Commission impossible: Why skills gaps and unrealistic expectations mean outsourcing is failing to deliver

Written by Jim Dunton on 13 November 2017 in Feature
Feature

Bureaucrat-turned-academic Gary Sturgess argues Whitehall needs to up its game on public service contracting and commissioning. Jim Dunton reports

Gary Sturgess Photo: Public Service Transformation Academy

You don’t need to have read every select committee report published over the past 10 years to know that outsourcing the delivery of public services doesn’t always go smoothly or provide the desired results.

The early termination of HM Revensue & Customs’ fraud-and-error checking contract with Concentrix, and industry giant Serco’s admission earlier this year that it stood to lose £120m on the Home Office’s “COMPASS” contract to house asylum seeker are just two recent examples.

Prof Gary Sturgess, who is Australia and New Zealand School of Government chair of public service delivery at the University of New South Wales, is firmly of the opinion that a “race to the bottom” fixation in Whitehall that prioritises the lowest bids from would-be providers above all other factors is the root of the UK’s problems, and one that the civil service must bear some responsibility for.


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Speaking to Civil Service World during a break from a Public Service Transformation Academy (PSTA) workshop on contracting, Sturgess – who was director general of New South Wales’ Cabinet Office in the 1990s – says that while ministers bear responsibility for their funding decisions, those decisions are informed by officials’ advice, and the systems put in place to make contracts work.

“A number of the private providers have not covered themselves with glory, but the settings of this market in terms of the reality of the finance available and the quality of the contracts and of relationships, government bears a huge amount of responsibility,” he says.

“My position is that since this is government supply chain, government had better step up to the plate and accept that it has the responsibility for the quality of these services.”

It is a point that Sturgess made in a paper for the Business Services Association earlier this year, but one that he says is far from universally accepted in Whitehall.

“There have been a lot of people happy to blame the providers,” he says. “And in the six months since the report’s been published, I don’t get the impression that there’s a lot of attention being paid to this.

“A number of civil servants were outraged that somebody would dare to point out that they may not have been doing their job particularly well. Beyond that, there’s been some people who’ve engaged.

“[Civil servants] have an obligation to explain to ministers what the consequences of certain actions will be, and they have an obligation to be well informed about what the consequences of various alternatives would be and to explain them.”

“In the area of contract design, we haven’t really developed a proper discipline. It’s not studied within the public sector, and people move on from their jobs too quickly to really acquire the skills.” Gary Sturgess

Sturgess says that while competitive tendering is an “extraordinarily successful tool” for driving down cost, a significant amount of work is required to ensure the ongoing delivery of quality services, and that deliverability is addressed as well as cost.

“In some cases it is a reluctance to accept responsibility for system-level interventions, or system stewardship,” he says.

“There have been a number of outstanding examples of system design, or market design, some of which was simply ignored by prime ministers, some of which was never done.”

Sturgess says there is a genuine lack of capability within the civil service in crucial commissioning areas and that the situation is exacerbated by staff turnover. He also argues that civil servants often fail to recognise the multiple factors that can lead private sector firms to bid for contracts at a level that may prove financially ruinous.

“In the area of contract design, we haven’t really developed a proper discipline,” he says. “It’s not studied within the public sector, and people move on from their jobs too quickly to really acquire the skills.

“The academic community hasn’t done too much to assist; they haven’t done good applied research that could be applied by the civil service, so there are a number of important skills that are simply missing. I’ve been [working in this area] for three decades and we’re simply not building those capabilities.

“There is a set of skills missing between policy and delivery, and the hand-off between policy and delivery is not terribly sophisticated. As a result, the accountability and report-back isn’t very sophisticated either. So there is a set of issues there; a sort of missing discipline.”

Sturgess believes the issue is recognised by some in Whitehall – which lead the Cabinet Office to found the Commissioning Academy, now overseen by not-for-profit groups and delivered by the PSTA – but less so by policymakers.

“There is an arrogance associated with the policymaking-implementation framework which is not about having a mature conversation with the people within the public sector, the people who will be charged with delivery,” he says.

“And this is true of the entire English-speaking world, it’s not just confined to the UK. There’s not a mature conversation between policy and funding and delivery of an engagement with delivery to understand what might actually work out there in the real world.”

PSTA chief executive Benjamin Taylor says there is a “significant appetite” among public sector commissioners to get to grips with the issues flagged by Sturgess.

“PSTA ran a joint event on social care markets in the late spring, and we had 50-60 people in a room from local government, providers and health,” he says.

“It was a commissioner who first used the dread phrase ‘race to the bottom’, and people are aware that there are challenges within these markets.

“What we see is that commissioning is a vital part of the way to get out of these challenges and provide quality within the budgets available. People are really genuinely hungry to learn and to improve outcomes.”

"Fabulous reports have been done by the National Audit Office and various other bodies over the years, but I suspect they’re largely unread the lessons have not been gleaned from them.” Gary Sturgess

Sturgess says a general recognition of looming public service delivery “car crashes”, with social care a prime example, ought to focus minds in Westminster on the need for a new approach to commissioning that hinges more on quality of service than minimum cost. 

“It’s going to require a message from a very senior level in government that this is not and was never meant to be solely about price,” he says.

“Questions of service quality are enormously important and we must build them into our considerations. The government may be wanting to buy a Volkswagen rather than a Mercedes, but there’s no reason why that Volkswagen should be breaking down at the first intersection.”

Nevertheless, Sturgess says conversations with some civil servants have revealed an acceptance that service delivery at the lowest possible price is “the brief” and that there is no time to focus on bigger questions.

“That’s important, because it’s turning up in poor quality services, poor quality contracts, and poor results in the provider market,” he says.

On commissioning, Sturgess says there are no obvious beacons for Whitehall to learn from, despite “occasional” examples of excellence. He said the UK could return to its initial experience with prisons for good practice pointers on contracting.

“Prison contracting was done really well,” he says. “For a long time the UK was the standard in this regard, but that example has been substantially compromised in the last seven years.

“It’s not just about price and efficiency. The Labour government used to talk about using contracting to drive their decency agenda; better quality services innovating in reducing reoffending. It wasn’t just about cutting costs and saving money.”

On Brexit, Sturgess does not believe the UK’s decision to leave the European Union has affected private sector interest in delivering public services, but he sees that a diminished interest in reforming service delivery on the part of officials.

“I think that what is perceived is that there has been a huge drain of talent into dealing with Brexit, and people’s attention has been diverted within government,” he says. “I’ve had people repeatedly suggest there is an issue because some of these systems-level questions … senior civil servants and politicians are distracted. It’s having a huge impact on domestic policy.”

Add to this high turnover of civil servants connected with commissioning and contracting, which Sturgess says is a “huge problem” and one that was “peculiarly British”, at least in the English-speaking world.

“There have been numerous attempts to treat contracting as a discipline and to honour and respect people around that,” he says.

“But I still hear about people who are in post for two years, and who do this job as well as they can and then move on.

“These are enormously complex and technical tasks and these are skills that need to be built and developed over time. There are places where this is recognised and people are retained, but there are huge parts of government where people working on commissioning and contracting, contract management, they don’t regard it as a career and they’re not in post long. So the memory is very short.

“Fabulous reports have been done by the National Audit Office and various other bodies over the years, but I suspect they’re largely unread and the lessons have not been gleaned from them.”

Prof Sturgess was taking part in the PSTA workshop “Contestability and the art of contracting” when he spoke to CSW.

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