Outsourcing public services and reputation

The reality is that the Government has to outsource public services. It lacks the resources – both infrastructure and personnel – to do everything itself. It is also often cheaper to bring in outside support: the private sector has a long-established reputation for greater efficiency than the public sector, while as the contractor government can demand the best possible value for money.

The breadth of services outsourced to the private sector in the UK is vast, and for that reason stories in the newspapers today (notably the Financial Times) that G4S has been referred to the Serious Fraud Office for the second time in six months will make unhappy reading for Ministers and civil servants. The news caps a torrid year not only for G4S but other major government contractors, many of whom have also experienced damaging reputational problems.

The outsourcing of public services is a sensitive and emotive topic – one need only look at the reforms to the NHS and the contention surrounding the opening up of its internal market. But this latest story involving G4S highlights a significant problem Ministers are now presented with. On the one hand there is the need to ensure the greatest possible innovation and efficiency in the delivery of public services, which requires the public sector. On the other, Ministers do not want the tag of handing public services in their entirety to the private sector and lining the pockets of executives who are then accused of mismanagement.

This puts government in a quandary – the results of which are already being felt. Ministry of Defence efforts to privatise its procurement through the creation of a ‘GoCo’ model have already fallen through because potential contractors have withdrawn from the bidding process over reputational issues. This is likely to be a feature of future government tenders, leaving Ministers with limited choices as to which companies they are able to contract.

The results of the problems experienced by the likes of G4S and others are likely to be two-fold. Firstly, there will be opportunities for alternative service providers, if they are able to demonstrate the capacity to deliver the services government requires. Secondly, the tendering of public sector contracts and the due diligence involved will be under scrutiny like never before. Any organisation or company looking to take on the delivery of public services will have to demonstrate the strength of their reputation, and will need both comprehensive understanding of the political sensitivities they are operating within and clear communications plans that involve reputational and crisis management.

Chris Rogers