Watching the media leap on the failing carcass of G4S’s contract to provide security to the Olympics will probably, for many, have felt like watching the brilliant BBC comedy Twenty Twelve expecting at any moment to see Hugh Bonneville appear and say in an understated way ‘so that’s all good then’.

However the commentary – journalistic, political and via the Twitterati – has raised a more serious question: if the world’s largest security firm can fail to meet it contractual obligations for something as important as the Olympic games, can the private sector ever be trusted with public services?’

Perhaps understandably, much of the questioning from MPs and journalists has focused on G4S’s systematic failings of business process in delivering this contract, which have been many, but, while robust and dramatic, the questioning has not necessarily uncovered the detail of how this contract ended up so deep in trouble so late in the day.

Alongside the specifics of the G4S shambles there is a refocused interest in private sector involvement in public services, more voices calling for an end to contracting with the private sector, and certainly the G4S failure appears to add weight to that argument, but what does it really tell us about outsourcing in the public sector?

There are perhaps two issues that the Olympic security problems highlight:

1.    that risk-sharing in public service provision between the private and public sector partners is part-truth and part-myth;
2.    that the rule of the six Ps is always true.

What do I mean by this?

Risk-sharing: truth and myth

It was decided to contract security provision to a single provider; therefore the provider had to be a significantly large organisation severely limiting the field of choice. G4S is the largest firm of its type in the world and yet the contract here was so complex that it failed. The largest provider could not deliver; its size did not protect against the prospect of failure.

The consequences of the failure to deliver to contract have in part been carried by G4S. The financial and reputational damage has been largely theirs; they have withdrawn from future bids for similar work; and the costs of the alternative security provision are being picked up by them. However, the public sector, through the police and the armed forces, has had to step in and ensure that the service is still delivered with the consequential loss of service this will cause elsewhere. So the effects of failure are still felt by the public sector. Not all the risk has been taken away through the contract.

Olympic security was never going to be delivered by the public sector. No one can believe it would have been sensible to deploy that many police officers or soldiers in to these kinds of temporary security roles, severely depleting the ability to deliver the roles those services are really for. Nor is it realistic to claim that using them is a serious contingency plan probably on overtime and after cancelling holidays, it is a recovery action.

The six Ps

This brings us to the second point: pathetically poor planning leads to pathetically poor performance – the rule of six Ps. I am far from being an apologist for G4S: they have failed to manage the contract competently, but questions must also be asked of the client, LOCOG in this case. For example, what were G4S asked to do? When was their requirement changed? Why did and when did the number of staff they were supposed to provide increase? How was it specified? On what basis was payment agreed?

A detailed security plan for the Olympics was, we are told, developed over a considerable time so why was this plan put in a position where there was a single point of failure, one single security contractor? What alternatives were considered? Why were they rejected?

When contracts go wrong it is rarely, if ever, just the contractor’s fault. Yes, companies can fail to deliver, but then so can public services (how full is your councillor’s caseload with failure to perform by the council?).

While there are many symptoms of failure in contracts that go wrong there is usually one primary cause – a breakdown of trust between the contractor and the client, and it is the client who has the most influence and control over this relationship.

The client sets the tone, puts in place the means of managing the contractor and, most importantly, specifies the scope and objectives of the contract. It is here many contracts go wrong, right at the start, because if the client doesn’t know what they want, or what they are trying to achieve, and just tries to tell the contractor what to do it is almost inevitable that the contract will be perceived to fail. If the client decides that that price will be a major deciding factor in who wins the contract (normally at least 40 per cent but often 60 per cent of the decision criteria in public sector contracts) then don’t be surprised if bidders cut their cloth accordingly. After all, if you ask someone to do something difficult cheaply, don’t be surprised when they try to do it on the cheap.

There is a tendency in the public sector to focus on how the service is delivered, not what the outcome of the service should be; the private sector wants to know what it must achieve in order to get paid and make its profit. This is the real culture clash between public and private sector. So if you tell a contractor to do A+B+C to get paid why are you surprised that that is all they do? You haven’t told them they are measured on or paid for anything else and if A+B+C doesn’t achieve what you want it to, whose fault is it really?

The answer has to be outcome-driven contracts and a focus on building partnerships of trust where the public sector uses the private sector.

The problem is that most public services are ultimately trying to achieve social results: better quality environments, improved educational results, lower reoffending rates. These can be hard to put into performance measures (and often public services don’t want fixed targets because it feels wrong or too abstract to detail this kind of objective) but without them how do we know we are succeeding? How can we be sure that a service contracted or delivered in house is achieving what we want? Without performance metrics we will end up with constant service drift and stifle service innovation.

Strong outcome-based measures will enable better service planning, better control when we decide to use the private sector in helping deliver services, but to do so we need new and better skills in service performance management in the public sector itself.

Outsourcing isn’t new and, of itself, isn’t privatisation. It is simply paying someone to do stuff for you so that you can concentrate on the things which, for you, are most important. The public sector has always bought goods and services from the private sector. The critical question that outsourcing in the public sector asks of us is this: what are we trying to achieve, how do we measure it and how can we define what help we really require?

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Keith White has been a Labour councillor since 1989, is a former deputy leader of Dacorum borough council and Labour group leader. Outside of politics Keith has worked in consultancy for the last 12 years developing a leading expertise in the design and implementation of managed, shared an outsourced services. In that time he has led significant projects in transforming service delivery in the private as well as public sector. He writes in a personal capacity, and tweets @imstillred

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Photo: Ben Sutherland