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When is an outsourcing contract not a contract? July 23, 2012

Posted by Mark Hillary in Current Affairs, Government, IT Services, Outsourcing.
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The Olympic games is almost with us and as the sport has yet to being the media is trawling through every negative angle they can find. The latest is the failure of security firm G4S to supply enough guards on time – leading to the need for the games organising committee to use more police and army personnel than ever expected.

The Chief Executive of G4S has apologised profusely and admitted that the situation is a shambles – in his own words, but was his company really to blame?

When outsourcing goes wrong it is not always the supplier at fault. The London Organising Committee (LOCOG) for the games originally specified that 2,000 guards would be required. This is what G4S had always been planning for.

Only a couple of months ago this figure changed to around 10,000 guards – plus all the volunteers and other military personnel that were expected to also help. So the scope of the contract changed by at least 500% with a very short lead-time.

Nobody wants to explore this in too much detail right now – the games are upon us this week so the post-mortems will take place once it is all over, but it looks like a classic outsourcing dilemma. The client suddenly needs to ramp up and will offer an enormous bonus to the service provider, but if the provider felt any doubt about their ability to scale up so quickly then the honourable thing to do would have been to refuse the change in the scope of the contract.

All will be revealed once the games are over…

Wenlock

Phoot by Ken Jon Bro licensed under Creative Commons

 

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