September 8, 2014
A newly published review from the UK’s National Audit Office claim that the poor management of the country’s public sector procurement function means that fraud is widespread to the tune of tens of billions of pounds. The review found that a lack of oversight and a belief that some contracts are too important to fail open the doors to fraud. A separate NAO report also claims that the function is given a low priority and too often is more interested in just getting deals signed and out of the way than thinking about how contracts function in practice. The review into the level of fraud and overcharging in Government outsourced contracts which was carried out in the wake of the high profile of the cases of ‘bad practice’ by G4S and Serco claims that the public purse may be exposed by as much as £40 billion. Five government contracts are already under investigation by police or the Serious Fraud Office, according to the report and more will follow.
Criticisms within the review include the fact that suppliers may offer essential services so are deemed to important to fail and that departments rely too heavily on what they are told by suppliers and do not carry out enough of their own checks and rely on independent sources of information.
Margaret Hodge, who chairs the public accounts committee, said: “More and more of our public services are now being delivered by private companies, who between them received a huge £40bn last year from contracts funded by the British taxpayer. These companies must be held to the same high standards as any government department, so that the public can have confidence that they are delivering the quality of service we are entitled to expect. Not all senior civil servants have taken these contracts seriously, with data to monitor and understand performance still not good enough because departments think their responsibility ends once a contract is signed.”
In the second report, the NAO claims that the public sector procurement function has habitually been awarded a low status in the civil service which means that it lacks ‘sway over colleagues to implement good practice and that the Government ‘fails to recognise the value of contract management’.
“Too often contract management has been seen as delivering the deal that was agreed when the contract was signed. This has meant that contract management has been seen as a way to avoid things going wrong, rather than unlocking value,” claims the report. “Traditionally, the procurement profession has had a low status in the civil service, while contract management has been seen as low status within the procurement profession. The profession has lacked the sway over colleagues to implement good practice and struggled to attract the best talent and skills.”
Jim Bligh, head of public services policy at the CBI, said in response to the publication of the report: “The NAO is right to highlight that the government sometimes sees contract management as an afterthought, focusing too much on getting the deal signed and too little on what will happen when the ink dries.The government has a sensible programme of commercial reform but progress is too slow.”