I asked Robert Morgan, a director of Burnt Oak Partners, an organisation that enforces Outsourcing commitments and contractual obligations, for his views on the credibility of Conservative plans to save £6bn during his financial year, in part by spending on new outsourcing contracts for back-office work.
Robert has a good knowledge of many government and private sector outsourcing deals.
His reply:
"Yes the Tories are very likely to extend spending on IT projects in the short term to reap mid and long term benefits of consolidation and establishment of shared services, the biggest savings being in the numbers of people used.
"The government has absolutely huge duplication of common commodity services.
"Take for example the simple function of HR, pay and rations - the Labour government has three times, to my knowledge, investigated consolidation and merger into a common shared services company.
"The latest thoughts (2007-8) were that this shared services department could become a legal entity that could ultimately be privatised with a ten-year, back-to-back contract to continue supplying service to government.
"This would be the largest such provider in the market and also solve some of the staff-related issues of the future, as they would be offered shares in a private enterprise based on their length of service.
"Government has mooted these ideas for years however. The Whitehall mandarins always manage to delay and then pull the ideas around election time. The only way to do it is at the beginning of a parliament and even better if there is a new party in power.
"These ideas are not radical but pure common sense. But what do you do with the initially displaced people - if this was a commercial decision instead of a political one then the answer is an everyday occurrence, redundancy as there are genuine reasons to not employ so many people.
"Regarding the need to OFEU the requirement, if this really is a top parliament requirement, then powers exist to award contracts under well-established framework agreements. These contracts would be for consultancy services, which in theory could be extended into service contracts over time.
"Time is clearly not on the new government's side. So it would appear that an OJEU notice would be the simplest and easiest way to bring this forward. Old plans could be dusted off and so coming to market quickly should be relatively easy.
"Regarding cancelling contracts, I doubt that any major saving can be made as the penalties associated with cancellation will be huge and cross out savings.
"Of course strong negotiation around future projects and pressure being applied to other contracts unless compromise is reached, could "change supplier attitudes". Among the biggest losers here could be Capita and HP's inherited EDS contracts.
One of the best ways to save immediate monies would be to terminate the hundreds of quasi support contracts, applications development and re-platforming projects where government almost forgets about them.
Here companies like PA Consulting and CapGemini could be among the losers. The kinds of projects are where new legislation means new reporting or extra functionality is needed and great rafts of people are contracted to amend large cumbersome and largely undocumented systems in situ while civil servants get to work on the sexy new technology platforms.
So onshore rates apply for something that has a limited self life and government cannot or will not use offshore resources.
Sir Peter Gershon [adviser to the conservatives on efficiency savings) certainly knows where the bodies are buried and exactly which mandarins obstruct decision making, so he is an excellent choice to be state executioner.
Burnt Oak Partners website
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