NOA warns of need for changes to support SME push

As Chancellor George Osborne prepares to throw open the UK public services to third parties seemingly across the board, the question is being raised about how far outsourcing will play a part.

A leaked late draft of a Number 11 strategy document, seen by The Sunday Telegraph, suggests that Osborne will "set out an across-the-board change that opens all spheres of government activities to outside providers, except in a small number of specific cases (the judiciary and national security)."

That would clearly mean big business for outsourcing providers - and might be seen by some as confirmation of the conspiracy theories outlined in last week's Channel 4 Dispatches programme. "The outsourcing industry is one which seems poised to benefit more than most," admitted Martyn Hart, chairman of the National Outsourcing Association(NOA).

But Hart added that despite this potential boom awaiting outsourcers, there are still areas that NOA wants to see Osborne turn his attention to, especially if the Coalition's stated aim of bringing more small businesses into bidding for major government contracts.

"The government's recent focus on encouraging smaller businesses to bid for public sector contracts means that we are likely to see a rise in multi-sourcing in the public sector, with a number of smaller suppliers providing a range of different services, instead of just one large single source supplier," he said. "But how well equipped is the public sector to manage multi-sourcing contracts?

"Very few workers in the public sector will have any experience of how to manage a number of different suppliers effectively, so perhaps we'll see the Chancellor setting aside some of the budget towards training public sector workers in this respect? They might even feel that it would a good idea to expand this investment in training so that it includes smaller enterprises, which have no real experience in dealing with contracts.

"In recent weeks, we've seen the Prime Minister attacking what he calls the 'enemies of enterprise' and pledging to support British entrepreneurs as part of his plan to back small firms. Perhaps, however, the best way he could demonstrate this commitment to enterprise is to introduce incentives to smaller organisations looking to bid, perhaps by making the bidding process itself tax deductible?

Hart also suggested that other changes to procurement and tendering practices would be needed to ensure Coalition ambitions are realised. "The NOA would also like to see the government investing in a means of measuring the performance of outsourcing suppliers, to ensure that the best providers are used, rather than just those capable of providing every service as part of a big contract," he argued. "The government could use the budget to announce a new initiative aimed at kitemarking the performance of suppliers, with the best, most suitable performing suppliers receiving a green kitemark."