Essay

‘Imagine us as part of you’

Outsourcing and the Serco way

LIKE MOST VISITS to ‘the future’ of anything, the wonders of a trip to Australia’s most advanced digital hospital weren’t the things I had expected. The Fiona Stanley Hospital is the biggest public works project commissioned by the state of Western Australia since the Goldfields Pipeline in 1898. Located in the southern Perth suburb of Murdoch, it is also the site of the largest outsourced health contract in Australian history: a $4.3 billion deal with the global outsourcing giant Serco for non-clinical services over twenty years.

The Serco website promises a building that isn’t just ‘smart’, but galaxy-brain smart: with a fleet of autonomous robots that quietly deliver meals to rooms, ‘real-time tracking’ of assets and people, 15,000 points of electronic contact and something known as ‘advanced interactive wayfinding’ – some sort of technical assurance, I guess, against visitors getting lost. Even individual towels are on the grid, each one bearing a unique trackable code. Protection from disorder comes not only in the form of advanced technology, but also from law: a 726-page contract containing 480 ‘key performance indicators’, drawn up to secure the trust of the local population. In this place, run in ‘the Serco way’, promises are kept, uncertainty is banished and prayers to St Anthony, the patron saint of lost things, are forever redundant.

The hospital lobby isn’t quite a cathedral, but there is something about the height of the ceiling that makes it seem, in a deep way, un-hospital-like. If you stand at a certain angle, it is like being in a park, complete with a large sculpture, green grass and wooden benches. Squint past the drip trolleys and scrubs and it feels like a modern airport, with some groups striding together authoritatively, others waiting on the sides and the hum from a food court just visible in the middle distance. Turn right, though, and you could be in an art gallery. On this wall hangs an enormous, gilt-framed oil painting of Fiona Stanley herself.

Stanley is perhaps one of the nation’s most trusted figures. A world-class epidemiologist, her career stands testament to the futility of thinking about science as an endeavour detached from society. She sees society whole, with healthcare and social equality conjoined like a Mobius strip. For those in my generation who grew up in Perth in the ’80s and ’90s, Stanley was a background fixture on TV, a figure who made it possible to conceive of the possibility of a systemically more responsive and inclusive society that didn’t leave anyone – Aboriginal kids, sick kids, disabled kids – behind. I have never met her in person, but the sight of her there, painted as a Renaissance figure with a crimson coat against black, brought a sense of deep recognition about this society we shared.

A good minute or two passed before I noticed the sticker. Stuck to the top right corner of the metal panel with the details of the portrait, the artist and the date of the commissioning was a small white rectangle, no more than a few centimetres across, bearing the Serco emblem, a Q code and the letters ‘BST-EST-ART-0021; Location B-GL0001’. Now, this was strange. Could Serco have actually turned Professor Stanley into a trackable node? Like a towel? Was this oil painting part of the corpus of ‘assets and people’ that the company was contracted to track ‘in real time’? Anyone who worked here could surely see that Professor Stanley wasn’t going anywhere. Not only was the metal plaque firmly affixed to the concrete wall, her name was literally written in ten-metre high letters on the outside of the building.

Yet seeing the sticker made me realise something very curious about the Fiona Stanley Hospital. It was that Serco, the maker of this modern space-time miracle, the entity that had turned this hospital into a node on an elastic global network that spans air traffic control in Baghdad, immigration detention in Villawood and, until 2004, the National Physical Laboratory at Teddington in London where Greenwich Mean Time itself is set, was nowhere to be seen. The uniforms of the Serco employees who staffed the helpdesk or cleaned the floors said ‘Fiona Stanley Hospital’, not Serco. The state-of-the-art entertainment system, a centrepiece ‘innovation’ of the Serco pitch for the hospital contract, bore the official kangaroo and black swan logo of the WA Department of Health, not the Serco sign.

 

EVERY PUBLIC HOSPITAL rests on an accretion of trust arrangements laid down by previous generations. There are the oaths to take care and do no harm stretching back to ancient Greece; moral associations that accrue from their origins as sites of philanthropy and benevolence in the nineteenth century; industrial standards and laws dating back to the early twentieth century, when hospitals were decisively lifted out of the domestic sphere and became part of nation-building states that eventually offered, by the mid-twentieth century, a particularly powerful trust deal with their citizens. One that offered the people, for the first time in history, a promise of medical care without proof of their moral deservedness or their ability to pay.

The contribution to this complex trust foundation offered by outsourcing multinationals such as Serco is different in kind. Serco, as will be seen, is a firm that owes much to a blend of military and engineering modes of co-ordination and control, by virtue of its history as a provider of technology and technical maintenance services to government defence departments.

The origins of many outsourcing firms in the world of engineering and technology are important for understanding the kinds of trust they prioritise and seek to engender: namely, trust that comes when rational, standardised, mathematical-scientific models of reality operate predictably and optimally. Theirs is not a species of trust that requires regular renewal through exposure to a body of citizens as social practice. Nor does it require any particular responsiveness to the lives and needs of individual hospital users, or their collective cultural and physical worlds. It rather operates, plausibly, at a distance, through a web of contractual terms that governments and firms spin around the technocratic lodestars of certainty and efficiency.

 

SERCO IS ONE of a handful of multinational companies that strike contracts with governments to perform ‘citizen services’ for profit on a global scale. They are powerful economic entities, yet poorly understood. As employers, some are enormous: the British-based security firm G4S claims to be the third-largest private employer in the world; ISS, the Danish-based facilities provider, the fourth. In Australia, in 2018–19, the facilities management industry generated $10.3 billion in revenue. The top eight companies employ more than double the number of people who work in the entire coal mining industry.[i] They have been a consequential part of the nation since the 1990s, when government agencies first started outsourcing services on a significant scale. These changes were overwhelmingly introduced from above following the recommendations of reports such as the National Competition Policy Review (1993) and the Competitive Tendering and Contracting by Public Sector Agencies (1996). Although a sense of privatisation reform was ‘in the air’ in that decade, formal public consultation and consent from employees and unions was often non-existent. These firms are also now wired into our medium-term future through contracts to operate numerous arms of our critical social infrastructure. Some of these run into the 2040s. Serco holds contracts to operate contact centres in the National Disability Insurance Agency; eleven onshore immigration detention centres; the Christmas Island detention centre; Centrelink call centres; Australian Defence Force healthcare; rail and ferries; prisoner transport; and prisons in a number of states, including the construction and operation of what will be Australia’s largest prison at Grafton, NSW. In 2017–18, the Australian government spent between $90 billion and $100 billion purchasing goods and services from private and not-for-profit providers, which is about three times the amount it spent on direct employment.[ii]

Our framework for understanding global outsourcing firms rarely goes deeper than expressing outrage at the scandals they leave in their wake. Of these, of course, there are many. In the Fiona Stanley Hospital alone, inadequate sterilisation procedures in 2015 saw blood and tissue left on surgical instruments and meant that patients were kept under anaesthetic for extended periods while nurses scrambled for clean equipment, one of seventeen ‘critical events’ that were reported in the hospital’s first year of operation. These sound almost minor compared with the abuses reported in detention centres, or the firm’s involvement in a UK scandal that entailed charging the Ministry of Justice for security tags for people who were either dead, in jail or had left the country, resulting in the Serious Fraud Office fining Serco £19.2 million in 2019.

Less attention is paid to the more subtle impacts outsourcing exerts on the trust landscape of our public institutions. Outsourcing advocates claim that they can add ‘efficiency’ to institutions without disturbing the underlying trust substrata. But by definition, the act of outsourcing reconfigures relationships within organisations and thus trust. It separates out one category of employee (on the basis that their work is deemed ‘non-core’) for employment by the contractor, creating both social and legal distance between this group of workers and those nominally ‘core’ employees who remain directly employed by the institution.

A wealth of academic research has revealed the consequences of these arrangements: they tend to result in the degradation of labour standards, particularly for vulnerable workers,[iii] work intensification, co-ordination challenges, and reductions in the levels of commitment by employers and employees alike.[iv] Their presence interferes, too, with the lines of trust and accountability that connect the institution to the public, interrupting the single chain of responsibility that would otherwise bind the most junior employee at the bottom to an elected minister at the top, and replacing it with opaque systems of internal contract management on the government side and shareholder interests on the corporate side. If, for example, a manager fails to adequately arrange for appropriate numbers of porters in a hospital where all staff are directly employed – thus endangering and inconveniencing patients, intensifying work for porters on shift, and increasing pressure on nurses and doctors – responsibility for their mistake flows upwards, to those who are empowered to take the appropriate disciplinary action and/or allocate resources to ensure it does not occur again. In a hospital where portering is outsourced, such as the Fiona Stanley Hospital, responsibility rests with a manager in the private corporation, who is tasked with meeting commercial targets and ‘key performance indicators’ simultaneously. The latter tend to be poorly monitored and enforced by governments, and rely heavily on corporate self-monitoring; contracts are cancelled in only the most extreme of circumstances. Consequences for poor performance more commonly take the form of opaque financial penalties which may be paid as abatements (that is, sums deducted from monthly contract fees).[v]

Secrecy shrouds these companies. Freedom of information laws do not apply to commercial information, and employees are often bound by strict confidentiality clauses in their employment contracts, which restrict their ability to blow the whistle on unacceptable practices. Observing these dynamics nevertheless does little to help us understand what, exactly, these entities are, where they came from, and why they have become such a powerful and tenacious presence in our collective institutions.

 

SERCO ORIGINATED AS a UK subsidiary of the Radio Corporation of America (RCA), a radio technology (and later film, record and TV) company that was established in the aftermath of the First World War. From its inception, the firm was shaped by geopolitics, created in response to American anxieties about ownership of the powerful new communication technology of radio being in the hands of the UK, a foreign power (albeit a friendly one). The establishment of RCA meant the US would be able to build and control its own equivalent of the Imperial Wireless Chain the British had constructed to connect their Empire. The subsidiary that would become Serco was based in the UK, and it was initially established to capitalise on the growing ‘talking pictures’ industry. With the outbreak of the Second World War, though, it came to play a critical role serving both the UK War Office and Ministry of Supply, furnishing the department with top-secret equipment that would simulate the sound of battle noise for the purposes of confusing the enemy, a project that had the personal backing of Winston Churchill.[vi] In partnering with the War Office, RCA (GB) unwittingly established the preconditions for a powerful convergence of capabilities, arising from their technical expertise, spatial location and a network of trust relationships with military officials on both sides of the Atlantic that would prove highly felicitous in the Cold War to come.

As a high-tech US entity that was based in the UK, RCA (GB) was perfectly positioned to produce and oversee military and surveillance equipment to defend the West against the Soviet threat. In 1952, it was awarded its first contract with the US Navy to produce submarine-detecting sonar equipment for the navies of NATO. This was followed in 1960 by a contract from the UK Ministry of Defence (MoD) to design, install and maintain the Ballistic Missile Early Warning System (BMEWS). It is hard to exaggerate the significance of this project: it positioned RCA (GB) as the entity that was responsible for the ‘four-minute warning’ of an imminent Soviet attack, which meant that any technical mistake could also set in train a path to ‘mutually assured destruction’ that could potentially annihilate the human population. Less dramatically, it also represented an unusual kind of contract in the UK at that time, one that extended responsibility for the running of virtually all station functions – including cleaning, transport, stores and workshops – to RCA (GB). Such all-embracing facilities management contracts would mushroom across public institutions of all kinds in the wake of Thatcherite policies in the 1980s.

RCA (GB) also solved personnel problems, employing large numbers of skilled national servicemen who had been made redundant following defence budget cuts in the 1960s. Military experience was deemed not only a suitable, but a crucial, skill set in senior roles in the ‘special projects group’ that had been established following the BMEWS contract. The general manager selected for this group was an RAF air vice-marshal, a ‘vital and appropriate’ qualification for a position that involved extensive dealing with both the US Air Force and the MoD.[vii] Informal military norms infused recruitment and management processes, with at least one former merchant navy man being offered a job purely on the basis that he answered the question of whether he played cricket in the affirmative.[viii]

Trust relationships were naturally crucial to RCA (GB)’s operations, but they were built with officials within government, not with the public. Indeed, the company’s public face offered a wildly misleading portrait of its activities – as a record company – while its business model relied on its reputation for maintaining high levels of secrecy around some of its most sensitive operations, such as the Anglo-American radar defence station in Orford Ness, Suffolk.[ix] The outbreaks of war in the Falklands in 1982 and Iraq in 1990 were both opportunities for the company to reinforce its reputation as an agent of discretion, flexibility and helpfulness towards the armed forces, where it demonstrated its preparedness to adapt to a war footing, scrapping routine work schedules to provide everything that was requested.[x]

Dwelling so closely in the folds of both the US and UK defence departments afforded the company the chance to develop and leverage unique commercial opportunities in the civilian sector that could only arise by virtue of their close proximity to the epicentre of military power. Their contract to manage the accommodation stores at RAF Quedgeley near Gloucester, for example, paid dividends many times over: it enabled the company to partner with another US-based outsourcing corporation, Securicor, as well as set a precedent for the company’s capacity to manage a complex contract for receipt, storage, repair and distribution of goods to all three armed services in the UK, as well as schools, churches and technical buildings.[xi] When AWASCo (the name of the partnership Serco briefly had with the electronics firm AWA) lobbied the Australian Defence Department in the late 1980s to outsource their operations, it would be to this contract they pointed as a precedent. The campaign was a success, and – with no transparent public process – led to a contract to manage Q Stores in Sydney, a facility that supplied hospitals, schools, medical centres and local authorities across the state. The outsourcing process had been kept secret from both employees and the public, to the extent that the company had been asked to impersonate stocktakers during their inspection visit to the warehouse.[xii]

Precedents created by their projects with the MoD enabled the company to pivot to the private sector and back. Not all commercial civilian contracts were long-lived, but on each occasion they afforded the chance to expand the company’s repertoire of services, pushing outward from the physical to the social with each iteration. At British Aerospace, they took on reception and telephone duties, security, fire prevention and cleaning – a contract that enabled them to acquire the craft of writing up the specification list for new tenders, as well as prove themselves capable of ‘dealing with difficult union and staff issues’.[xiii] In 1988, the company transferred their skills to the local government sector by proposing a contract to maintain the parks and gardens of London’s affluent Royal Borough of Kensington and Chelsea.[xiv] Precedents, sectors and skill sets were ingeniously mixed and matched, enabling ‘the Serco way’ to metastasise across boundaries. Expertise gleaned from a contract to work on electron microscopes as the RCA was paired with experience overseeing support to military bases to inform a plausible bid to operate West Middlesex University Hospital.[xv] Skill sets developed in the UK, such as the 1990 contract to teach electronics and trade skills to apprentices at the Royal Electrical and Mechanical Engineers training school, became a springboard for contracts in the developing world as a stream of World Bank funding became available to provide education and vocational training to Turkey, Indonesia, the Caribbean, Laos and the Philippines.[xvi]

In this way, the reconfigurations of trust wrought by Serco in various public institutions go well beyond their role as an incidental means to shrink workforces, cut pay and dilute unions. Perhaps more crucial is the mindset of a company that was born between the interstices of the public and the private, the military and the civilian, and the technical and the social realms: an attitude that suggests that all of these domains are fundamentally the same. No special salience is attached to ‘society’, the category that had so powerfully anchored the twentieth-century nation and animated state efforts to identify and meet social needs and stave off alienation and anomie.[xvii] All is terrain to be mastered, managed and controlled as rationally as possible.

 

SERCO HAS MADE few attempts to garner meaningful public support for its operations. The quietly abandoned company slogan from the mid-1980s – ‘Think of us as part of you’ – suggested the company thought that mustering public support was inherently unnecessary. In place of seeking a popular mandate, the company tended to simply emphatically assert the objective, a priori superiority of ‘the Serco way’. ‘The great strength of our management processes,’ claimed its 1999 annual report, ‘is that we can apply them to almost any activity.’[xviii] The Serco way meant that specialist knowledge was unnecessary: by implementing Serco’s ‘proven management processes’, ‘unobtrusive but effective controls’ could be implemented and ‘mindsets changed’, regardless of whether an employee was maintaining an atomic weapons facility or assessing a primary school teacher. It meant the personal liberation of ‘good people’ from ‘bad systems’.

Serco grew spectacularly until 2013, when a string of high-profile scandals brought some of this earth-mastery rhetoric down to earth, or at least changed its tone. The ascension of Serco’s current CEO, Rupert Soames OBE, ostensibly represents a return to an earlier company era, when the firm seemed to operate as more straightforward technical assistants to modernising states. Among the most Establishment figures in the UK (he is the grandson of Winston Churchill), Soames is uniquely placed to provide this impression. His speech is sprinkled with phrases about ‘humble servants’, ‘sticking to knitting’ and diffident Etonian renderings of economic catastrophe. (He described the aftermath of the collapse of the British multinational Carillion as a kind of toilet mishap: ‘Crash – bang – wallop, someone’s fallen in!’)[xix] But the ‘Keep calm and carry on’ optics are merely a graft onto ‘There is no alternative’ substance. Serco shows no signs of retreating from its citizen-services portfolio.

 

TO SEE OUTSOURCING multinationals as lucky opportunists, rather than agents of a grand neoliberal plan, perhaps provides a more encouraging basis for those of us intent on imagining alternatives to the current order. Serco’s success has been the product of audacity and good timing as much as planning. Without the Cold War, it may well have entered the decade of the ’80s as a radio, film, television, record and videotape company, with scant claims to run air traffic control services, let alone hospitals, schools, welfare services or immigration detention facilities. Whether our current modes of governance in public institutions should inevitably continue to follow the implicit groove cut by Cold War geopolitics is not an inevitability today. From Foundational Economy devotees, who seek to refocus economic policy on the basic drivers of welfare such as health, care, education and housing, to Preston Model advocates working to build community wealth from the bottom up, to Green New Dealers, the appetite to reimagine economies as things that serve human and ecological flourishing is growing, and unlikely to diminish with time. Axiomatic to all these movements is the idea that public trust cannot be forged with entities that are unseen; that it is corroded by relentless surveillance; and that it is dissolved when workforces are invisibly split between those who are accorded full status and those who are second class. They demand, like Fiona Stanley, institutions that embrace the best technology and science, but who see these things as instruments for realising a more trusting, fair and inclusive society, not as tools of control. It is not hard to imagine their descendants going to visit Professor Stanley’s portrait in a few decades’ time to learn about, and remember, the paths she bravely forged to build a society where everyone belonged, and where technical ‘outcomes’ were not divorced from their relational bedrock. The metal plaque by her painting will have a pleasing patina by then. The adhesive stain left by the white sticker will have long since faded from view.

 

REFERENCES

 

[i] IbisWorld (2018). Facility Management Services in Australia. IbisWorld calculates the following employee figures for the following top outsourcing companies: Serco (8,120), ISS (11, 700), G4S (1,910), Ferrovial (25,000), Spotless (36,000), Programmed Maintenance Services (20,000), Compass Group Australia (9,840), Sodexo (4,760), a total of 117,330. The ABS calculates the total number of people employed by the coal mining industry in May 2019 at 57,900. See ABS, Labour Force, Australia, Detailed, Quarterly May 2019, https://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/6291.0.55.003May%202019?OpenDocument. As the top eight facilities maintenance firms represent just 31.7 per cent of the market, it is likely that the number of Australians employed in the industry probably exceeds a quarter of a million.

[ii] O’Flynn, Janine and Sturgess, Gary L. (2019).  '2030 and beyond: Getting the Work of Government Done'.

[iii] Holley, Sasha, and and Al Rainnie (2012). 'Who Cleans up? The Declining Earnings Position of Cleaners in Australia.' The Economic and Labour Relations Review (143–60). 23, (1). Ryan, Shaun, and Herod, Andrew (2012).  'Restructuring the Architecture of State Regulation in the Australian and Aotearoa/New Zealand Cleaning Industries and the Growth of Precarious Employment'. Luis L M Aguiar and Andrew Herod (eds.) The Dirty Work of Neoliberalism. Chichester: John Wiley & Sons, Ltd, 2012), 60–80.

[iv] Hall, Richard (2000).  'Outsourcing, Contracting-out and Labour Hire: Implications for Human Resource Development in Australian Organizations'. Asia Pacific Journal of Human Resources 38, no. 2 (2000): 23–41.

[v] Holley, Sasha. 'The Monitoring and Enforcement of Labour Standards When Services Are Contracted Out.'

[vi] Serco Group plc (2002). Serco: The Family History 1929-1999 Middlesex: UK.

[vii] Serco Group plc, 13.

[viii] Serco Group plc, 26.

[ix] Serco Group plc, 15.

[x] Serco Group plc, 122–23.

[xi] Serco Group plc, 109.

[xii] Serco Group plc, 192.

[xiii] Serco Group plc, 148.

[xiv] Serco Group plc, 151.

[xv] Serco Group plc, 175.

[xvi] Reddington, Emma (2004). Good People, Good Systems. London: The Serco Institute.

[xvii] Pusey, Michael (1991). Economic Rationalism in Canberra: A Nation-Building State Changes Its Mind, 2nd ed. (p. 66). Cambridge: Cambridge University Press.

[xviii] Serco (1999). Serco Group Plc Annual Review and Accounts.

[xix] Reddington, Good People, Good Systems.

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