2 We followed the taxpayers' pound
wherever it was spent
We secured greater transparency of the performance
of private providers who deliver public services on behalf of
government
8. The Government was spending around £187
million on goods and services with private and voluntary providers
when we reported in March 2014. We looked at how departments let
and managed specific contracts as well as contract management
as a whole. We followed the taxpayers' pound by demanding answers
from private providers who had failed to deliver what was expected
from them. We found that departments were not only frequently
lacking the skills to negotiate and write tough contracts that
protect the public interest but all too often lacked a strong
grip on performance. There was a serious lack of engagement by
senior staff with the contracts for which they were responsible.
The centre of government does little to guide and support departments
or use the collective buying power of government to drive a better
deal. It is also the case that too little has been done to create
competitive markets in this space. All too often expert small
and medium sized enterprises are squeezed out of the market by
the large companies that have become expert in securing government
contracts. We found that contractors did not initially accept
any duty of care to taxpayers despite the relatively lucrative
and risk free nature of public sector contracts.
9. We took evidence on several occasions from
Atos, Capita, G4S and Serco, who between them held £4 billion
worth of contracts in 2012-13. These contractors gave evidence
alongside the Accounting Officer and Senior Responsible Owner
of the programme under scrutiny, which gave us a full picture
of their performance and the management of the contract.
10. We examined several high profile failures
by private providers including: Serco's misreporting of out of
hours GP services in Cornwall; the questionable performance of
private companies providing the Work Programme; Capita's failure
to deliver court translation services for the Ministry of Justice;
issues with Atos's work capability assessments for the Department
for Work and Pensions; and G4S and Serco's over-charging for years
on the Ministry of Justice's electronic tagging contracts. All
of these instances had undermined public confidence in the motivation
and capability of private providers.
11. Each time we took evidence we were shocked
at the weak responses from the departments that had awarded the
contracts in the first place. We sought assurance that the Government
was effectively managing private provider performance, holding
two evidence sessions in September 2014: the first with the Ministry
of Justice, the Home Office, G4S and Serco; and, the second with
the Cabinet Office and Crown Representatives for Serco and G4S.
12. Persistent contract failures called into
question for us the strength of the Cabinet Office's grip on the
situation given its responsibility for managing government's suppliers.
The Cabinet Office admitted to us that there was a long way to
go before government had the right commercial and financial skills
to manage contracts. This was concerning given the speed at which
some departments, such as the Ministry of Justice, were pressing
ahead with outsourcing, despite a poor track record. The Cabinet
Office accepted our recommendations to reduce the risk of further
failures by: ensuring an appropriate level of Accounting Officer
and board engagement in all major contracting decisions; increasing
the level of investment in developing experience and expertise
in commercial issues; making appropriate commercial skills and
experience a requirement for all contract managers within departments;
and strengthening the Crown Representative initiative by providing
them with the necessary time and support to do their job more
effectively. We secured consensus from government and from industry
that public sector providers do have a duty of care to the taxpayer
which requires greater transparency about the services expected
to be delivered and the performance to be achieved.
13. Our work has identified the need for a range
of reforms and we have welcomed Cabinet Office's intent to raise
government's game in this area. We recognised the need for greater
transparency and visibility to government, Parliament and the
public about suppliers' performance, costs, revenues and profits.
At the time of our March 2014 Report, only one-third of contracts
were on an open-book basis, and even then, departments rarely
accessed this information partly because they lacked the capability
to do so effectively. This needed to change, so we welcomed Cabinet
Office's commitment to test a wider use of open book accounting
to develop the skills to make this meaningful; and, mandate this
practice where it would enhance value for money.
14. The Cabinet Office has also accepted that
it should explore how to extend the Freedom of Information powers
to cover contracts with private providers; to publish on a regular
basis standard information about contracts such as their length
and value; and to ensure the Comptroller and Auditor General had
adequate access rights to private providers.
15. We also led calls for a standard whistleblowing
policy term to be included in all publicly let contracts. Given
our experiences of Serco manipulating data on the Out of Hours'
GP service in Cornwall, and G4S's and Serco's 'ethically wrong'
and 'flawed judgement' when they charged the Ministry of Justice
for services they did not provide, we viewed this change as essential
to prevent wrong-doing and to hold those responsible to account.
We remain disappointed that the Government rejected our recommendation,
expecting private providers to fully implement the spirit of this
legislation without mandating it. At the time of our report, despite
all 4 private providers having whistleblowing policies in place,
none had chosen to nominate someone in the contracting department
as a person to whom whistleblowers could make authorised disclosures.
- Our direct engagement with private providers
is an important development on which our successors should build,
so they can continue to call to account any organisation delivering
public services using taxpayers' money.
| 
