When Should Government Work Be Outsourced?

By Daniel Jones, Partner and Director, Public Sector

Professional service contracts are a relatively small part of the services brought in by governments, but the impact can be high and widespread use of consultants can quickly result in a very large expenditure on presentations and reports. To curtail this practice, the Department of Homeland Security recently announced a workforce assessment initiative reviewing all professional services contracts exceeding one million dollars before a new contract is awarded or an existing contract is renewed.

This raises an interesting question of what constitutes an inherently governmental function, particularly when looking at the wider question of Public Sector outsourcing.  A significant increase in government work was outsourced to private companies during the Bush administration as well as the Thatcher administration in the UK. There is no easy answer to the question of what needs to be done by public servants, although there are, at least at first sight, some obvious areas – policing, armed services, courts, taxation and border control, but all of these include activities that can and are outsourced, often to great benefit. Ultimately the answer as to where to draw the line on outsourcing will result from a political decision on the role of the private sector in delivering public services.

Some would argue that public services are special and that a sensitive public service should not be outsourced, but there are examples of great services delivered by commercial organizations for government, just as there are examples of exceptionally poor services delivered by public sector employees. The difference has generally to do with leadership, service design and levels of investment, rather than any difference in the motivation or values of public servants and corporate employees. Where the service is outsourced, a key determinant of service quality is the ability of the public sector to provide effective service management and governance.

Professional services are a lot less tangible than outsourcing and public sector organizations in all the major economies will be looking hard at the value they receive from their advisors – and rightly so.  In some cases they will undoubtedly conclude that the work should have been done by a government employee, or that they did not receive value for the money spent.

Not all professional services fall into this category.  There are some areas where external specialists, supplementing a skilled internal team, can make a very significant difference, particularly if they come with proven methods, in depth experience, and a wealth of detailed data to support their advice.