In the course of researching this report, I re-read a wide range of government reports and personal memoranda which I had collected in the years when I was deeply engaged in the UK public service market (1993 to 2011). One of the surprises was how often these same concerns had resurfaced over the years.
I was particularly struck by the following, from a brief on the state of the market, which I prepared in January 2003 for the Public Services Strategy Board, which had recently been established by the Confederation of British Industry:
These difficulties have been ascribed to the failure to articulate client needs clearly in advance, conflicts between multiple government agencies, greater intrusion of political considerations into bidding, excessive risk aversion, a bias towards low-cost bids rather than best value, unrealistic expectations about risk transfer, attempts to maintain intense competition down to final selection, a failure to understand the needs of the private sector, a lack of procurement skills in government, a lack of continuity in bid teams, and a failure to manage advisers.
Two and a half years later, a meeting of senior public officials and private sector executives was convened by the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office to address the question of market sustainability. The list of issues discussed at the meeting included the following:
• Provide greater certainty about the future direction of government policy and the political environment.
• Develop competition and contracting models that are politically sustainable (in terms of service quality, accountability and workforce issues).
• Develop models that are commercially sustainable (in terms of attracting new entrants, ensuring adequate market depth, providing sufficient visibility on forward opportunities, stimulating innovation and investment, avoiding unnecessary scale and complexity which tend to exclude SMEs, finding optimal contract length).
The difficulties that have surfaced in the public service market in the past five or six years are not new. They are certainly more acute than in previous decades, but the underlying issues are much the same. What has been different in recent years is the broader economic and financial climate, and the particular ways in which government has chosen to respond. Understanding this should make it easier for government and industry to appreciate the underlying causes of these problems, and to develop solutions that will be effective in the short-term and sustainable over time. At the same time, knowing that these issues have been encountered (and dealt with) before provides ground for optimism that fundamental policy and market settings can be recalibrated to ensure that the public service market is politically and commercially sustainable over the medium- to long-term.