The recent allegations made against the two companies contracted by the Ministry of Justice to operate the national tagging scheme inevitably raise some fundamental questions.
The government has instigated several reviews, including potentially a Serious Fraud Office investigation in respect of G4S’ involvement and behaviour in the MoJ tagging contract. It is appropriate that these reviews and inquiries should be allowed to run their course before too much can or should be said about the specific allegations. It is also important that the results of the reviews and inquiries are made public – save, of course, for any evidence that could impede any prosecutions.
However, there are nonetheless some critically important general points that can be made and which need to be urgently debated. These serious allegations raise a series of questions about the fundamental ethics of some public service providers and/or their internal control systems, and corporate and personal accountabilities; about the quality and effectiveness of public sector procurement and contract management; the nature and complexity of the contractual (and in particular, the payment) arrangements; and potentially, the efficacy of outsourcing especially when there is little supply side competition.
And I suggest that it should also cause ministers to push the pause (if not possibly the stop) button on the current probation and re-offending management services procurement.
Over the last few decades under successive governments, there has been a political and ‘new public management’ view that the use of competition and outsourcing of public services is intrinsically a ‘good thing’ that will result in savings, better performance than the public sector can produce, and often a greater choice for the service user. Actually, the evidence to date has been very mixed and I suggest that in future, and without firm evidence, such assumptions are best avoided.
Service and productivity improvement usually requires several conditions in order to be delivered: excellent leadership; clear objectives; investment in people and systems; excellent service design and re-design; and well-motivated, well-managed and involved (and usually well rewarded) staff.
These conditions can in fact be found right across many parts of the public, business, social and charity sectors. In the case of public services, it is generally held that a ‘public service ethos’ is also essential. Actually, again, this ethos can be found in all sectors though perhaps more predominantly in the public, social and charity sectors – but not exclusively, and most certainly, not always!
Where present, such a public service ethos should embrace a focus on service users as well as wider communities and citizens, transparency, accountability and public legitimacy or authorisation. The public sector has to be the custodian of this ethos with political accountability, as it has for public expenditure.
So when a service is delivered on behalf of the public sector, whether through a contract by a commercial company, a social enterprise or a charity – ultimate responsibility and accountability remains with and must remain with the public sector.
Public services are not the same as consumer services, especially when they are funded wholly or in part through public expenditure and/or have a wider public interest than simply serving an individual user. Unfortunately we are guilty of having introduced the language and some management approaches of the retail sector into public services and not always appropriately.
The Best Value Social Value Act places a specific duty on the public sector to secure wider social, economic and environmental outcomes when procuring public services. Unfortunately however, and all too often, the emphasis has typically been on lowest cost and attempts to transfer risks to the provider (often spuriously) rather than securing public value. Again, perhaps inevitably, there is a strong sense of price driven procurement being adopted in this period of austerity simply (or primarily) as a means of reducing public expenditure.
In the pursuit of outcomes and public value, public bodies have the opportunity (indeed, duty) to look at a variety of delivery models. They should not assume that outsourcing or even partnering with the business sector or any other sector is always going to be right answer.
Public bodies have the additional options of: undertaking service redesign and delivery themselves or through public sector partnerships; contracting or partnering with social and charitable organisations; as well as partnering or contracting with businesses. The key is to determine what is right for a specific case and having a robust (but not overly-bureaucratic) means of selecting the right approach as part of their strategic commissioning.
If services are to be contracted externally, it is vital that the principles of public service ethos are maintained – which brings us back to the MoJ tagging contracts and some immediate thoughts.
When using market competition to open public service delivery up to businesses and other providers a public body must have certain conditions including:
· being clear about the outcomes it is seeking
· having the means to recognise and measure these outcomes
· having politically set values as well as financially and operationally based criteria, both for making informed choices and for selecting external providers
· having the necessary (and vital) procurement and contract management skills and capacity
· being sure that there is a competitive supply market and not (unless for an exceptional situation) only a few potential bidders/providers; and in the case of a new service or activity testing whether this could be best delivered ‘in-house’
· aligning procurement processes with wider policy goals
· not applying a ‘one size fits all’ model of procurement and contract management, that treats a £100,000 contract the same as a £100 million contract
· not effectively discriminating against new or small SME or social/charity suppliers
· having the will and means to test bidders’ ethics, values and standards of governance
· adopting contracts and payment mechanisms that deliver and incentivise good behaviours and outcomes whilst not being too complex and obtuse to external inspection; and having the means to accurately hold providers to account before making payments
· contracting in as flexible a manner as possible without compromising value for money, and with exit routes (and having contingency measures should corrective intervention fail and exit be required)
· requiring providers to be fully transparent on financial and operational performance, as well as any wider contractual requirements; and ensuring this is all subject to independent audit
· requiring providers to declare their internal company transactions and money transfers between the company or subsidiaries and the contracted service business unit; and for this to be subject to potential independent audit
· requiring providers to be transparent about their internal executive and staff, payment and reward arrangements and how these may influence behaviour related to the contract
· ensuring that political scrutiny applies to both provider and client functions within the public body
· regularly publishing easily accessible performance reports that identify performance against contract; wider social benefits; and payments
Of course any public sector body must behave in a manner proportionate to: the size of the contract, the nature and scale of the services being contracted, the associated risks, and a provider’s capacity and size.
Transparency and ethics are at the root of most of my ‘wish list’, and I believe that government should introduce regulations that extend the Freedom of Information Act (which contrary to some colleagues in both the public and business sectors, I most wholeheartedly believe in) to providers from all sectors, and not only to the public sector.
I also believe that CIPFA, the NAO and others should develop accounting and audit standards for public sector contracting.
The MoJ tagging story is one of several recently that will have provoked some serious thinking about a reliance on business sector outsourcing; when it happens, and how it is controlled and monitored. It may also have made some public sector leaders re-consider the role that the social and charity sectors as well as the public sector itself can play. And with luck, it will have also hopefully spark a movement for greater transparency and accountability for all public service provision, irrespective of who the provider is but most especially when it is not the public sector.
Tagging is apposite! In my opinion, contractors also have to be tagged so we know what they are doing. And in turn, politicians and public sector leaders must be held to account for the performance and behaviour of those with whom they contract.