Procurement: The Outsourcing Playbook

On 20 February 2019, the Government published “The Outsourcing Playbook – Central government guidance on outsourcing decisions and contracting” and twelve Outsourcing Guidance Notes. This suite of documents have been produced following study of what, why and how the government outsources, prompted by the fall-out from the collapse of Carillion in January 2018.

The Outsourcing Playbook and accompanying Outsourcing Guidance Notes apply to outsourcing of services by central government departments, but they will be of wider interest.

The Outsourcing Playbook introduces 11 key new policies capturing the approaches and behaviours required in central government outsourcing. These new policies include, for example, requirements to undertake a “Make versus Buy” assessment before deciding to outsource a service and to run a pilot where a service is being outsourced for the first time.

In the case of critical services, one of the new policy requirements is the provision by suppliers of “resolution planning” information, i.e. information on ensuring continuity of service in the event of supplier insolvency. In that context, the Government has also published new Guidance on Corporate Financial Distress. This is to provide a basic understanding for government contract managers on identifying the signs of corporate financial distress and practical steps to take where there are concerns over a supplier’s financial health.

The Outsourcing Playbook is divided into twelve short chapters and each chapter includes links to other documents, including the new policies where relevant. The chapters follow the procurement cycle from “Pipelines and Market Management”, through conduct of the procurement process and contract award, concluding with “Expiry, Extension, Transition and Termination”.

The new Outsourcing Guidance Notes cover:

• Market Management
• Approvals Process
• Make or Buy
• Benefits Measurement
• Risk Allocation
• Payment Mechanisms
• Payment Mechanisms and Risk Allocation
• Dialogue and Negotiation
• Data Quality and Transparency
• Assessing and Monitoring the Economic and Financial Standing of Suppliers plus a Financial Viability Risk Assessment (FVRA) tool – in the form of a spreadsheet
• Evaluating Bids
• Resolution Planning

The Outsourcing Playbook and Outsourcing Guidance Notes are available from:

https://www.gov.uk/government/publications/the-outsourcing-playbook

The Guidance on Corporate Financial Distress is available from:

https://www.gov.uk/government/publications/corporate-financial-distress