Whitehall management of outsourcing deals ‘must improve’

4 Sep 14

The government still has a long way to go before it has proper control of the £40bn it spends annually on contracts with the private sector, the National Audit Office has said.


Auditors’ Transforming government’s contract management report found that progress had been made since it was revealed that G4S and Serco had been over-charging the Ministry of Justice for some electronic tagging services. However, the NAO concluded there was still a need for sweeping changes in the culture of the civil service and its capability to procure and manage commercial contracts.

The report is a review of the response of the MoJ, as well as the Cabinet Office and the Department for Work and Pensions, to procurement failings.

In most of the contracts reviewed across government, auditors said there were weaknesses in contracts management.

Widespread problems were found in administration, including poor governance and record keeping and capacity issues.

In a complementary report, Home Office and Ministry of Justice: Transforming contract management, the NAO says the MoJ ‘has responded promptly with a more comprehensive improvement plan with the potential to transform how it manages its contracts if it sustains its current commitment’.

Publishing the reports, auditor general Amyas Morse said: ‘For several decades, governments have been increasing their use of contracts with the private sector to provide goods and services. This has produced successes but also thrown up major new challenges, which are not easy to surmount.

‘Not the least of these is the need to build up the commercial skills of contract management staff, both in departments and in the centre, and enhance the status and profile of their role.’

He added that current reforms, which include changes to the civil service, show that the government is taking the issue seriously.

‘I welcome the fact that the Ministry of Justice, in particular, has responded promptly and positively with a wide-ranging improvement plan,’ he added.

‘There is, however, much to do, and the acid test will be whether the resources and effort needed for sustained improvement are carried through into the future performance of the departments in procuring and managing contracts.’

Margaret Hodge MP, Chair of the Committee of Public Accounts, which is preparing its own report on public procurement, commented: “The discovery that G4S and Serco had massively over-charged the Ministry of Justice and Home Office on public service contracts was an urgent wake-up call for the government’s disastrous contract management.

“More and more of our public services are now being delivered by private companies, who between them received a huge £40bn last year from contracts funded by the British taxpayer. These companies must be held to the same high standards as any government department, so that the public can have confidence that they are delivering the quality of service we are entitled to expect.

‘With so much taxpayers’ money at stake, departments must urgently put an end to the "out of sight, out of mind” mentality that has led them to be in this weakened position before even more taxpayers’ money is wasted.’

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