Civil servants are not seeking enough ministerial directions when politicians set unrealistic deadlines to commission new services, according to Serco CEO Rupert Soames.
Soames, who has been head of the outsourcing company since 2014, was speaking at an event hosted by the Institute for Government on Monday.
Responding to a question about the pressure on procurement teams to sign a contract quickly rather than pause or stop negotiations to improve the contract, Soames said the pressure “very often comes from politicians”.
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He pointed to the process of outsourcing probation services to 21 Community Rehabilitation Companies in 2013 and 2014 as an example of this political pressure, saying: “It was a political imperative of government to get the thing done by a time”
He added: “The contracts were written in unseemly haste and my God, tens of thousands of people are paying for that now in terms of the care that they are getting.”
He said civil servants in these situations need to “pluck up the courage to write [a letter of direction] not about a financial thing but to formally say ‘minister the timescales you are requiring us to work with are impossible. We will do them if you insist but it's got to have a ministerial direction’”.
“I don't see that being used nearly enough,” he concluded.
Event chair and IfG director Bronwen Maddox asked Soames to comment on recent debate – sparked by the collapse of outsourcing giant Carillion – over whether margins had become unsustainably low on government outsourcing contracts.
“I don't think the issue here is margins, because I think we're dealing with government, with taxpayers’ money you're not going to get rich quick doing that,” he said.
“I believe this is about risk transfer. Some time in the last ten to fifteen years government started to justify outsourcing contracts to private companies on the basis that it was transferring risk to them. I think this is a fundamentally bad idea.
“They should transfer the public services to manage them better but what has happened is huge amounts of completely unmanageable risk have been transferred to the private sector – like hand grenades in contracts and now they're starting to go off.
“We are still to this day being asked when we sign contracts to take the risk of change of law for 10 years, from a customer who makes the law, and it just ain't on.”