It was a long time ago. Ronald Regan was President of the United States. Margaret Thatcher was Prime Minister of England. And Madonna was… well… like a Virgin. The government, especially the government of the UK, had come up with a new term… Privatization. At the start of the 80's a global recession was about to hit and the UK would be the first nation in Europe to bear it's brunt, hitting their economy harder than most of their European neighbors.
There were already years of neglect in some critical services, now the lack of funding took tottering services and pushed them over the edge. Some were just very poor quality and others were facing total de-funding. The conservatives were enamored about the idea of privatization. But they were more focused on philosophy than on how to build a good outsourcing contract. Conservatives knew that there were certain services that just shouldn’t be run by the government, and if it was run by the unions then it was probably a good place to start. The focus of privatization became: the railroads, airlines, health services, coal and the post office.
Today, privatization has evolved into government outsourcing, but the targets are very much the same. There are still heated debates in the UK if the great transformation worked. The idea was to reduce the cost of these services, but it was more of a political goal where economic benefits would follow. The plans were a bit fuzzy, the measurements were inconsistent, and the results were difficult to measure.
But it was a very different time. Neither the unions nor the conservative thought that you could exactly measure what these services did or how much privatization changed their productivity. When privatization was underway in Margaret Thatcher’s England, project management wasn't yet an organized practice and Six Sigma was just being developed at Motorola.
Today, government outsourcing is focused on hitting specific performance targets. In 2012, the UK central government expects to outsource 4 billion pounds sterling. The focus this time around is: defense, police, and pension funds. Unlike the fuzzy 80s, this time around there are clauses in these contracts such as, “10 per cent of revenues are tied to reducing reoffending rates” (for a prison-related contract). Moving toward specific, measurable goals may not guarantee the success of every contract, but it will guarantee that you can measure the success of the contract instead of depending on a political analysis.
Interestingly, some of these contracts are talking about partnerships rather than complete outsourcing, especially in prison management. Prisons are a necessary evil… in every sense of the term. Throughout history, they have been both private and government run. Neither private nor government prisons have been perfect. Perhaps it does take a partnership to create a better prison work.
We can definitely expect to see some innovative outsourcing in Greece and Spain, as these governments look for new ways of paying for services while still paying back their debts. In the US, municipal governments, particularly those in California, are under a lot of pressure to reduce costs and launching an innovative new wave of outsourcing agreements.
Of course, there have also been some early examples of very bad contracts. In Texas and in California there have been lawsuits over failed government outsourcing contracts. While these disputes are tinged with politics, it’s interesting that the courts are driving both the government and the vendors back to the conditions in the contract.
It may have taken decades and a financial crisis to get government to modernize their outsourcing process, but we may be entering a new age of effective government services. One thing is for sure… we need to keep our eyes open for new lessons from this new wave of privatization!
There were already years of neglect in some critical services, now the lack of funding took tottering services and pushed them over the edge. Some were just very poor quality and others were facing total de-funding. The conservatives were enamored about the idea of privatization. But they were more focused on philosophy than on how to build a good outsourcing contract. Conservatives knew that there were certain services that just shouldn’t be run by the government, and if it was run by the unions then it was probably a good place to start. The focus of privatization became: the railroads, airlines, health services, coal and the post office.
Today, privatization has evolved into government outsourcing, but the targets are very much the same. There are still heated debates in the UK if the great transformation worked. The idea was to reduce the cost of these services, but it was more of a political goal where economic benefits would follow. The plans were a bit fuzzy, the measurements were inconsistent, and the results were difficult to measure.
But it was a very different time. Neither the unions nor the conservative thought that you could exactly measure what these services did or how much privatization changed their productivity. When privatization was underway in Margaret Thatcher’s England, project management wasn't yet an organized practice and Six Sigma was just being developed at Motorola.
Today, government outsourcing is focused on hitting specific performance targets. In 2012, the UK central government expects to outsource 4 billion pounds sterling. The focus this time around is: defense, police, and pension funds. Unlike the fuzzy 80s, this time around there are clauses in these contracts such as, “10 per cent of revenues are tied to reducing reoffending rates” (for a prison-related contract). Moving toward specific, measurable goals may not guarantee the success of every contract, but it will guarantee that you can measure the success of the contract instead of depending on a political analysis.
Interestingly, some of these contracts are talking about partnerships rather than complete outsourcing, especially in prison management. Prisons are a necessary evil… in every sense of the term. Throughout history, they have been both private and government run. Neither private nor government prisons have been perfect. Perhaps it does take a partnership to create a better prison work.
We can definitely expect to see some innovative outsourcing in Greece and Spain, as these governments look for new ways of paying for services while still paying back their debts. In the US, municipal governments, particularly those in California, are under a lot of pressure to reduce costs and launching an innovative new wave of outsourcing agreements.
Of course, there have also been some early examples of very bad contracts. In Texas and in California there have been lawsuits over failed government outsourcing contracts. While these disputes are tinged with politics, it’s interesting that the courts are driving both the government and the vendors back to the conditions in the contract.
It may have taken decades and a financial crisis to get government to modernize their outsourcing process, but we may be entering a new age of effective government services. One thing is for sure… we need to keep our eyes open for new lessons from this new wave of privatization!
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