Following Carillion's demise, the government is developing a 'playbook' to guide public outsourcing © PA Images
Following Carillion's demise, the government is developing a 'playbook' to guide public outsourcing © PA Images

Whitehall seeks more supplier financial checks post Carillion

7 November 2018

The Cabinet Office (CO) is working on plans to compel suppliers to give more details about their finances as part of a procurement overhaul in the wake of the Carillion crisis, it has revealed.

Responding to the  scathing July report on public sector outsourcing from the Public Administration and Constitutional Affairs Committee’s (PACAC), the Cabinet Office (CO) said officials were looking at ways to give the government “greater insight into the financial stability of suppliers and markets”.

This information would help establish “better right-at-the start processes” to account for what PACAC called the “monopolistic” buyer conditions in public procurement, it said in the response. More details will be published “in due course”.

The CO and the Treasury are also developing a “playbook” laying out cross-government standards for how to tackle simple and complex outsourcing, including the questions authorities should ask as commercial projects advance.

The playbook, used with the Treasury’s Green and Orange books of financial and risk-management guidelines, will define delivery goals, tender options and procurement strategies for contracting authorities.

It will also prepare them for the “potential impacts of corporate failure on the continuity of public services”, added the CO.

Officials also announced that “key, high-level KPI reporting” will soon be included in the spend database for all public contracts. This will reportedly make it “easier to monitor performance at a contractual and supplier level”.

The response also included plans to force suppliers delivering “critical public services or those whose corporate failure would seriously affect government’s ability to deliver key public services” to put “proportionate plans” in place for what happens if they become insolvent.

A group of “industry and relevant subject matter experts” are developing these ‘living wills’, responding to PACAC’s calls to give service users “confidence in their resilience”, regardless of particular companies’ fates.

In September, SM learned the government is running a “study group” of 20 industry experts and secondees examining “complicated issues where we need to work with industry” in outsourcing policy, according Gareth Rhys Williams, the government’s chief commercial officer. It is unclear whether this group is linked to the group working on living wills.

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