Attitudes to externalization and reform in local authority projects

Both the expansion of Compulsory Competitive Tendering in the Local Government Act of 1992 and the Best Practice policy of the 1997 Labour administration have driven local authorities to externalize services to the open market. However, despite the initial compulsion and later encouragement towards externalization by central government, apathy exists amongst local authorities and their employees to the perceived benefits of these initiatives, in an area of the economy that accounts for a significant proportion of construction industry spending. Beginning with a review of the historical context of externalization, the paper then continues by using quantitative data from engineering consultants and observational data from a local authority in-house team to deliver a preliminary case study on the execution of projects within a maturing professional services contract, between an in-house team and their engineering consultants. The paper explores if the long-term commercial provision of externalized services through a consultant undermines the skills, responsibilities and commercial viability of local authority engineering teams. It also identifies how complex factors within the 'partnered' project teams of local authority engineers and their consultants may result in the paradoxical situation whereby project success leads to a worsening of relationships and potential contract failure. Crucially, in examining these issues the paper goes on to discuss this apathy to public service reform and the ongoing reform of the construction industry. It explores how, when this apathy is consider alongside a relative lack of exposure to commercial pressure, in-house engineering teams could be considered as not only stifling the effective procurement and execution of construction projects, but also the reform of the construction industry. The paper also identifies further research upon the subject, and raises issues to be considered when assessing the potential for further reform of the construction industry and the role of public service clients.