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Back to the future? The challenge of modern contracting and commissioning.

Emmet Regan argues that the rise of complexity in our lives and in our public services has made traditional approaches to outsourcing contracts ineffective at best, redundant at worse.

Today, sees the launch of the Government’s Outsourcing Playbook. This was borne out of the collapse of Carillion and a new desire to do things differently. As the document states ‘by acting together central government hopes to improve the quality of public services delivered’. This is a timely acknowledgement that current contracting and commissioning processes are not fit for purpose.

Last year, the Ministry of Justice (MOJ) announced that it would be bringing Birmingham prison under its direct control, terminating the contract it held with G4S for them to directly operate the prison. This decision itself was not surprising given the growing level of unrest within the prison itself and within the wider prison service. However, the MOJ’s decision provides more evidence that traditional outsourced contracts are becoming volatile at best, unworkable at worst. This announcement came hot on the heels of the aforementioned collapse of Carillion and the early termination of the East Coast Mainline rail franchise.

All of this evidence points to the need to debate the existing models of public service delivery and whether future models should include outsourcing in its current form. Today’s announcement is a practical step towards this and a welcome contribution to the debate.

The use of the private sector to deliver public services was a major tenant of successive governments from the 1980s onward. The ‘make or buy’ debate permeated both central and local government, with outsourcing seen as a way of increasing efficiency and reducing risk.

In truth, history has shown us that in a lot of cases, the opposite was true. Efficiencies have been either difficult to prove or hard to maintain over the longer-term and government having to act as the ultimate backstop to the outsourced contracts when they financially overran or under-performed.

Outsourcing public sector contracts to the private sector became the orthodoxy for delivering services. The growth of outsourcing formed part of the of New Public Management (NPM) playbook which became the over-arching direction for public services in the United Kingdom and beyond.

However, the growth of complexity in our public services and the interconnection of people’s lives makes it very difficult to follow the same linear thinking. Relying on a bilateral contracts between a government function and a private company to deliver those services in no longer viable, mainly due to rise complexity of people’s lives and their interconnected nature.

Back to the Future?

Perhaps the easiest answer to the debate around outsourcing is to look to the past for our future direction.

It is all too easy to reach for the lever of nationalisation and look to bring all services back in house, simply equating public as good and private as bad. This cannot be the solution to all the challenges facing our public services.

Issues like rising demand, rising complexity and decreasing budgets are not solved by merely insourcing contracts. Yes, there is an ability to exert more control with an in-house solution but that does not automatically improve outcomes for the citizens we serve. The state having a monopoly on service provision can lead to inefficiency, a reduction in innovation and a lack of proper investment. It is not to say that the privatisation hasn’t led to some of these problems too but this illustrates the point that the choices we face are not binary.

Social value and shared outcomes

The ultimate goal of any public servant is to maximise the use of resources in order to improve outcomes for the citizen. The world of public services is not monochromatic. The false dichotomy between public and private is seductive in its simplicity. We need to look not at the provider and its profit margin but at how we can contract and commission to focus on outcomes not outputs. The government’s recent Social Value strategy can point the way in terms of social value commissioning and driving change.

Collaborate have produced some interesting research as to how things can be done different and creatively in terms of commissioning and contracting. This work provides an aperture into the future. The Centre for Public Impact has a wealth of case studies and innovative methods to engage with.

There is no easy answer to the challenges of commissioning and contracting but there is a growing body of evidence of how things can be done differently. Let’s not look for easy answers but engage with the debate and not rely on history to be the predictor of our future.

To hear about our work supporting public sector commissioning, contact Emmet Regan on emmet@mutualventures.co.uk.

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