Yesterday I read in my local newspaper that Bradford Council is proposing to bring grounds maintenance services for parks and cemeteries, which have been outsourced for almost 20 years, back in house when the current contract expires next year. The driver for the proposal is not cost, although the Council is expecting a marginal saving, it is the wider benefits which the switch is expected to bring. These include:
- being better able to respond to winter emergencies such as gritting (through improving the resilience of the DSO)
- being better able to work in partnership with other Council departments
- being able to work more flexibly at a local level and develop closer working relationships with local communities
- improved flexibility around service standards to meet budget challenges.
In the financial climate that we are now in, it is impossible to argue that these outcomes are not absolutely critical to the ability of the Council to continue to meet the needs of its residents. What is interesting is that, presumably, the Council has taken the view that these benefits cannot be achieved through a new contract for the services with an external provider (or at least cannot be achieved to the same degree).
There is, it must be said, some pretty strong evidence for the prosecution here. I had a local authority client a while ago who were locked into a PFI contract for one school, which saw that school maintained in an almost ‘as new’ condition for 25 years, whilst the authority struggled to fund anything other than essential and emergency repairs for all of the other maintained schools, creating a two tier service which made both officers and members extremely uncomfortable, to say the least. ‘Watertight’ contracts which satisfy lawyers tend not to incorporate the word ‘flexible’ too often.
So, given that flexibility is so important, are we heading for a rush towards taking outsourced services back in house or is there a way that we can deliver flexibility and protect long-term value for money in service contracts? Well, George Osborne and his Treasury colleagues clearly think so.
Tomorrow, Osborne will be presenting his Autumn Statement to Parliament. As with most Government announcements these days, it has been so comprehensively trailed in the press, that watching it live tomorrow will be like watching a repeat of a TV sitcom, only not as funny. You know what lines are coming, but you just sit there hoping that you might spot something that you missed first time round. Anyway, one part which is covered in the papers today is the proposal for the replacement to PFI. Welcome to PF2 everyone.
Apparently, PF2 will be ‘far more flexible’ than PFI. We will have to wait and see how that translates into the detail, but the issues to be addressed are exactly the same as those which will have vexed Bradford Council and others thinking about their outsourced services.
My personal view is that you can build flexibility into long-term contracts and protect value for money and accountability. The key requirement for me, though, is not around process or specification drafting or contract negotiation, important though these are. It is around attitude, both in authorities and the private sector. We all need a dose of ‘brave pills’, because central to success is trust. But if watertight contracts and the word flexibility don’t sit comfortably together, watertight contracts and the word ‘trust’ are usually not even on speaking terms.
Process and rules need to be seen as there to guide and protect, rather than to stifle. Risk should be seen as something to manage and mitigate, rather than eliminate and we perhaps need to re-think what we really mean by ‘partnering’. All much easier, I know, to write rather than to implement, but with a positive attitude it can be done. Almost everyone I meet, in both authorities and in private sector organisations, says that we have to move to a new style of procurement, but don’t want to be first to jump. Perhaps George will get us there tomorrow. Brave pills anyone?