Central Government's Service Contracts - Public Accounts Committee Report
The 17th Report of Session by the House of Commons Public Accounts Committee was
published on 28 April 2009 following an investigation into the management of government
service contracts. Service contracts range from IT deals to security, facilities
management and various forms of outsourcing. In excess of £12 billion was spent
by central government on service contracts in 2007-08; an estimated £240 million
was spent on managing these contracts.
The report draws up nine key conclusions and recommendations, and makes the point
that between £160 million and £290 million a year could be saved through better
contract management. The conclusions and recommendations include:
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Achieving value for money depends on effective contract
management. Improvements would be made if responsibility is assigned to a single
individual, whose responsibilities should include ensuring that all major service
contracts have appropriate governance arrangements and documented contract management
plans. Contract managers also need to be better supported. |
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Major service contracts should have performance measures which are updated as necessary
to meet changing business requirements.
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Financial penalties should be applied when contracts entitle central government
organisations to invoke them. Even where services supplied were sub-standard, almost
40 per cent of managers currently choose not to apply financial penalties that they
are contractually entitled to impose. |
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The value for money of service contracts needs to be routinely tested; all significant
changes to major service contracts should be tested as a matter of course. |
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Risks associated with major service contracts should be reviewed and good practice
risk management processes put in place, including risk registers and contingency
plans. Too few central government organisations are taking such steps: over half
of contracts were found not to have a contingency plan in case of supplier failure. |
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The Office of Government Commerce has not previously provided sufficient contract
management guidance or monitoring of major suppliers. However, during 2009 it plans
to issue further guidance and develop new training on contract management, and extend
its monitoring of the major suppliers to government. |
Recent episodes have demonstrated that failures by contractors can have a major
impact on citizens, such as the late marking of SATS tests and the problematic payment
of Educational Maintenance Allowances. The report concludes that outsourcing of
services means central government’s role becomes one of contract management, and
every effort needs to be made to avoid similar failings in future.
For more information visit:
http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/152/152.pdf
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For More Information Contact:
David Wall
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email:
David
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