On lessons from Carillion

Pity poor Oliver Dowden MP, whose ministerial promotion was rewarded with an immediate kicking on Newsnight over Carillion. Dowden has picked up most of what used to be the Cabinet Office efficiency and reform brief, although his experience as a PR man and SPAD seems hardly more relevant to digital than Caroline Nokes’ ponies. But as David Cameron’s ex-deputy chief of staff he must have some political nous, which could help as GDS is pulled into Brexit coordination along with the rest of Cabinet Office.

The Carillion fiasco is chilling for companies at the larger end of the public sector contracting market. Not because others are poised to follow Carillion off the cliff, but because the story is fuelling increasingly anti-outsourcing political rhetoric. Some might be scared silly by Corbyn’s talk of nationalisation, but they should be paying more attention to Bernard Jenkin MP. As a Brexiter Tory MP, and Chair of the Public Accounts Committee, it’s voices like his setting the political wind – and he’s questioning the nature of private sector involvement without provoking accusations of socialism.

How relevant is all of this to IT contracts? IT outsourcing doesn’t generally suffer the same race to the bottom that bedevils the most people-intensive BPO and construction markets, in which contract costs go up and margins down. (Rail franchises suffer the same problem, for that matter.) The outcome for contracts that blow up tends to be some combination of public service failure, supplier failure and/or taxpayer bailout. Remedies currently proposed by those including Jenkin are more oversight of large suppliers, increased use of smaller suppliers, and better contract management. Some work will probably be taken back in-house too, but we can safely predict that no one will call that ‘nationalisation’.

Sound familiar? Think back to the government IT strategy driven by GDS in its pomp. Disaggregation, small suppliers, becoming a more intelligent customer, doing more work in-house. Five years later all of this is run-of-the-mill stuff. In time, it’s not inconceivable that similar could be applied to other public sector contracting markets. Suppliers who’ve developed expertise in the full range of SIAM-type services and transition support could find themselves much in demand.

(Originally published on Kable)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s