Outsourcing - good or bad?

Amidst this week's embarrassment of Parliamentarians serving their own interests the Sunday Times Business section included a piece of the increasing outsourcing of public services. I first have to declare an interest in that I am currently involved in a major outsourcing contract, so assume I have some bias, just in case.

One of the criticisms of outsourcing is alleged to be "little accountability or transparency over the claimed savings". To me, that argument just doesn't stack up.

First, it implies an acceptable level of accountability and transparency over existing savings under the 'as is' service delivery. It implies both will be reduced through outsourcing. Accountability for service delivery should remain with the democratically elected representative (or CEO) regardless of whether or not the service is delivered in-house or outsourced - failure to recognise that is a failure to recognise the fundamentals of public service delivery and contracting. Outsourcing delivery does not mean an abdication of accountability for delivery. In a well defined contract there will be clear levels of service stipulated supported with tight performance/contract management - accountability starts in defining what is to be delivered, which may not previously been subjected to the rigour of a specification.

There has been scepticism over claimed savings within the public sector for years. Indeed, even more fundamental, there have been difficulties actually calculating how much the 'in-house' service delivery costs. Without clarity on existing service costs there is no baseline for comparing the achieved savings, regardless of whether an in-house 'efficiency agenda is pursued or outsourcing. However, assuming you have gone through some sort of contracting route, you should be able to see how much an outsourced service will cost through the price. You should also be able to compare that price against any internal cost. Then, in subsequent years, you should be able to see year on year changes in the price paid.

You've got to accentuate the positive,

Eliminate the negative,

Latch on to the affirmative,

Don't mess with Mr In-Between. 

I tweeted recently to that effect: 'Student loans misunderstood, Health reforms misunderstood, DWP reforms misundertood: Dave and the Commotions, 'Please don't let me be misunderstood''.

Communication misunderstandings aren't unique to public policy reform, they are also a frequent procurement weakness; the procurement 'end' appears to be misunderstood.  An example was provided as recently as 2 March with the furore over the supposed 'police privatisation'. The only message which appeared to have been communicated was the 'negative'.  Why was there such a complete lack of confidence in the affirmative that the procurement could deliver a better outcome for citizens even though so much appears to have been contracted in the past? Highly respected procurement commentator, Peter Smith, even went so far as to refer to it as an example of 'stupid sourcing'  While I largely agree with Peter, in terms of a questionable sourcing strategy but the stupidest aspect is the associated communications strategy.

A lot of my blogs ask the simple question, 'Did the procurement deliver the anticipated results?'  I have argued that effective political leadership, scrutiny and use of 'fearless' gateway reviews all have a contribution to effective procurement outcomes - they certainly would have helped with the police procurement debacle.  But these are concerned with the procurement 'means' as opposed to the procurement 'end'.  The achievement of the outcome sometimes gets lost in the bureaucratic process or indeed in debating the process.

Yet I have also argued that suggesting some ends can be met when the process constrains that is also political folly.

Nevertheless, too many times investment just hasn't delivered what it was supposed to - that epitomises ineffective procurement;