In a fascinating report prepared for the Business Services Association, Professor Gary L. Sturgess examines some of the challenges that have led to a significant decline in trust on both sides of the public sector service market in the UK over the past five or six years. A key recommendation in the report states that:
“Government must formally acknowledge at the highest level that the procurement and contract management tools appropriate for buying ‘paperclips’ – highly commoditized, easily specified goods and services – are not appropriate for commissioning complex support services and front-line human services.”
The apparent inability to distinguish between these markets has led to a more transactional approach to public service delivery that has in turn impacted trust on both sides of the contractual equation, as well as private sector performance and, ultimately, delivery success. Other contributing factors identified by Professor Sturgess include:
- An aggressive transfer of risks that private sector organizations have no control over;
- The shift from a relational form of contracting, based heavily on personal relationships and institutional trust, to a highly transactional approach;
- Attempts at centralization, aggregation, and standardization for complex public services;
- Aggressive price-based tenders and e-auctions, which encourage a ‘race to the bottom’;
- Systemic self-deception, including unrealistic timelines and the practice of signing legally binding agreements without clear performance requirements and tasks included;
- Lack of continuity, capability, and authority among civil servants managing these large procurements and contracts; and
- In response to austerity concerns, a decision by government in 2010 to extract large cash payments – hundreds of millions of pounds – from its major providers with no legal or contractual foundation.
The report includes some very candid and rather shocking comments by the private sector providers surveyed about government attitudes, including towards profit (‘seen as evil’), delivery (characterised by ‘entropy’), and management of these contracts (seen as a ‘zero-sum game’).
This report provides valuable insight and lessons to be learned particularly by the public sector on this side of the pond, as well as links to previous reports and other historical attempts to remedy the situation. In conclusion, Professor Sturgess provides what can best be described as cautiously optimistic recommendations.
The full report can be found at: http://www.bsa-org.com/wp-content/uploads/2017/04/Just-Another-Paperclip-FINAL.pdf
Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication.