The U.K. government often does not waste time trying to become
more efficient. That is why partnerships with industry have become
so popular, particularly in defense-related activities.
The U.K. Ministry of Defence has established more than 85 public-private
partnerships, worth about $2 billion.
These partnerships are the result of about 20 years of evolution
in government contracting practices. They are being used “in
a very strategic way, to deliver infrastructure and service needs,”
explained Martin Kitterick, a partner at PricewaterhouseCoopers.
He spoke during a recent public-private partnership conference in
“The government is not good with saving money,” said
Tony Pryor, whose company manages a good chunk of the Devonport
Royal shipyard. In 1987, Devonport Management took over 29.5 percent
of the shipyard, while the Royal Navy still owns part of the dockyard
and its own naval base. “There is no dividing line between
our dock line and the Royal Navy,” Pryor said.
During the first three years of the program, Devonport Management
focused on rapidly driving down costs. “Cash became a real
problem and we had to get rid of redundancies in the first few years,”
said Pryor. The company then focused on deliveries and productivity.
In 1993, it became the only nuclear-capable shipyard in the United
Today, Devonport Management has almost 4,000 civilian employees
and has a revenue of $340 million a year. The company is gaining
significant amounts of non-defense work.
Through privatization, a company has a greater willingness to invest
and to motivate its workforce, explained Pryor. This stems from
the realities of ownership and a long-term corporate commitment
that bring financial payoffs, he added.
At the Aldershot Garrison, the Royal Army partnered with Sodexho
Defense Services, for various support services to military and civilian
organizations. The commercial partner is responsible for transportation,
storage, catering, cleaning, waste management, grounds and property
management, office support and primary healthcare, among others.
The contract was valued at $44 million per year, and the initial
partnership is for a minimum of five years, starting in 1997, Sodexho’s
Cliff Fiander explained. The private company delivers services based
on output, which, in turn, are measured by the government through
“Satisfaction Reports.” There is also a central help-desk
for all requests and complaints. According to Fiander, defining
requirements in terms of output, educating the customer and breaking
down established practices were some of the biggest challenges Sodexho
Partnering, he said, brings a stable contractor and a single point
of contact. A partnership sets common goals and shared commitments,
risk sharing, quality and efficiency within imposed targets. In
a partnership situation, there is full visibility of costs.
Fiander suggested that the establishment of business development
teams is crucial to the effectiveness of a partnership. The government
needs to release the information on government employee transfer
and provide detailed operating procedures, covering every aspect
of the contract.
For their part, contractors have to establish a mutual objective
with the government and establish ties with local authorities. “Business
can only be successful when the company markets its achievements,
when it’s ready to compromise and be flexible, and when it
keeps its books open,” Fiander said.
Three years into the contract, the company has improved efficiency
by 24 percent, against the baseline requirements. That translates
to $2.8 million so far.
“Public-private partnerships are the only way forward,”