Only a third of government contracts are ‘open book’

Will Green is news editor of Supply Management
29 November 2013

Only a third of government contracts in a recent sample contained open-book accounting clauses, MPs have been told.

Government CPO Bill Crothers also told the Public Accounts Committee (PAC) on Monday that even where contracts included open-book clauses, many departments failed to use them.

Crothers said: “In a recent sample of large contracts, about a third were open book, although most of the open-book clauses were not used. What we have is a right, but for some reason, the departments were not enacting the open-book clauses.”

He told the committee the government was developing a model contract to be used across government, which would include open-book clauses.

Stephen Kelly, chief operating officer in the Cabinet Office, said the civil service had a “big job to do in terms of building capability”.

He said: “It is easy to say ‘open book’, but there is some science in the interpretation of net margin and allocation of overheads, and we need some accountants and finance people on our side of the table. We need to raise our capability significantly to manage open-book relationships, candidly.”

Crothers, in a passing reference to the reviews taking place into contracts held by G4S and Serco, told MPs contracts were too complex and generally he favoured shorter contract lengths of “three, four, five or maybe seven years.”

He said: “When looking at contracts across government, we have looked at particular sets - as it happens, Serco and G4S - but we will infer more general messages from that. One of the things we have found is a theme that contracts are more complex than they need to be. There are many KPIs with which performance is not managed as well as it would be if things were simpler. We will look at that and make some recommendations.”

The PAC is investigating reports by the National Audit Office covering the delivery of public services by private contractors and managing suppliers.

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