Posted on December 15, 2021 by Iain Forrester
This is the last in a series of posts on our good practice guidance for managing the commercial lifecycle. In that guide we shared fresh insights from our extensive body of work on government’s commercial activities.
It’s not surprising that many of the examples in our guidance related directly to responding to the COVID-19 pandemic. Just as everyday purchases we normally take for granted like buying pasta from the local supermarket, became complex thanks to the effects of the pandemic, so did government’s processes for buying the things it needed.
Of the supporting elements in our guidance which apply across the whole contract letting spectrum, governance and accountability may be the most crucial for responding to big changes and extreme circumstances. Risks are more likely to be borne out at any stage without the right people to make appropriate decisions and provide adequate scrutiny.
Explaining governance and accountability
When considering governance, we look at the oversight arrangements at an organisational level – poring over what risk reviews have taken place, and the adoption of learning from previous lessons. When we consider ‘accountability’, we reference the support to contract managers; others charged with responsibility for the governance of contracts and the organisation as a whole (including the Accounting Officer for whom the duties for managing public money and reporting to Parliament falls to).
To be effective, these arrangements should facilitate open discussion and continuous improvement. Public bodies should demonstrate robust, independent oversight of both their contractual arrangements and overall commercial portfolios. We have often found that organisations do oversight well at a ‘big picture’ level or in fine detail but often cannot achieve both.
Accountability in complex systems
In 2020, we reported on the value for money of the local bus service system overseen by the Department for Transport. The report looked at the effectiveness of the government’s support for local bus services and whether the tools to improve local bus services were in place. The Department is not accountable for delivering bus services, but it has a national policy responsibility. We found that, during the COVID-19 pandemic, the Department came together with local authorities and operators, intervening rapidly to target the weakest areas and keep buses running – a good learning point for future programmes.
Using governance to support speed
Effective governance is important at all times but crucially so when risks are higher and goods and services are required to be delivered at greater speed. The NAO’s work on Lessons Learned: Delivering Programmes at Speed highlights the contribution governance can make in such situations. This publication references the need for governance structures to be tailored to support the pace of the work. We have seen different structures work in different circumstances, but the main principles are to have clear accountability lines and to involve the right people at the right time.
An example of the importance of clear accountability comes from the NHS Test and Trace Service. This was created to lead the government’s COVID-19 test and trace programme, which was delivered in part by contracted providers. The NHS Test and Trace Service was part of the Department of Health & Social Care (the Department) and was subject to the Department’s financial, information and staffing controls. However, the executive chair of the NHS Test and Trace Service did not initially report to the Department’s ministers or Permanent Secretary, but to the Prime Minister and the Cabinet Secretary. This unusual organisational relationship created dual reporting lines, which brought risks of unclear accountability. The relationship subsequently changed so that the executive chair reported to the Secretary of State for Health.
What good looks like
In defining how to achieve good governance and accountability to support successful contracts, our good practice guide sets out areas of improvement and outlines our expectations of best practice. They include:
- Accountability is defined and responsible officers are appropriately empowered.
- There is effective independent scrutiny of commercial activity.
- Lessons learned promptly feed into the wider strategy and plans for other contracts, and are integrated into needs assessment and the list of strategic suppliers.
- Reliable, timely management information is used for rapid diagnosis of issues and prompt action.
- The organisation’s own performance against obligations and the supplier’s view of performance are known and considered.
- Industry expertise is valued and used, subject to robust independence controls.
Wishing you all successful governance and accountability arrangements for your contracting activities!
About the author
Iain Forrester is a qualified accountant with long experience of working on the NAO’s commercial and contracting related work. This has included cross-government work on grants, shared services, EU Exit, and the government’s response to COVID-19. He also worked on the commercial and contract management insights guide published in 2016.