Kent Council cheerily flings about £100m at managed services bods Kent County Council and two other local authorities are on a mission to splash between £50m and £100m on a mega outsourcing gig with managed services providers. The four-year contract is to be awarded to five suppliers for "the outsourcing of day-to-day management responsibilities and functions" and is part of council plans to …
I'd feel more comfortable about these deals,maybe, if there were figures and plans that demonstrated how much could be saved by which means. If you see a plan that says what they will do differently and how that will cost less, it might be OK.
But when it's just a " We will give our £50m services contract to Crapita and they promise they will do all the same stuff for only £40m while retaining a handy profit margin" my heart sinks.
I think the theory - much like the large Highways Maintenance PFI deals which I have direct working knowledge of - is that while the services cost the same amount of money to provide, there is a saving to be made by outsourcing to the likes of Capita et al because some of the overhead costs, such as HR, (internal) IT support, pensions etc. etc. are shared across all the Capita outsourced jobs, rather than being duplicated by each Council (or whatever.)
There is also the fact that - from the POV of the Council - it's a fixed annual fee. They know exactly how much they're paying out year-on-year as it's in the contract, and if the contract has been written and vetted correctly, it should never cost any more or any less than that, no matter what changes to the services Capita (or whoever) are asked to undertake. That then makes it easier to see how much money the Council has left for other things, rather than the cost of service provision being a moving feast.
At least that's the theory as I understand it.
In practice, of course, it hardly ever works.
>>"I think the theory - much like the large Highways Maintenance PFI deals which I have direct working knowledge of - is that while the services cost the same amount of money to provide, there is a saving to be made by outsourcing to the likes of Capita et al because some of the overhead costs, such as HR, (internal) IT support, pensions etc. etc. are shared across all the Capita outsourced jobs, rather than being duplicated by each Council (or whatever.)"
Similar to justifications I heard when I worked for the NHS and they were outsourcing IT support services - the 'savings of scale'. I pointed out then and I'll point out now, that this principle doesn't apply universally to all things. Building cars? Certainly - massive savings building them all in a factory over people making their own at home. Computer support? Not so much - if you need Y people to support X computers, that doesn't change because they all work for the same company. So do you expect this massive saving in cost of scale to occur in the fringe support infrastructure around them? "Well, we still need five hundred IT support people, and they still need the same amount of office space, phones and computers, but all their payroll is done by one company now so that'll save ten million!"
Not sure exactly what the details are in this outsourcing, but I am as yet unconvinced it will be any different. The main motivation in such operations in my experience is having paper work to show poor performance is someone else's fault. Or, as the first poster observed, an extra wad of cash in the back pocket.
"If you see a plan that says what they will do differently and how that will cost less, it might be OK." I totally agree with your sentiment but if they put that in the plan, then the council could just do it themselves couldn't they? Why would they need the outsourcing "partner"?
I always see outsourcing as an admission by management that they don't actually know what they are managing and have to get someone else to do their job for them. The only valid reason for outsourcing in my view is economy of scale. But even with that, multiple councils could get together and still do an effective job without outsourcing. It just takes good management. But it's easier to outsource and let someone else deal with the horrible 'doing stuff'.
"...plans that demonstrated how much could be saved ..."
Transparency? Sorry to enlighten you, but we live in a pseudo democracy where public accountability is just a myth.
Cameron thinks canning FOIs would be a victory. I suppose in the war on truth, it would be :/
After all, he is only an advertising executive, and they're the last sort of people to be interested in the facts.
@Terry 6 - indeed. A FoI request should produce the business case, showing the savings over the other 2, 3 4, whatever options that were costed. It rarely does, as I experienced with the "commercial confidentiality" screen last time I FoI'd them regarding BT and the BDUK broadband money.
Seeing a good deal of the business case detail would help, as government IT hasn't got a great track record. It's our money after all, and I'm sure there are private sector clever cloggs's out there with time on their hands that could very well donate their knowledge to pointing out the holes in the contracts and saving us from a outsource pong fest. What does KCC have to lose by publicising business case detail? Unless there is something to hide? They should stop treating the public as idiots. Sure there are some, and equally there are clever clogs amongst them that can help.
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