US gets tough with outsourcers


US gets tough with outsourcers

David Bicknell

US legislators are considering a proposal that would put the squeeze on outsourcing companies supplying government services and make them compete for existing contracts.

Under new legislation, companies would be forced to verify the cost-savings they claim to be able to achieve, or their contracts could be cancelled and put out to new "public-private competition".

In the UK, the Government has been unable or unwilling to penalise IT outsourcers who have under-performed on high-profile public sector contracts.

The new US legislation, called the Truthfulness, Responsibility and Accountability in Contracting Act, has come about because - according to the Bill's sponsors - there is no documentation to prove that outsourcing by US government agencies has saved money or improved efficiency. The Bill is expected to reach Congress this winter.

The Bill has upset supplier groups, including the IT Association of America (ITAA), which claimed that, if passed, it could force the cancellation of so many contracts for critical functions that the US Government would be forced to shut down.

According to US research group Input, when one ITAA member asked how currently valid contracts could be arbitrarily put at risk, another member said simply: "Any contract can be cancelled at any time."

The ITAA board said: "We have been kicked badly. Of the estimated $30bn-$36bn spent in the federal sector annually, 15% is for IT and virtually all of it could be affected."

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