Reforms to improve Whitehall procurement remain fragile, warns report

8 Feb 17

The government has improved the way it manages outsourced public services contracts, but these reforms are fragile and could still fail, the Institute for Government has warned.

The think-tank reviewed Whitehall’s progress in boosting its contract management performance in the wake of several high-profile failures, such as those with Serco and G4S.

The IfG noted in Building Commercial Capability in Government that many services, including tax and benefits systems, are maintained by private sector businesses. Also, most government departments rely on contracted suppliers of payroll, energy, facilities management and consultancy services.

However, weaknesses in supplier management often caused government to underfund or overpay providers, give work to incapable organisations or fail to ensure users can have a say in services.

These failures are typically caused by a shortfall in commercial expertise, both in the policy-making and implementation stages. This dearth of specialist knowledge extends over procurement, contract management and procurement, according to the IfG.  

The think-tank acknowledged that driving improvements in this area was an “immense challenge”. Previous attempts had faltered before they could deliver their benefits as short term priorities diverted attention. Elsewhere, the problem was caused by a lack of unity on the part of departmental leaders.

The government has taken steps to remedy the situation. Recent moves include creating the new post of government chief commercial officer, held by Gareth Rhys Williams, who is leading the setup of a new commercial body – the Government Commercial Function. This has the responsibility for raising commercial standards across government.

Also, there is a greater focus on recruiting commercial specialists at all levels, and aiming to improve retention of existing staff through improved pay structures and better training.

According to the report, many of the government’s reforms were “developing well”. Although improving departmental performance was thought to be more beneficial than centralising the commercial function.

The report highlighted that the next three years would be vital in bedding-in the changes. Communicating the aims and benefits to those working on commercial projects was key to ensuring the reforms take hold. Also, the Cabinet Office “must lead by example.”

Author of the report, Tom Gash, said the fact that many public services are supported by private companies and voluntary service organisations highlighted the scale of the issue.

He said: “Private companies run the trains and buses we travel on, and charitable academy trusts run the majority of secondary schools.”

Gash cited polling undertaken by IfG last year of over 2,000 people that indicated more than half (53%) of Britons believe that no-one takes responsibility when something goes wrong in contracted public services.  

“It’s time for the government to prove them wrong,” he said, “and it can only hope to do this by keeping up the momentum on these crucial reforms.”

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