This morning's press includes an number of articles announcing a Government shake up as to how public sector contracts are to be sourced following Carillion's spectacular collapse in January 2018. Clearly, the Whitehall mandarins having been hard at work over the past 13 months learning the lessons and today sees the publication of the eagerly awaited half-term 'Outsourcing Playbook'.
What are the key changes? According to today's headlines they include:
(1) The principle that the Government is to take on a greater share of the risk and civil servants should not expect suppliers to shoulder unlimited liabilities;
(2) More transparency with Key Performance Indicators (KPIs) being made publicly available;
(3) Resolution Plans or 'Living Wills' to deal with what happens if the private sector supplier fails, i.e. we get another Carillion;
(4) Government departments are to publish their future requirements so that the private sector suppliers can plan ahead; and
(5) The public sector is to make decisions as to when it is best to deliver services 'in-house' rather than through the private sector, which seems to be a good starting point.
Allocation of risk
Much of what is being reported does seem to rest on the notion that risk should lie with the party best placed to manage it. I don't disagree but I have heard similar words spoken before, including when shut away with teams of lawyers and clients negotiating complex PFI health sector projects. On these occasions (when advising the downstream private sector providers) I must say that those acting for the public sector "talked the talk" but rarely "walked it".
I recall one occasion when the private sector suppliers (and there were quite a few of us in the room) took a side bet on how many times the public sector representatives would use the words, "risk must be borne by those best placed to manage it" (or to that effect) only then to allocate each risk to the private sector. The winner (not me) had to buy the post negotiation drink.
Bob Dylan was misunderstood - he could see past Carillion
Perhaps, back in the early 1960's, the great Bob Dylan was actually writing and singing about the state of the UK's public procurement industry and how enlightened the future looked. Indeed, Carillion's own mission statement was 'Making tomorrow a better place', and perhaps that will be its legacy to public sector procurement. That's one for discussion over a flat white coffee.
The Government is overhauling its approach to outsourcing following the catastrophic collapse of Carillion. A new outsourcing ‘Playbook’ published today sets out guidance designed to improve how government works with industry. Key changes include allocating risks to those best able to manage them, and piloting new complex contracts before rolling them out.