We can't afford not to contract out services

There are past and sadly still present failings in the implementation of outsourcing, its monitoring and contract renewal.

The very good examples of shared services across the parking sector are areas that those in environmental services should be proud of. And it is now exciting to see increasing numbers of shared chief executives.

The point has been made that the existing staff and management ethos may not be able to manage large-scale change in outsourcing and service delivery. This reflects the reality that technically proficient people who have become functional team leaders and directors may not always have the skills needed for the future challenge.

But to focus too heavily on the problems with outsourcing risks leaving key services open to a lack of innovation or any contribution to the 28% cuts. Indeed, if service managers across any block feel they can sit back whilst others deliver the savings it will in fact drive the chief executive to a simple solution of OJEU and outsourced service in a quantifiable time, with specific savings associated with it.

It is worth investing in the expertise to outsource in order to ensure basic mistakes are not made and the expertise of having devised, operated and even terminated contracts can be brought to bear.  It does therefore raise certain challenges across any aspect of service outsourcing.

Firstly, in devising the contract are you increasing the specification of the service demanded? For instance, internal failure rates may be regarded as acceptable but when outsourced there may be an expectation that any degree of failure rate is unacceptable. From the outset you are actually seeking to procure a higher level and cost of service. The tender should encourage innovation and experience to flow into your council.

Secondly, performance management in any contract should be about a degree of trust and relationship management. The demands placed on outsourced providers can again be more onerous than when they were internally provided – this is often the dyed in the wool service manager wanting to actually still run the service.

This neatly brings me on to the third point about the skills of the client manager. I have seen too many outsourced arrangements be deemed to be ‘failing’ by the inability for the client manager to grasp that times have changed and to allow the outsourced provider to grow and develop the service.

The churn in service providers at the end of each contract period worries me as much as continued rolling forward of contracts. Yes, there are some areas where a contract fails and you can’t wait to terminate it. What is equally worrying is the desire to set short contract periods in the misconception that the only way to get real value is by going back to the market every two, three or four years. This crude contracting totally misses the scope for longer-term partnership.

I see massive scope for those councils who have never outsourced. The savings will be huge, especially where members and the chief executive sign-off a strategic outsourcing and are prepared to concentrate on policy, direction and performance of the council super tanker – rather than wanting to get involved in the operational bowels of the engine room or galley. The models of governance are changing and all service managers would do well to swim with the tide. They must grasp that many aspects of service provision are no longer as economic as they might be.

It will ensure that you have a role in helping lead the options and solutions to hitting ever-tighter budgets.

Join the Efficiency Network on Linked In for regular updates