A new report by the National Audit Office (NAO) ‘Transforming government’s contract management’ has concluded that whilst significant improvement programmes have been introduced by central government, since recognising the magnitude of the problem they face in managing their annual £40 billion of contracts with the private sector, a lot of work still remains to be done – including instituting widespread changes in the culture of the civil service and its capability to procure and manage commercial contracts.
In July 2013, significant over billing dating back to 2005, principally in the Ministry of Justice’s (MoJ) electronic monitoring contracts with G4S and Serco was announced by government ministers and senior officials. Also around the same time, the NAO and the MoJ received allegations from a whistleblower about operational practices at G4S. The Ministry commissioned further reviews of its other contracts and the Cabinet Office did the same for the major G4S and Serco contracts across government. The Home Office and DWP also commissioned internal reviews of contracts with a range of contractors.
In the majority of the contracts reviewed across government ,weaknesses were identified in the way contracts were managed. Widespread problems were found in administration, including poor governance and record keeping and capacity issues.
According to the NAO, the government is taking the findings of its reviews very seriously and reforms are going in the right direction. Yesterday’s report sets out the steps which the spending watchdog regards as important to transforming contract management. These include establishing the systems and processes needed if contracts are to be overseen and managed effectively; and ensuring that responsibility for the delivery of contracted-out services properly rests with the contractors. Departments also need to find ways of making the most of their commercially experienced staff, giving them the right skills and an enhanced role.
Overall, the MoJ started from a significantly weaker position than the Home Office, finding far greater overbilling and areas of weak contract ownership. But 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. There is now a desire and impetus for change in both departments upon which they must capitalise before the end of 2015.
Amyas Morse, head of the National Audit office 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. Current reforms are going in the right direction and 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. 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.”
In response to the NAO report, Jim Bligh, the Confederation of British Industry (CBI) head of public services policy, said:
“The NAO is right to highlight that the government sometimes sees contract management as an afterthought, focusing too much on getting the deal signed and too little on what will happen when the ink dries.
“The government has a sensible programme of commercial reform but progress is too slow. It needs to focus on quickly building up the skills and capabilities of the Civil Service to manage the growing complexity of contracts. And the Cabinet Office must have the necessary levers at its disposal to make sure that Whitehall departments adopt new ways of working.
“The industry recognises that it also needs to act differently. Wider use of open book accounting would make sure that the government has better access to financial information about its contracts with the private sector, and improve accountability for the taxpayer.”