The UK Central Computer & Telecommunications Agency has been discussing its role in the government’s Competing for Quality initiative – known to many as the market testing initiative. For the uninitiated, the initiative was introduced with a government White Paper in November 1991, as part of Prime Minister John Major’s Citizen’s Charter. Its aim was to cut costs within government departments by introducing private sector operating skills, and it did it by asking every government department to consider whether its operations would be most efficiently carried out in-house or externally. Some UKP1,500m of business was to have been tested in the first stage, which ended on September 30 1993. In fact, just under UKP1,000m had been tested at the time of writing, with another UKP800m to be tested in the 1993-94 stage. Since the initiative was launched, ministers have pushed hard to get it implemented, and the Cabinet Office believes the programme has saved UKP100m in its first phase.
The Agency outlined how instructive it has tried to be in helping departments to come to terms with the market testing initiative, and also talked about what it has done in both the private and public sector to help people put together bids. However good the intentions of the UK government in questioning the efficiency of services to the public, there are problems with the initiative that will take time to resolve. Some are simply there and cannot really be handled. For instance, experience proves that so far, smaller contracts tend to be won by in-house bids, because the larger private sector companies don’t believe that it’s commercially viable to make a serious bid on accounts under a certain size. This can also work the other way – larger contracts are often won by the private sector, as in-house teams previously accustomed to cushy, public-sector life are thrown into the icy cold commercial waters at the deep end. Another problem that was raised at the CCTA briefing is that boundaries in a public sector world are hard to set. What is information technology and what isn’t in a large bueraucracy, and how easy is it to separate out the computer services from the rest? The Computer & Telecommunications Agency has been working to provide what it calls common good services alongside specific, chargeable services for departments that are under orders to test the market, and for teams – both internal and external – that want to tackle the work. These services take the form of publications, case studies, workshops for in-house teams, support services, and seminars for the services industry.
One of the people quoted as praising the CCTA’s services is Mike Allen, director of the Department of Employment’s information systems branch. He is currently engineering his in-house team’s bid for the department’s data processing contract, after it was market tested. Allen took the position by choice after he was involved in the original market testing procedure. He wanted to see his staff win the business to boost their morale, and therefore decided to roll up his sleeves and get his hands dirty. Allen was one in-house bidder who saw the parts of private sector pulling out early – Hoskyns Group Plc pulled out about four months ago, leaving only Electronic Data Systems Corp and Sema Group Plc bidding for the contract from the outside. He bears no grudges against ministers for forcing the bill through, and indeed welcomes the move. It can create conflicts, but he says that these can be resolved so long as managers have the initiative to get moving early on – often, White Papers are all too easy to ignore initially, and that makes it all the more painful when the red letter lands on your desk later on. Even so, staff suffered; We had to make staff realise that it was real. In doing so, we created a new low in staff morale, he says. Originally, the plan had been to test only half of the data processing service over a period of three years, but very early on in the test the department decided to test more of the service. This ties in
with another point raised by Roy Dibble, director of the Central Computer & Telecommunications Agency at the recent briefing, about salami slicing of contracts. He said that operations to be tested weren’t being divided up into separate contracts, primarily because of cost and management issues. Each contract has to be accompanied by numerous administrative and management links, and for this reason the fewer separate contracts the better. Even so, Hoskyns pulled out of the bid. Why? Charles Cox, executive director of Hoskyns’ public sector division, explained: We pulled out of the external bid, but the internal support bid is still there, he said. It has to do with balancing your portfolio of assets, skills and resources. He also pointed out that one has to bid initially to get the real details and requirements of the contract. Paradoxically, therefore, it is only after bidding that a company can decide whether it really wants to bid.
There are other problems on bidding for government accounts, according to Cox. One is that the process of market testing means that by the time the private sector gets involved, most contract details have been set, and bidders have little space left to manoeuvre. The public sector also works differently from the private sector in terms of procurement, according to Cox. In the private sector, procurement policies are generally carried out at a high level, whereas the public sector procures equipment at lower levels, he says, bearing out his view that What they’re not doing is thinking of outsourcing as a strategic structural move in the way they operate. He does think, though, that there is nothing to stop the public sector attaining private sector efficiency levels in the end, especially now that the first phase of testing is over and the second has started – perhaps government departments will be able to learn a little from earlier market testers, with the help of the CCTA.