The Office of Government Commerce (OGC) has argued against claims that public sector outsourcing contracts are wasting tax payer’s money, costing the public 75 per cent more than they should.
An OGC spokesman pointed to this year’s Budget report. Since the 2004 Spending Review’s efficiency targets for departments and the wider public sector, £23bn efficiency savings had been made, which included over £8bn from procurement efficiencies, he said.
Discrepancy exists between the government’s figures indicating public sector procurement savings and those held by public sector consultancies and thinktanks.
According to Compass Management Consulting, the public sector pays 75 per cent above average for an outsourcing contract, while the TaxPayers’ Alliance notes that government projects, including those involving IT, are £23bn over budget.
The OGC has been criticised for lacking scale and expertise to procure for the sector, but claims that it is at the forefront in helping the government and wider public sector improve procurement and deliver value for money. “OGC is an expert in providing guidance and standards on procurement best practice, fostering productive partnerships and realising the benefits of collaborative solutions to meet the buying needs of the public sector,” said the OGC spokesman.
However, outsourcing providers agree with the criticisms levelled at the OGC. Gurmeet Singh, director of Europe outsourcing practice, Sapient, said because the public sector lacks expertise in the areas being outsourced, a dependency develops on the vendor that is not in the interests of either party.
Singh gave advice to organisations looking to outsource: first identify the range of services needed before going to any supplier with a project; second, have at least a two to three year plan with the provision of revising the terms of the proposal at the end of each year; third, have a clear conversation with both parties together about their exit strategy, and finally, ensure you are working with the right sized company: too large and you may not receive the attention you require, too small and you may not have the flexibility for an agile business model.
In addition to building the terms of a contract, Singh said to build a governance model for executing the contract. “In many ways, this should be seen as important as completing the contract itself,” he said.
The governance model can help administer the contract, Singh added. “This body should meet at regular intervals – at least once a quarter – to ensure the value of the contract is clearly demonstrated.”
