UK government contracting problems are “widespread, long standing and rooted in the culture of the civil service”, according to a lacerating report published by MPs.
The review into contract management by the Public Accounts Committee said civil servants had prioritised the tendering process, and considered management post-award to be “mechanical and unimportant”.
It added the government would not achieve value for money until it paid much more attention to the management of its deals.
“Departments have taken their eye off the ball and placed too much trust in contractors and relied too much on the information contractors supply,” said PAC chairman and Labour MP Margaret Hodge. “Contracts need to be managed at a sufficiently senior level, with strong accountability in place, by people with the right commercial expertise.”
The MPs’ report recognised efforts by the Cabinet Office to increase commercial expertise to compete with the private sector and raise personal accountability for contracting failures. But said there was “a long way to go” and reform “must not be allowed to drift away as it has done in the past”.
Public sector suppliers were also given a caustic appraisal of their performance. It described the G4S/Serco electronic tagging contract saga as a “belated wake up call”, warning “too often the ethical standards of contractors have been found wanting”.
“Contractors simply have not shown an appropriate duty of care to the taxpayer and users of public services. Contractors talk of corporate renewal and a need for a new way of thinking about how companies do business with the government – but this must be turned into real action,” said Hodge.
It also blamed the government’s approach to contracting for handing too much advantage to suppliers, adding it needs to rebalance commercial relationships and break free from quasi-monopoly providers who are considered “too important to fail”.
The report set out four areas for the government to focus on:
• Achieving value for money from contracts. Improving contract management, raising the accountability of civil servants and improving the attractiveness of careers in commercial roles.
• Contractors' duty of care to the taxpayer. Establishing obligations of what a duty of care means and what sanctions apply if performance is below expected standards.
• Management of public service markets. The government should use contractual powers to intervene where there is market consolidation. Barriers to SMEs joining markets also need to be addressed with a plan developed to tackle them.
• Rebalancing power in favour of the taxpayer. Open-book contracting should be mandatory. KPIs should also be reviewed to ensure the right behaviour is being incentivised.
SM is awaiting a response to the report from the Cabinet Office.