11 June 2012

What should be the criteria for assessing government service providers?

If a company operates in 125 countries, employs nearly 660,000 staff (making it the largest employer listed on the FTSE) and is chaired by a former Global Chair of Deloittes, should there be any uncertainty about its suitability to contract as a major provider of services to Government?  Is there an expectation that even major transnationals must be evaluated to determine whether engaging them is harmful to the public interest?

The issue is live regarding G4S, the company given major security contracts for the Olympic Games. The Independent on Sunday predicts that Labour peer Lord Hollick will table a question today challenging Ministers to ensure that the British based company does not provide security services in illegal settlements in the West Bank.

The political play will be to see whether the Foreign Secretary’s endorsement of widespread international criticism of Israel’s settlement expansion – which last week included US opposition to the announcement of another 850 Jewish homes in the West Bank – will extend to requiring that a major government contractor excludes itself from associations which harm the standing of the British Government. Although the Foreign Secretary has been critical of the West Bank involvement, 4GS has large FCO contracts to provide security services in the UK and Afghanistan.

Criticism of G4S operations in Israel including their provision of equipment to West Bank military checkpoints, security systems in courts, jails, retail and other commercial premises, and at the West Bank police headquarters.  It has indicated an intention to exit some of these arrangements over the next few years.

The G4S policy “… is always to comply with national law in any jurisdiction in which we operate. We take our ethical responsibilities very seriously and operate to high standards around the world.”  About 70 demonstrators at the company’s annual general meeting protesting against its “horrendous human rights record” in various locations, particularly Israeli prisons, were not convinced.

In New Zealand, the specifications in Treasury guidance have the effect of preventing an agency contracting for the provision of services – or the delivery of those services – in ways which the agency could not lawfully provide or deliver itself. The purpose must be lawful and reflect any relevant statutory framework. Any contract (or grant) must be consistent with the funding agency’s appropriation (and purchase agreement), must comply with good employer and employment equity obligations set by the Department of Labour, and must be compatible with the State Services standards of integrity and conduct ( although there is probably no corporate equivalent of the code obligation on State servants to do nothing that would harm the reputation of their agency or the State services.)