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Guide no. 08/03: Organisational set-up of corporate services

Guidelines

 (1) The organisational structure and procedures of general internal services should be reviewed and streamlined periodically. For that purpose, the authorities should have available organisational studies including an assessment of staffing requirements.

 (2) Authorities having central and field offices at several locations should always pool their general internal services. Any exceptions should be adequately justified and documented.

 (3) The authorities should use efficiency appraisals to determine whether to perform general internal services in-house or to contract them out to a private sector contractor.

 (4) Where general internal services have been contracted out, the authorities should issue invitations to tender at maximum intervals of five years.

 (5) The authorities should identify all costs for the use of premises by contractors and determine an appropriate remuneration on this basis.

 (6) Benchmarking is a suitable means for improving the quality of general internal services.

 Background

 To enable general internal services to support the core functions of the authority as best as possible, they must work effectively and efficiently. In 2009 and 2010, we carried out a horizontal study of the internal services of non-departmental federal bodies. We found that there was scope for enhancing the efficiency and organisation of these services.

 (1) We found that, in the majority of cases, the audited authorities did not review and streamline the structural organisation and procedures of their general internal services. In most cases, they failed to do organisation studies followed by an assessment of staffing requirements.

 If general internal services are streamlined, an authority is able to discharge its core functions as best as possible. Systematic review of structural organisation and procedures is needed to detect weaknesses, to identify and use savings potentials. Rather than restricting such review to individual services, the whole range of general internal services with all managerial, executive and support functions needs to be studied.

 (2) In a number of cases, authorities with several locations had in place a decentralised organisation of their general internal services. In these cases, they failed to assess as to whether the centralisation of these services would have been more appropriate.

 Where several internal services work in parallel, this may lead to gaps in information exchange and to overlaps. In contrast, unified internal services for all locations permit a consistent and efficient performance of tasks. Moreover, the centralisation of services prevents excessively small organisational units with mini-sections.

 (3) In most cases, the audited authorities did not assess as to whether they should run the general internal services themselves or contract them out to the private sector. Only in a few cases did they carry out efficiency appraisals. Where such appraisals had been conducted, they were often incomplete and methodology was flawed.

 An efficiency appraisal is absolutely needed for reliably identifying the way in which individual internal services can be performed efficiently. When making such appraisal, the authorities should consider all options for performing the tasks (e.g. themselves, in cooperation with third parties, contracting out to private sector) and estimate the costs of each option. The appraisal should use the present-value method recommended by the Federal Finance Ministry and by us (relevant guidance in German: “Introduction to efficiency appraisals”; Interdepartmental Circular GMBl. (2011) pp. 76 seq.).

 (4) The audited authorities mostly contracted out the functions of access control, guarding and management of premises to the private sector. At the time of our audit, the remaining contract terms frequently significantly exceeded five years.

 To foster competition and make use of the resulting price advantages, public invitations to tender for general internal services should be issued at least every five years. Prior to that, the volume of service to be contracted out (e.g. cleaning intervals) needs to be assessed and adjusted where necessary. Where it is foreseeable that services will be used not at all or only in part (e.g. winter-related services), a proportionate refund should be stipulated.

 (5) The audited authorities did not record the costs of internal services. This was the case especially in connection with making rooms available for use by contractors. The contractual charges often did not take into account related operating and personnel costs (e.g. caretaker and doorkeeper services) and costs of technical equipment (e.g. microphone system, video projector).

 (6) The authorities conducted benchmarking exercises only in isolated cases. Benchmarking is an appropriate tool to achieve transparency as to the costs and quality of general internal services and continuously improving these services. The basis for this may be data from cost and performance accounting. Benchmarking across various authorities suggests themselves for looking into similar functions discharged across the board.

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