Headlines: May 31st, 2000

The National Audit Office (NAO) has praised the detail of a partnership arrangement in which almost the entire staff of a government department were transferred into the private sector.Sir John Bourn, head of the National Audit Office, has scrutinised arrangements between National Savings and Siemens Business Services (SBS), following the ground-breaking arrangement.

SBS were awarded a 635 million pound contract to process transactions and provide service to National Savings’ 30 million customers.

The firm took on around 4,000 National Savings staff across the country, leaving only 130 people staying on at National Savings responsible for the overall business performance of the service, for the design, management and marketing of products to customers, liaison with the Treasury on funding requirements and managing the relationship with SBS.

The partnership aims to inject modernisation money required to enable National Savings to be competitive and relevant in the highly competitive and fast moving retail savings market.

The NAO says the deal represents better value to National Savings than the alternative of keeping the operational service in-house.

It also says there are lessons to be learned for others entering into such a large-scale partnership.

These include tight monitoring by National Savings to ensure that the promised improvements to services are delivered. National Savings monitors SBS performance through effective business judgement, incentivising performance improvement rather than applying a mechanistic formula of penalties.

Also advocated is a clause added to the deal by National Savings which prevents it being ‘locked-in’ to its contract should promised improvements not be forthcoming.

Another feature of the deal is that as it makes the service more streamlined, SBS is offered incentives to find alternative work for its new employees.

Link: www.nao.gov.uk