Government gets outsourcing service it deserves
The Whitehall official leading a review of scandal-hit firms G4S and Serco has said the government should take some blame for suppliers' bad behaviour because the way their contracts are managed is "poor in a lot of areas".
Bill Crothers, the Cabinet Office chief procurement officer, said government departments "get the suppliers they deserve" and claimed oversight of private firms delivering public services "needs to improve considerably".
His comments come after a series of scandals about companies running outsourced public services, including allegations of fraud at G4S and Serco in a tagging contract, and A4E, which runs welfare-to-work programmes.
Since then, the government has been urged to slow down its massive expansion of multimillion-pound outsourcing contracts, which are spreading from more traditional areas such as IT and administration to frontline work including probation, health and immigration controls.
Crothers suggested some problems have been caused by the government spending too little time making firms "deliver what they said they would do" for a certain price.
Asked whether the government should take some of the blame for bad behaviour by its suppliers, Crothers said: "The short answer is yes. Certainly, we need to improve considerably. I am leading a review of contract management for 28 contracts which happen to be Serco and G4S. Our plan is to come out with recommendations that are more than about Serco and G4S. How we manage contracts has been in a lot of areas poor, no question."
Crothers said the government puts a lot of effort into deciding which suppliers should be hired, but "traditionally spends relatively little time managing a contract once it's let".
"Actually, that's where value leaks," he said. "Spending time with a supplier, ensuring they're delivering what they said they would do, their pricing for what they deliver – just basic stuff – we need to spend more time on that and get people who are qualified and experienced to do it."
Crothers said he was not just talking about G4S and Serco, as "there are other examples where things haven't gone well". A spokesman for the Cabinet Office later said Crothers did not intend to suggest the latest problems with G4S and Serco are "all the government's fault".
The senior Cabinet Office official also said more time should be spent encouraging small suppliers to bid for government work because "what happens is in IT we tend to get the oligopoly – the same suppliers bidding".
However, he said the big outsourcing companies would continue to get business from the government as "there is a lot of profit to be had" and argued the firms "want to end bad practices as much as we do".
The coalition now offers around £20bn in contracts to deliver public services each year – more than double the value in 2008 – as part of its drive to run a more efficient civil service.
Crothers made his remarks at an event held at the Cabinet Office attended by outsourcing companies including Capita, and City of London financial analysts.
At the presentation, Francis Maude, a Cabinet Office minister, said he has found £5.4bn of savings this year so far compared with the level of spending in the year before the coalition came to power. He is aiming to find £15bn before the end of the financial year.
Sajid Javid, a Treasury minister, said the savings are an example of the way civil servants are "radically rethinking the way they operate to increase productivity and support small and medium-sized businesses".
The drive to save money has created an opportunity for outsourcing companies. However, G4S and Serco are under intense pressure to prove they offer value for money after the Serious Fraud Office launched a formal criminal investigation into claims they overcharged by tens of millions of pounds for the electronic tagging of offenders. Crothers is now leading a review of 28 contracts that the two companies currently hold with the government worth a total of £9bn, including the management of the atomic weapons establishment at Aldermaston.
Last year, A4E was under a similar spotlight over its historic welfare-to-work contracts, with nine of its former employees appearing in court last month charged with fraud.
Earlier this summer, the Institute for Government warned there have been mistakes in the way outsourcing in areas such as care for older people, schools, probation and employment services had been set up and managed.