A Road Travelled

18 March 2011

After celebrating 25 years with ISS last year, Simon Cox describes to Jane Fenwick how his career he has spanned the key landmarks of facilities management development in healthcare, and now other sectors and globally

BY THE TIME PFM FIRST PUBLISHED IN 1986, the FM sector had emerged as outsourcing developed in both the public and private sectors. In at the beginning was Simon Cox, Managing Director - ISS Facilities Services, Healthcare, Education and Defence. His subsequent career has traced the evolution of FM from outsourcing of single services, through various government initiatives and market opportunities, to build up the ISS business in the UK in healthcare, education and defence, and in the private sector.

In the 1980s, ‘outsourcing’ of key workplace services such as cleaning, catering and security had gained a foothold in the private sector, but it took the iron will of Mrs Thatcher through her contentious CCT (Compulsory Competitive Tendering) policy to bring the benefits of competition to the public sector and NHS.

The support services company, Mediclean was established by Thatcher supporter and former Treasurer and Deputy Chairman of the Consertive Party, Michael Ashcroft. Cox was one of its first managers of the CCT contracts at Hammersmith Hospital in West London and St Helier Hospital in South London. He recalls, "There was not much time to prepare and no TUPE. We took over after a stike. All the staff had been made redundant and we had to recruit again. It was a very high profile exercise for Government and the trade unions were opposed to CCT in the NHS."

He continued, " We soon appreciated that there was an opportunity to evolve into other services within the health sector. We moved into portering easily, and as we were already serving meals on the wards, we realised we could deliver ‘cook chill’ catering services. From that we evolved a full catering capability."

In the late 1980s, Mediclean was aquired by the ‘world’s largest cleaning company’, Denmark’s ISS, and Cox became the MD of ISS Mediclean. CCT came and went, closely followed by the challenges of the PFI and then the Agenda for Change in the NHS. As Cox explained, "In the early 1990’s when PFI started, we realised that we needed to develop a capability. As a result ISS was an early participant in PFI as a service provider."

Underpinning these government policy changes were real developments in service delivery and client relationships in the healthcare sector. Key amongst these, Cox recalled, was the fundamental move from input to output specifications. Cox continued: "This helped service providers and NHS Trusts to work in real partnership to underpin our clients objectives of delivering healthcare and reducing hospital acquired infection rates. Now, the debate has moved on. The more informed clients no longer ask "who can do the service best" but now ask "how can we do it much better and benefit from delivering healthcare by working together."

He observed that over time there has been a real shift in attitude. "The debate in the past was the ‘public sector can do it better than the private sector, or vice versa’. This was the trade union position but it was not the right debate."

Cost constraints in public finances have seen he PFI model come under some criticism recently. Cox commented, "A lot of these PFI deals were structured at a time of high interest rates. The risk profile at the beginning was difficult to put a value on so people were cautious and put into the deal bigger margins for unknown risks. As PFI has progressed over the last 15 years, we have seen the investors gain significantly but the clients were also party to refinancing, giving them the benefit of lower interest rates. However, it is an unfair assumption that we are making loads of money. It is not true and we are still making margins around 5-6 percent."

He cautioned about overlooking the fact that the unitary fee is largely for the maintaining buildings to a high standard over their life. He said, "The danger is that short term cost cutting will affect this and this will be a retrograde step. One of real benefits of PFI is that these healthcare facilities will be maintained, unlike in conventionally funded facility, where it is easy to cut maintenance."

The future looks a more uncertain. He continued, "It will be interesting to see what happens over the next few years as cost pressures come to bear. Our clients are facing really huge cost pressures. The last government told hospitals to save £20bn over three years. There is still 18 months to go on that programme. Now, in addtion, there are changes in commissioning and the elimination of PCTs. Hospitals won’t have the security of income they had in the past and as a result they are nervous of moving in any direction."

Cox applauds the increased focus on cleaning standards in hospitals that has developed over the past 25 years, but particularly in the the last decade. "There has been a progressive improvement in addressing hospital acquired infection. There is real working together on this issue. Infections are not down to one department or part of the hospital; it is about the whole operation working together. The Government’s mass deep cleaning strategy certainly created a flurry of activity and raised awareness about tackling the issue, and ultimately raised investment in cleaning."

Despite its roots in cleaning, ISS’s main activity is now catering. About 70 percent of its revenue comes from its catering operations in the public sector. Key to this move was the acquisition in 2007 by ISS of Caterhouse which catered for 200 schools in London the the South East. "The education market has huge potential for us. We are relatively small at the moment and but we are serious about it," Cox commented.

It was this catering capability that won its latest landmark contract and provided a foothold into the defence sector. The Super CRL contract to deliver Catering, Retail and Leisure services to 15 RAF stations was won by ISS Facilities Services – Defence in January and goes live in June. This seven-year contract will employ more than 1,000 staff and covers a range of Officers’, Sergeants’ and Junior Ranks’ messes, cafes, bars, leisure facilities and SPAR retail shops, as well as some ‘In-flight’ catering. Cox sees this contract as a landmark as one of the first of the new tri-service contracts to emerge from the MoD.

Tendering

The CRL contract is in stark contrast to the combative days 25 years ago of CCT that prioritised cheapest price tenders. The CRL contract involved a competitive dialogue tendering process that Cox applauds. He said, "It is a good process as it gives an opportunity to test ideas with the client before submitting your best offer. It enables you to understand what the client is looking for. If our industry is really going to progress that is what we all have to do. A lot of us say we do this already and understand what our clients needs are, but do we really? You have to work really hard to get under the skin of the client."

He continued, "The process has given us a lot of ideas of how we could change our working relationship with our existing clients and offers a different approach particularly in the public sector."

The road travelled by Cox in his career has tracked key development milestones in FM over the last 25 years. Starting as a CCT pioneer, he subsequently met the challenge of PFI, and has now entered a new phase public sector tendering through competitive dialogue.

Cox has steered first Mediclean and then ISS into a wider range of service lines, and integrated solutions that have transformed the balance of the ISS business activity. It also opened up a new business opportunities in education and defence.

Cox has also seen the business go global. Denmark based ISS was one of several continental European support services business that saw opportunities developing in the UK from deregulation and public and private sector outsourcing. Now its corporate clients, which account for about 60 percent of its business, are going global. Among these HP which recently extended its long term contract with ISS to include North Amercia, and, says Cox , there are more in the pipeline.

It is a story that is reflected among several leading FM services providers, but few can point to an individual such as Simon Cox who has seen it all.