Services > Privatization/Outsourcing; Insourcing; Managed Competition
Privatization/Outsourcing; Insourcing; Managed Competition
These terms are generally misunderstood, and governments are attacked and criticized whenever they utter the “P” or the “O” words. The reality is that most governments already “outsource” goods and services that in many cases are valued in excess of 50% of their annual budgets. How can this be?
It’s simple. First, there are goods and services that government just should not be in the business of producing, including things like office supplies, furniture (unless the Dept. of Correction has a competitive woodworking/furniture making program), building products, automobile maintenance, highway construction, printed forms (that require large printing infrastructure), etc., to name only a few.
Next, government has never been very good at negotiating wages and benefits, or buying/building or leasing real estate and so typically has higher fixed costs than the private sector. Added to that, government does not train its workforce to world-class standards.
Government is not constrained by a need to produce income because of its power of taxation. Such an atmosphere leads to development of very poor spending habits. When you couple this with poor procurement processes, the concept of "competition" is taken out of the equation because fewer qualified firms come to the table. Since, as mentioned above, governments don’t always have the most knowledgeable contract experts working to help close deals for them, all these factors lead to government paying far more money than it should, and for fewer goods and services, or lesser quality goods and services, than needed.
Said differently, these factors assure that performing a particular service or producing a particular good will generally cost government more – in some cases substantially more - than the private sector. What does all this mean?
Government must think critically about what goods and services it should produce and what goods and services it should procure. WhysSolutions will help you do this. Further, we will then help to make sure that in both arenas: a) goods and services produced, and b) goods and services procured – that government is spending its taxpayers’ dollars as efficiently and effectively as possible.
Procurement reform is a term often thrown around but rarely effectively addressed. It’s not about creating new laws and stiffer penalties for misdoings. Rather it’s about strategically understanding your business; being clear and concise in the work that needs to be done and the expected outcomes (whether we’re talking about government employees or outside vendors); having well-defined roles and responsibilities to ensure executive oversight, and a cadre of professionals who will both hold others, and be held accountable for the work being done – the goods and services being produced.
It’s not about hiring someone to take work away from a government employee. It’s about ensuring that the person(s) performing a service or producing goods are well-trained, competitively compensated and organized and managed as efficiently as possible so as to achieve an end goal of the best product or service, the best value, for that dollar spent.
You may call “it” whatever you please. We like to view “it” as “Strategic Sourcing – which we define as finding the greatest value producer of a good or service – whether within government or from the outside – and helping our clients procure those services.
Now you may ask "why do we need WhysSolutions’ help if we're going to use our own people?" The answer is twofold: 1st, because you won’t know if it’s the right thing to do until you do an assessment and 2nd, all the principles of project management outlined above (see "Project Management: The 5 Key Phases") need to be applied internally as well as externally – the primary difference is that internally you would not necessarily generate a contract.