Doubts about capabilities of public servants in contract management worldwide

The Economist last week reported on British Chancellor George Osborne’s ambitious plan to remake the British Government, and it observed (in U-turns and new turns):

“By 2020 departments will be too cash-strapped to run things; public administration will be far more about awarding and overseeing contracts. That is a sensible shift, but it is not clear that bureaucrats are up to the job.”

The Economist rightly pointed out the London Olympics security contract debacle, and it could have also noted the Queensland Health payroll debacle. In the Brisbane Times coverage of the news that the Queensland Government cannot sue IBM over the health payroll debacle, it was noted that “the debacle has been described as possibly the worst public administration failure in Australia.”

The health payroll debacle demonstrated a lack of capability in the Queensland public service to oversee the implementation of major projects being delivered by contractors. This was disturbing because, regardless of the political party holding power, there is a clear trend toward greater outsourcing or contracting out, which, as I have noted previously, has been demonstrated to yield efficiency gains, typically in the range of 10-20 per cent. Of course, those gains only occur when the outsourcing is properly managed, and that was certainly not the case in the Queensland Health payroll debacle. And that is why there is an urgent need to review the capabilities of Queensland public servants and to determine their training needs in project and contract management.

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4 Responses to Doubts about capabilities of public servants in contract management worldwide

  1. Jim says:

    Gene

    Good post and an interesting topic. I would imagine that the 10-20% efficiency gains from outsourcing you highlight are based on benchmarking the efficiencies of the current public servants vs. private contractors.

    But I think there is an alternative to your solution of having better trained public servants to manage contractors. That is having professional public servants that actually do the applied work, rather than outsourcing.

    My understanding is that in the US and Europe there is a significantly higher proportion of technical work undertaken within agencies because they have retained capable senior professionals and actually use them as professionals.

    But in Australia, the professional positions top out at about $100K in most fields (perhaps health is the exception). The consequence is that many professionals in the public service face a career decision when they are just starting to really make a contribution. Do I move into management to get my next promotion (where professional skills and relevant content knowledge are secondary to generic process management), or do I leave the public service altogether (as many do)?

    Perhaps the managerialism approach introduced into the public service the 1990s has resulted in unintended inefficiencies and an over-reliance on external contractors?

    • Gene Tunny says:

      Thanks for the comment, Jim. The 10-20% estimate is based on outsourcings undertaken in the 70s, 80s and 90s, with many observations coming from municipal services, such as garbage collection. See the article referenced at this old post of mine:
      https://queenslandeconomywatch.com/2013/05/05/cost-savings-from-contracting-out-public-services/
      Obviously you could question just how broadly you would expect that result to hold across different types of outsourcings.

      I wouldn’t be surprised if there were some unintended inefficiencies in some parts of the public service from outsourcings gone wrong. You’d need to look at it on a case-by-case basis. Obviously there is a need for a core group of technically proficient public servants. But I doubt it is as many public servants in policy development roles as we have now.

  2. Mike Smith says:

    Gene, some of that review you are calling for has been done, here: http://www.qao.qld.gov.au/report-10-:-2013-14

    • Gene Tunny says:

      Mike, many thanks for pointing this review out to me. I’ll post on it in the future once I’ve investigated whether anything was done in response to the report. It’s findings are very concerning, though expected.

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