuts, get monkeys problem.
  2. Poor to no client management before during and after the life of the contract suggests that the attitude within the civil service is that once a job has been taken on by the contractor, they are simply ‘expected’ to deliver. Government has no reliable resources to launch post hoc value for money checks.

Starved of contract management resources the big lawyers of large private sector contractors run rings round their non specialist public sector counterparts and accountants. In each of these cases the long term cost of such slack management has varied from small to huge.

What’s rarely recognised is that the enormous scale and complexity of the jobs undertaken by the public sector often far outstrips the experience and capacity of any single private sector contractor. Banks may have millions of transactions to process every day, but patient databases are not reducible to simple number crunching.

So the NHS has spent years and billions trying to create a one size fits all, and failed miserably. The ambitions of senior civil servants and their political masters often outstripe the resources they are prepared to commit to make it happen.

G4S was not the first, nor will it be the last screw up. If the public sector continues to see value in using private sector contractors, then it must commit resources upfront to ensure proper contract management expertise, or be prepared to take more and more punishment when the chickens come home to roost.

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