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All posts by Iain Forrester

    Effective governance and accountability is a mainstay for successful contract management

  • Posted on December 15, 2021 by

    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

    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.


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  • Commercial strategy needs to be joined up to achieve best value

  • Posted on November 25, 2021 by

    Last December, the government published a Green Paper on Transforming Public Procurement. It  stressed that investments should be subject to consideration of the public good, including supporting national priorities. It discussed leveraging commercial activity to achieve social and environmental value.

    For our good practice guidance for managing the commercial lifecycle, we examined similar opportunities and how to support them. We shared fresh insights and learning from our extensive body of work on government’s commercial activities. In this latest post, I will share some of our insights on commercial strategy.

    Commercial strategy means thinking about the overall approach to ensure that procurement and other commercial activities provide the outcomes that government wants and benefit us all. This is the part of our guidance which really focuses on the context around what government does when it runs a competition or revises a contract, and the importance of joining up different elements.

    Joining up commercial strategy is vital if government wants to achieve its wider aims as well as value for money. That includes establishing a consistent approach to risk management, and the organisational capacity and capability to respond to uncertainty. It is also where other considerations come in, including where procurement can be a lever for larger goals like encouraging innovation or diversifying the landscape of suppliers to government. Commercial strategies should demonstrate how each commercial agreement aligns with wider strategic objectives and how this is then reflected in the approach for managing commercial risks and incentives throughout the commercial lifecycle.

    A couple of our past reports give good examples of the importance of joining up strategy at the programme level and more widely.

    Aligning timetables

    In 2018 we reported on The Ministry of Defence’s arrangement with Annington Property Limited, a sale and leaseback arrangement for accommodation. As part of our review, we found that the timetable for developing the Ministry of Defence’s wider estate strategies was not aligned with the timetable for rent reviews. The department was developing a ‘Future Accommodation Model’ intended to provide personnel with more flexible accommodation options. However, the timing meant that its negotiations on the sites with Annington would begin before a decision was taken on the wider model. This affected its ability to develop negotiating strategies for these sites. We recommended that the department align the timetables to use realistic scenarios in its negotiations, giving it a clearer strategic view.

    Leveraging procurement across government 

    On a wider scale, we reported in 2016 on the government’s spending with small and medium-sized enterprises (SMEs). The government recognised that SMEs could offer many benefits to the public sector, including flexibility, innovation and better value for money due to lower overhead costs, as well as increasing local investment and improving social outcomes. We recommended that the government should take a more focused approach, identifying where SMEs could bring the most benefit, and look into an integrated cross-government procurement platform to support its commercial strategy. The government has since introduced guidance for SMEs applying for contracts and promised to invest in joining up the different procurement systems. The intention is that this will help drive the commercial benefits from better data sharing – as part of changes to procurement processes following exit from the European Union.

    That is an example of the kind of strategic approach to identifying risks and opportunities which we want to see applied consistently across organisations, and we look forward to seeing how government’s follow-up to Transforming Public Procurement would help to further encourage this.

    What good looks like

    Our good practice guide sets out areas of improvement and outlines our expectations of best practice, with specific case study examples that demonstrate some of these expectations of a joined-up commercial strategy. They include:

    • Commercial, policy, operational and business teams work together to develop a clear understanding of the contracts and produce required outcomes
    • Each contract staffing model is developed early, regularly reviewed and tailored to different contract stages
    • Capability plans include operational resilience to address unplanned demands
    • Knowledge and experience of underlying contract issues is retained throughout the lifecycle of a commercial relationship
    • There is investment in the organisation and its people to ensure adequate access to training and development to support commercial awareness and expertise.

    About the author

    Iain Forrester

    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.


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  • Capability is for contract life, not just for procurement

  • Posted on November 2, 2021 by

    The NAO’s work includes looking at a huge range of government activities, and the setting up and managing of commercial arrangements are central to many of them. This became very clear when looking back at twenty years of our work auditing government’s spending and reporting on its value for money for taxpayers. Over this time, we have assessed over 350 of government’s agreements with commercial partners to deliver services and goods for the public.  

    Government has come a long way in developing its expertise in this space, but the pandemic and the need to procure services quickly has highlighted the extent to which further improvements are needed. Our perspective looking right across government and its programmes puts us in a unique position to draw together lessons and the common themes which have kept coming up in our work. 

    One example is our recently published Good practice guidance: managing the commercial lifecycle. In it we share fresh insights and learning from our extensive body of work on government’s commercial activities. The guidance has 10 sections – six procedural steps and four supporting elements. I previously wrote about one of those supporting elements, data, and this time I want to focus on another: capability.  

    Capability covers both personal effectiveness and organisational capability. It means having people within commercial teams and elsewhere with the appropriate commercial skills, at the right time. It also means supporting them with appropriate organisational leadership, systems and levers to deliver the required outcomes. Achieving all of this will require some measure of collaboration across organisations – be they cross government, or the wider public and private sectors.  

    Getting these capability aspects right is crucial throughout the entire process of the commercial lifecycle, from requirement through to transition at the end of the contract and is a key area for improving outcomes. An important aspect of managing contracts is being able to respond to change.  

    Substantial additions to government’s programmes, like the purchasing of COVID-19 vaccines and the associated equipment to roll out the vaccine programme, have shown just how much change can occur in a short time. This comes alongside the pandemic’s disruption of long-held assumptions and traditions, with huge impacts to our ways of life. 

    If that much change can take place within a couple of years, it’s clear that contracts, which sometimes span decades, must often react to very significant changes. That means that organisations need to make sure they maintain the appropriate skills and capability to manage contracts and commercial activities as a whole.  

    Some of our past reports highlight the importance of capability approaches. For instance, in our progress report on Terminating the Magnox contract, we highlighted the importance of reassessing capability throughout the life of a contract.  

    In March 2017, the Nuclear Decommissioning Authority (NDA) decided, based on legal advice, to terminate a 14-year reactor decommissioning contract due to a “significant mismatch” between the work specified in the tendered contract and the work that needed to be done. The NDA decided to renegotiate the contract with the incumbent, with the contract ending in 2019, nine years earlier than originally planned. To react to the change in circumstance and to better equip itself, the NDA commissioned a review of the delivery plan to improve its intelligent client capability before changing contract arrangements. It also strengthened its executive team, including a new commercial director, and increased the capacity of its contract management team. These changes were an example of meeting the expectation that contract staffing models should be regularly reviewed and tailored to different contract stages.  

    In our report on the BBC’s TV licence fee collection, we recognised how the BBC had benefited from introducing contract governance and reporting, supported by a multi-disciplinary team model and a wider strategic contracts infrastructure. We also recommended that it should maintain information on commercial skills to enable it to adapt to changes, such as upgrades to technology and ICT, which require different skill sets. This point was particularly important because we had identified that the BBC did not routinely assess its commercial skills and future requirements. 

    In our good practice guide we emphasise ways that improvements can be made to organisational and people capability, and their application throughout the commercial lifecycle.  

    There is an opportunity to make projects more successful in the short and long-term. We include expectations that:  

    • Commercial, policy, operational and business teams work together to develop a clear understanding of the contracts and produce required outcomes 
    • Each contract staffing model is developed early, regularly reviewed and tailored to different contract stages 
    • Capability plans include operational resilience to address unplanned demands 
    • Knowledge and experience of underlying contract issues is retained throughout the lifecycle of a commercial relationship 
    • There is investment in the organisation and its people to ensure adequate access to training and development to support commercial awareness and expertise. 

    The guidance also includes our expectations of good practice for all other stages of the commercial lifecycle and draws attention to some of the most important things for government to improve in its commercial activities. Stay tuned for further entries in this blog series, the next of which will be on commercial strategy. 

    About the author

    Iain Forrester

    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.

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  • Data is not just about numbers but opportunities

  • Posted on October 4, 2021 by

    We live in a time when more of our data is collected and connected than ever. It happens when I make an online lunch reservation and Google automatically turns the confirmation email into a reminder on my phone. The pandemic has taken this one step further. When I arrive at the restaurant I now need to scan a code to help supply information to the COVID-19 tracking app.

    Alongside an increase in demand for our own data there has been greater public expectation for government to be transparent with its data. For instance, in relation to the commercial elements of its pandemic response: from spending on Test and Trace to new contracts for PPE and for food boxes for the clinically extremely vulnerable.

    As the independent auditors of government, giving Parliament and the public greater transparency around government’s activities and the value for money that it delivers is at the heart of what we do.

    In our recently published Good practice guidance: managing the commercial lifecycle, we share fresh insights around what we learned from our extensive work on government’s commercial activities to help inform future actions and to support better sourcing of the things government needs. Transparency and data is one of four supporting elements which are important to the entire commercial lifecycle.

    There are many opportunities to make better use of the government’s commercial data and digital solutions to improve value for money throughout the commercial lifecycle. For example the process of publishing data could become easier; more useful connections can be created; and more insights could be gained from across the whole of government. But before this can be achieved, government must address challenges it has with late and incomplete disclosure of the information it is required to publish.

    This is because government’s stated policy is to adopt and encourage greater transparency in its commercial activity. Publishing information on contracts is an important part of its commitments. It recently reinforced this through a new Procurement Policy Notice. However we found in several past reports that publication of contract information fell short of what is required, for instance in not publishing details of contract awards within the timescales it is required to.

    Addressing these issues can go hand-in-hand with taking practical steps towards better use of commercial data. Analysis of our own reports on commercial topics over the past five years shows that there have been improvements, but we still found cases where the lack of commercial data has hampered government’s ability to analyse its spending and what it is getting in return.

    For instance, in the report Care leavers’ transition to adulthood, we looked at the data on local authority services. We found that without the data being accurate, complete and comparable, the Department for Education couldn’t support assessments to determine whether services offered good value for money.

    In our report on Improving value for money in non-competitive procurement of defence equipment, we saw an example of the potential benefits of increased transparency of information on costs for contracts. The Ministry of Defence told us that greater access to supplier cost information allowed it to monitor actual costs against the estimates in contract prices. It meant it could hold negotiations in a more informed way.

    Across government there is a chance to improve data and extend commercial transparency to give a clearer view of supplier profits and performance throughout its commercial arrangements. The government also needs a strategy and leadership to navigate the tensions between commercial sensitivity and the public interest. For instance, there should be a more consistent approach on which details need to be redacted from contracts for sensitivity reasons.

    In our good practice guide we highlight some of the key ways that improvements can be made in commercial data and transparency infrastructure and arrangements. Data and transparency are crucial to all steps of the commercial lifecycle. There is a big opportunity to implement improved infrastructure to make it easier to make better use of data.We include expectations that:

    • Transparency rules and guidance are consistently followed in full
    • Transparency principles are applied to what is procured and how, as well as to performance and changes to the contract.
    • The collection of data is transparent, proportionate and timely to support the understanding of processes and the market.
    • Data specification makes the data easy to share and use – consider open data standards, including common taxonomies and unique contract identifiers.

    We have also set expectations for good practice and what we see as the most important things for government to improve in other aspects of the commercial lifecycle, and will cover these in future posts, so keep tuned for further entries in this blog series.


    About the author

    Iain Forrester

    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. 

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  • The power of information for contracts

  • Posted on October 1, 2018 by

    Concept image suggesting super importance of informationFrom the collapse of Carillion, to failures within Capita’s £1 billion worth of public contracts, recent NAO reports starkly reiterate the importance of information in managing contracts. As the Comptroller & Auditor General said in his post Risks, resources and government-supplier relationships, government ‘needs to assess the financial health and sustainability of its major contractors and use this information to protect the public interest’. Here we outline the crucial role of information throughout the commercial lifecycle. more… The power of information for contracts

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  • To share or not to share: that is the question

  • Posted on June 16, 2016 by

    Shared servicesIt’s good to share. Surely sharing services has to be more efficient? Standardised services and economies of scale have to reduce costs. But what about tailoring to needs and allowing flexibility? What about the risks of service failure? We at the NAO are often asked by public sector organisations whether they should join in shared services. The answer is … it depends.

    more… To share or not to share: that is the question

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  • About the NAO blog

    Our experts share their views about issues and common challenges facing government, what public sector leaders should look out for and how organisations have addressed issues. Our posts draw together threads from across our reports, share secrets spilled in events and reveal our experts’ expectations for the future.

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