The Federal Government will outsource a number of its employment services contracts to offshore companies as the result of a process conducted by Julia Gillard’s Department.

Last year, the Department Employment, Education and Workplace Relations commenced a tender process for a new employment services program — the Universal Employment Program — which will replace the current Job Network services as of 1 July. Last week, successful tenderers were informed they had been chosen, as a prelude to final negotiations.

A number of current providers — non-government, not-for-profit agencies with very successful track records – were not contacted and accordingly are out of the running.

Instead, the UK companies A4E and Reed Employment are said to have been selected. The outcome will be announced at the end of the month.

The outcome means several NGOs and non-profit employment service companies will close, as they are dependent on Job Network contracts, throwing out of work hundreds of people. One provider alone is expected to lay off 400-500 employees.

Some may be picked up by the successful tenderers — A4E, possibly expecting success, approached a number of community firms and non-profits prior to the tender process to discuss partnerships. However, the irony of an employment services contract throwing hundreds of job provider employees out of work on the cusp of a recession won’t be lost.

More significant than the offshoring of the services is the likely switch to for-profit contractors, who will have a strong incentive to place clients at minimal cost. The smaller community firms that have missed out, or will now have to negotiate commercial sub-contracting arrangements with the successful tenderers, usually have strong local networks, or are church-based groups that link employment services to other forms of assistance such as counselling. These groups also plough profits back into services.

Many in the local employment services sector are furious, and there are claims that Therese Rein — who sold the local arm of her employment services company to a UK firm two years ago — must somehow be involved in the decision. However, the process was conducted by DEEWR bureaucrats with external probity auditors.

Greens Senator Rachel Siewert first began hearing from the sector last week and raised the issue in Parliament. The Government refused to respond, given the tender process is still officially continuing.

“We’re hearing at this point thousands of people will be made unemployed by offering these tenders to for-profit providers,” Siewert told Crikey. “At the time where we’re seeing the Prime Minister express a great deal of concern, we have actions of his own Government making a number of people unemployed who provide valuable services to our community.”

The timing of the decision, when the Government is significantly ramping up the role in training in helping combat the impact of the recession, could not be worse. Training will be the Government’s primary response to both minimising unemployment and making sure the unemployed retain and acquire necessary skills through a period of joblessness until the economy starts growing again. Whether A4E and Reed have the local skills to manage that remains to be seen.