Much has been written about Carillion usually from the political perspective that outsourcing is a good/bad thing. Since that is often a fixed political framework its not particularly helpful to understand where we are with public sector procurement in the age of austerity.
Much has been written about the weaknesses inherent in British capitalism - eg too much focus on short term profit and share prices, how that drives executive behaviour and not enough focus on long term investment and productivity. This seems a very dangerous cocktail (especially for businesses heavily reliant on the public sector) when combined with the long period of public sector austerity which has governed the procurement environment since 2010.
Large businesses in a market with few suppliers have to win to be seen to be still in the game- that doesn't matter if prices are driven inexorably downwards by procurement as there is the somewhat cynical/optimistic assumption that a cheap upfront price can be recouped by variations (hence the challenges of contract management etc). This race to the bottom will provide short term winners but ultimately leads to a race to the bottom.
Unless we reset public sector procurement where price is secondary to collaboration, mutual respect, good governance, boardroom ethics and recognition by the public sector that a business that makes not profit (or get paid on time) will not be a business for much longer. If not, the next Carillion is round the corner.
Comment At least 25 top-tier councils held major contracts with the contractor Carillion, LGC can reveal. Of those, 11 contracts were related to major civil engineering works, eight were for school meals and cleaning services, four were for library management, while the remaining two contracts relate to ICT and road gritting. Of those civil engineering works contracts, the majority were for road construction works, with many projects left for completion by subcontractors.