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Government must get ‘house in order’ with private contracts - PAC

The government is failing to manage performance “across the board” with contracts it enters with private firms, a Public Accounts Committee (PAC) report has warned.

The study has stated that government needs a far more “professional” and “skilled” approach to managing contracts and contractors. Additionally, contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs.

On top of this, the PACstated thatthe public’s trust in outsourcing has been undermined recently by the poor performance of G4S in supplying security guards for the Olympics;Capita’s failure to deliver court translation services; issues with Atos’s work capability assessments, misreporting of out of hours GP services by Serco; and most recently, the astonishing news that G4S and Serco had overcharged for years on electronic tagging contracts.

“These high profile failures illustrate  contractors’  failure to live up to standards expected and have exposed serious weaknesses in government’s capability in negotiating and managing private contracts on behalf of the taxpayer” the report highlighted.

Margaret Hodge, chair of the PAC, said: “Private provision of public services has become big business, with half of all public spending on goods and services going to private providers of contracted-out services.

“We believe government needs to urgently get its house in order so that this expenditure is properly open to public scrutiny, and that measures are put in place which will improve services and secure a better deal for the taxpayer.”

A lack of transparency and openness around government’s contracts with private providers, with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information, has also been criticised.

Hodge added that it is vital that Parliament and the public are able to follow the taxpayers’ pound to ensure value for money. So, today,the PAC has called for three basic transparency measures:

• The extension of Freedom of Information to public contracts with private providers;
• Access rights for the National Audit Office; and
• A requirement for contractors to open their books up to scrutiny by officials.

“The four private contractors we met – G4S, Atos, Serco and Capita - all told us they were prepared to accept these measures. It therefore appears that the main barriers to greater transparency lie within government itself,” she said.

According to the report, an absence of real competition has also led to the evolution of “privately-owned public monopolies” which have become too big to fail. Some public service markets such as for private prisons, asylum accommodation or disability benefit assessments, are now controlled by just one or two major contractors.

“Small and medium enterprises (SMEs) have been crowded out by the complexity of the contracting process, excessive bureaucracy and high bidding costs,” stated the report.

John Cridland, director general of the Confederation of British Industry, said: “The private sector plays an increasingly important role in running public services, as this report notes. The public has a right to know how its money is being spent and the industry has pledged to meet a higher bar on transparency.

“Businesses running public services agree that open book contracting should become the norm. The National Audit Office should also be able to audit government contracts as long as this is done in a systematic way with the triggers for inspection, like missed performance targets, agreed from the outset.”

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