Posted tagged ‘Keynes’

Local Government by contract?

April 11, 2011

Beyond the known knowns?

“Stuff Happens” (Donald Rumsfeld)

“When the facts change, I change my mind. What do you do, sir?” (John Maynard Keynes)

Forgive the diversion into quotes from yester-year but I hope they will help me ask a simple question about the outsourcing of council services.

This past week I have been knee deep in a contract with an external service provider of my local authority. This contract is for a substantial period of time and yet already we are in the position of needing to change something.

Obviously, needing to change something is going to cost us money. Even the most friendly contractor does, in my experience, require a certain amount of money to change anything they’d originally agreed to do.

The assumption of a lot of outsourcing is therefore that:

a)      Any changes can be predicted in advance and therefore written into a contract or:

b)      The service is so straightforward that we won’t need to change anything significant no matter how long the period of the contract

My experience is that this is not always the case.

I heard of a council that felt they had managed to negotiate an amazing deal. In 2007 (ish) they let a ten year contract that promised 2.5% efficiencies per year over the term of the deal. In 2011, they now realise that the deal is not delivering anything like what they need it to in terms of cuts/efficiencies and are not having much luck in renegotiating. What they thought was a great deal is now anything but. (more…)