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.
“Yes the Tories are very likely to extend spending on IT projects in theshort term to reap mid and long term benefits of consolidation andestablishment of shared services, the biggest savings being in thenumbers of people used.
“The government has absolutely hugeduplication of common commodity services.
“Take for example thesimple function of HR, pay and rations – the Labour government has threetimes, to my knowledge, investigated consolidation and merger into acommon shared services company.
“The latest thoughts (2007-8)were that this shared services department could become a legal entitythat could ultimately be privatised with a ten-year, back-to-backcontract to continue supplying service to government.
“Thiswould be the largest such provider in the market and also solve some ofthe staff-related issues of the future, as they would be offered sharesin a private enterprise based on their length of service.
“Governmenthas mooted these ideas for years however. The Whitehall mandarinsalways manage to delay and then pull the ideas around election time. Theonly way to do it is at the beginning of a parliament and even betterif there is a new party in power.
“These ideas are not radicalbut pure common sense. But what do you do with the initially displacedpeople – if this was a commercial decision instead of a political onethen the answer is an everyday occurrence, redundancy as there aregenuine reasons to not employ so many people.
“Regarding the needto OFEU the requirement, if this really is a top parliamentrequirement, then powers exist to award contracts under well-establishedframework agreements. These contracts would be for consultancyservices, which in theory could be extended into service contracts overtime.
“Time is clearly not on the new government’s side. So itwould appear that an OJEU notice would be the simplest and easiest wayto bring this forward. Old plans could be dusted off and so coming tomarket quickly should be relatively easy.
“Regarding cancellingcontracts, I doubt that any major saving can be made as the penaltiesassociated with cancellation will be huge and cross out savings.
“Ofcourse strong negotiation around future projects and pressure beingapplied to other contracts unless compromise is reached, could “changesupplier attitudes”. Among the biggest losers here could be Capita andHP’s inherited EDS contracts.
One of the best ways to saveimmediate monies would be to terminate the hundreds of quasi supportcontracts, applications development and re-platforming projects wheregovernment almost forgets about them.
Here companies like PAConsulting and CapGemini could be among the losers. The kinds ofprojects are where new legislation means new reporting or extrafunctionality is needed and great rafts of people are contracted toamend large cumbersome and largely undocumented systems in situ whilecivil servants get to work on the sexy new technology platforms.
Soonshore rates apply for something that has a limited self life andgovernment cannot or will not use offshore resources.
Sir PeterGershon [adviser to the conservatives on efficiency savings) certainlyknows where the bodies are buried and exactly which mandarins obstructdecision making, so he is an excellent choice to be state executioner.
Burnt Oak Partners website