06 August 2018 | Herpreet Kaur Grewal
The government must be more transparent with the outsourcing contract process, say MPs.
The "seriously damaged" public trust in outsourcing as a result of the Carillion debacle can only be rebuilt if the government is transparent about how and why it decides to purchase goods or services, says an influential group of MPs.
The Public Administration and Constitutional Affairs Select Committee report After Carillion: Public Sector Outsourcing and Contracting states that this should be done particularly in cases where private sector involvement or the type of commissioning is novel.
And the government should also publish its rationale for the decision and notify the relevant select committee, for example, in the form of a published business case, adds the committee.
It believes that the government can only let and manage contracts successfully if it has the right data - and the government admits that it needs to improve its internal data.
The report adds: "We are concerned by the fact that the government has not systematically analysed where and how it spends taxpayers' money on procurement. This includes data not only about current contracts but also about areas that the government wishes to purchase in the future."
The failure of Carillion was one of the biggest commercial challenges the Cabinet Office has ever faced, state the MPs, adding that the government was right not to bail out Carillion. The government was prepared for the consequences of this decision, and was able to ensure that public services kept operating as far as possible, they add.
However, the failure of Carillion reflects long-term failures of government understanding about the design, letting and management of contracts and outsourcing.
Sir Bernard Jenkin MP, the committee chair, said: "The Carillion crisis itself was well managed, but it could happen again unless lessons are learned about risk and contract management and the strengths and weaknesses of the sector.
"Public trust requires that outsourcing better reflects public service values. The government must use this moment as an opportunity to learn how to effectively manage its contracts and relationship with the market."
Recommendations (not exhaustive):
Government should consult with the Local Government Ombudsman and the Parliamentary and Health Service Ombudsman about the problems identified by the Local Government Ombudsman in relation to complaints made about private sector contractors, over whom they have no jurisdiction.
The government should lay out a new code of conduct that would apply to both government and suppliers and set out expectations of behaviour and shared values when it comes to private sector contracting.
The government should improve its due diligence processes to understand the resilience of the cash flow and financial position of its partners.
The government should investigate the experience of the Scottish Government with the non-profit distributing model and report back in its response to this report its view of what the UK Government can learn from the Scottish experience.
The Treasury and the government should not approve any further PFI projects until they can clearly justify, based on evidence, their claims about the benefits of the scheme.
The report can be found here: tinyurl.com/FMW0818-pfi