Posted on May 19, 2016 by Andrew Denney
£225 billion of taxpayers’ money is spent annually with private and voluntary providers. Health, justice, employment and many other public services are delivered by them. This delivery can be complex and high risk, and very high profile if providers fail. Government Commercial and Contracting: an overview of the NAO’s work highlights some of the key challenges faced by government and brings together findings from our work across these challenges. We invite you to join the discussion and help us do more to share thinking and practices across government.
The 2013 Cross-government Review of Major Contracts, instigated after the Ministry of Justice’s discovery of overbilling on its electronic monitoring contracts, revealed continuing weaknesses in the management of major contracts. The issue was taken seriously, and reforms since 2013 are going in the right direction. But the problems remain systemic, deep rooted and cultural, and will take sustained effort to address.
Considering commercial and contract management from both a government and departmental perspective, our work has looked into these issues. We found repeating patterns and themes, and it became apparent where and how government is making progress.
Our Overview focuses on six themes from our work, where government faces particular challenges:
- Government’s commercial capability
- Managing contracted‑out service delivery
- Accountability and transparency
- Government as one customer
- Managing markets for public services
- Using new commercial models
We concluded, for example, that commercial capability could be improved through better departmental governance, and more effective integration of commercial and operational staff. Our recently published report on Transforming Rehabilitation shows the Ministry of Justice investing heavily in contract management and deploying this kind of new, multi-disciplinary staffing model.
With many public services now being delivered through ‘quasi markets’, managing markets is increasingly important. Government needs to understand these markets and providers, guard against the consolidation of markets, and manage provider failure (a ‘principles papers’ on the latter, along with related reports can be found on our User choice and consumer protection web-page). We’ve seen recent improvement in broadening market participation in areas such as the Department for Work & Pensions’ Contract-out health and disability assessments and the Department for Transport’s Reform of the rail franchising programme. There’s been less progress in broadening access in general for SMEs and third sector organisations, as shown in Government’s spending with small and medium-sized enterprises.
The picture that emerges is an improving one. But there is much more to be done for government contracting to be effective and for services and providers to meet the standards the public expects. With about £225 billion spent this way every year it is a top priority for government, as emphasised in evidence to the Public Accounts Committee’s (PAC) recent report, Transforming contract management: progress review.
We hope that Government Commercial and Contracting: an overview of the NAO’s work helps government understand and address the challenges it faces and supports the pace of change sought by the PAC.
The commercial agenda remains a priority for us too, and like government we continue to learn about what good looks like. This summer we will be talking to government, providers and other interested parties about what we, and they have learnt about managing contracts to join the dots and refine our thinking of what good looks like. We invite all those interested to Contact us and join the conversation.
About the author: Andrew Denney has worked with the NAO Commercial and Contracting team since 2013, having previously worked on studies around the government’s efficiency and reform agenda and third sector issues. Prior to that Andrew led capacity building programmes for third sector bodies engaging in public service delivery at the Association for Chief Executives of Voluntary Organisations, and acted as a Specialist Adviser to the House of Commons Public Administration Select Committee in its 2008 report ‘Public Services and the Third Sector’. Andrew has held trustee and advisory roles with third sector start-ups in the health and environmental sectors.
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