Authorization

Outsourcing bosses say Government contracts are still mostly awarded on price

Outsourcing sector bosses have told MPs that the Government's procurement proposition had gone "too far" in a quest to keep costs down and that the system needs overhauling, in the wake of Carillion's collapse.
Speaking to a parliamentary select committee on Tuesday morning, Rupert Soames of Serco said that in his four and a half years leading the company, the only contract he could remember winning on any factor other than price was to manage facilities for Barts Health NHS Trust.
Mr Soames said this proved that Government outsourcing was still mainly based on cost, rather than the expertise that private companies could offer.
Phil Bentley, chief executive of Mitie who was also appearing before the committee, said: “There’s always this drive to the lowest price as the easier answer.” He added that he thought more conversations between the public and private sector prior to a contract being awarded would help.
“Innovation is taken out of the bids because the OJEU rules [for tendering work] are about creating a level playing field,” he said.
The committee was meeting as part of a wider investigation into the way the Government uses the private sector for services such as running schools and prisons, following the collapse of outsourcing company Carillion in January.
Carillion has been criticised for bidding for work at extremely low prices, putting its financial health at risk. The Government is meant to assess contract bids against a variety of factors.
Mr Bentley said both Mitie and Serco were different to Carillion, pointing out that the latter had failed because of its construction contracts rather than its outsourcing. He said the Government had been unwise to award services contracts to “an outsourcing company with large construction risks”.
Outsourcing bosses say Government contracts are still mostly awarded on price

Serco chief executive Rupert Soames said he wanted to see more transparency over the costs at the outset of procurement talks

Credit:
Luke MacGregor
Mr Soames also told the committee that different Government departments had different policies for awarding work, despite there being centralised rules for the process.
“It’s very dependent on the quality of the team doing the procurement,” he told the committee.
“I would also say that very often the civil servants doing this are struggling themselves. They are trying to run departments with very limited resources.”
He acknowledged that the private sector should not use Government outsourcing contracts as “a licence to print money” but wanted to see more transparency over the costs at the outset.
“The proposition at the moment has gone too far - the proposition is that you can make 5-6pc margins if it goes really well, but if it goes wrong [the Government] will bankrupt you,” he said.
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«    Октябрь 2018    »
ПнВтСрЧтПтСбВс
1234567
891011121314
15161718192021
22232425262728
293031