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23.03.16

Contract management by government still failing to achieve value for money – PAC

Contract management by the government is failing to achieve value for money, the Public Accounts Committee (PAC) has warned in its latest report.

The report says that the Cabinet Office has failed to do enough to challenge departments on their contracts spending, following a 2014 report warning that there are deep-rooted problems.

It also says that they have failed to ensure that contractors are meeting the needs of vulnerable groups. For example, the Home Office did not follow through on the risk of people being identified as asylum seekers because G4S painted the doors of their homes red despite the PAC raising concerns about housing services provided by contractors for asylum seekers two years ago.

Meg Hillier MP, chair of the PAC, said: “Poor contract management comes at a cost, failing service users and hitting taxpayers in the pocket.

“As evidence heard by this committee in recent months bears out, change isn’t happening consistently or quickly enough. Time and significant sums of money have been wasted.”

The report says that the government has only implemented 37 of the 96 recommendations from the 2014 commercial capability reviews.

Four out of seven departments asked to assess their commercial capability have failed to do so and at least one department does not have a commercial director.

The report warned that problems with contract management include a focus on the procurement process, which was seen as more prestigious in the Civil Service, over contract management, and a lack of staff with commercial experience.

Some departments have commercial vacancy rates of 15% or more.

The report says that by the end of 2016 the Cabinet Office should report back with an overview of progress made by each department to improve their contract management, identify any departments which fail to produce credible plans, and lay out progress on how it will intervene if departments fail to co-operate.

It also says that the Cabinet Office should tackle the lack of commercial knowledge among government staff by increasing the weighting of commercial competence when considering senior Civil Service promotions and consulting on whether commercial directors should be included on departmental boards.

A Cabinet Office spokesperson said: “The government is committed to getting the best value for taxpayers and we’re proud that our work to overhaul our commercial activities helped save taxpayers £5.5 billion over the last Parliament.

"We’ve taken significant strides to improve commercial capability across government and develop our professional approach to managing contracts with all our suppliers. This includes tracking the performance of significant contracts with our strategic suppliers on a regular basis. We know there is much more yet to do and appreciate the committee’s recommendations which we’ll consider in depth.”

A recent National Audit Office report said that the government needs to improve its efforts to support small and medium-sized enterprises through procurement contracts.

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