Government contracts poorly planned and badly managed

April 29, 2009 11:36 AM

Value for money seems to be ‘en vogue’ right now. But yet another official publication has demonstrated evidence of a lack thereof. A report from the Public Accounts Committee (PAC) published yesterday, looking into the Government’s £12billion spent on service contracts in 2007/08, and the further £240million spent on managing these contracts, strongly suggests that the process is not nearly as thorough as it should be. Providing service contracts is often necessary for Government and if executed correctly and monitored closely they can provide significant savings for the department, and therefore the taxpayer. Nevertheless, we have seen too often that these projects can become expensive nightmares- the oft cited case of the NHS super computers is a classic example.


The PAC believes that the Government currently places more emphasis on the initial letting of the contract than on managing them thereafter. This is akin to hiring a team of builders to put up a conservatory in the garden and then going on holiday for a fortnight. To achieve true value for money the Government needs to ensure that it liaises with service providers throughout the process and offers incentives to maximise efficiency and value for money. 


Another area of concern is the lack of consistent risk management procedures, designed to limit the impact of delivery difficulties- 56 per cent of contracts did not have a contingency plan in case of supplier failure. This is a seriously disconcerting figure, which shows a real lack of foresight, as strategies for all outcomes should be addressed at the earliest stages.


Also, a huge 30 per cent of the contracts dealing with personal or security information did not have a risk register. One assumes that when such sensitive information is being handled, there should at least be the recognition and identification of potential risks. Such carelessness is reflected in the now numerous incidents of Government data being lost in the post, on trains or from courier’s motorcycles. More stringent approaches to prior planning would at the very least show that the Government is serious about protecting data when distributing service contracts.


Finally, it seems too that service providers are given an easy ride by central Government. The report states that in cases of under-performance, financial penalties are rarely imposed- going on to conclude that this increases the risk that relationships between central Government and suppliers are ‘too cosy’.


The picture painted is one of a process devoid of meticulous preparation, and a quite frankly irresponsible approach to contract management. Add poor planning to the mix and one is left with the impression that central Government seems to simply give the service providers a free hand. A substantive change in attitude is needed, where Government monitors the services being provided to ensure value for money. A more robust approach would see a saving for the department and demonstrate good practice that should be the norm when dealing with taxpayers’ money.

Value for money seems to be ‘en vogue’ right now. But yet another official publication has demonstrated evidence of a lack thereof. A report from the Public Accounts Committee (PAC) published yesterday, looking into the Government’s £12billion spent on service contracts in 2007/08, and the further £240million spent on managing these contracts, strongly suggests that the process is not nearly as thorough as it should be. Providing service contracts is often necessary for Government and if executed correctly and monitored closely they can provide significant savings for the department, and therefore the taxpayer. Nevertheless, we have seen too often that these projects can become expensive nightmares- the oft cited case of the NHS super computers is a classic example.


The PAC believes that the Government currently places more emphasis on the initial letting of the contract than on managing them thereafter. This is akin to hiring a team of builders to put up a conservatory in the garden and then going on holiday for a fortnight. To achieve true value for money the Government needs to ensure that it liaises with service providers throughout the process and offers incentives to maximise efficiency and value for money. 


Another area of concern is the lack of consistent risk management procedures, designed to limit the impact of delivery difficulties- 56 per cent of contracts did not have a contingency plan in case of supplier failure. This is a seriously disconcerting figure, which shows a real lack of foresight, as strategies for all outcomes should be addressed at the earliest stages.


Also, a huge 30 per cent of the contracts dealing with personal or security information did not have a risk register. One assumes that when such sensitive information is being handled, there should at least be the recognition and identification of potential risks. Such carelessness is reflected in the now numerous incidents of Government data being lost in the post, on trains or from courier’s motorcycles. More stringent approaches to prior planning would at the very least show that the Government is serious about protecting data when distributing service contracts.


Finally, it seems too that service providers are given an easy ride by central Government. The report states that in cases of under-performance, financial penalties are rarely imposed- going on to conclude that this increases the risk that relationships between central Government and suppliers are ‘too cosy’.


The picture painted is one of a process devoid of meticulous preparation, and a quite frankly irresponsible approach to contract management. Add poor planning to the mix and one is left with the impression that central Government seems to simply give the service providers a free hand. A substantive change in attitude is needed, where Government monitors the services being provided to ensure value for money. A more robust approach would see a saving for the department and demonstrate good practice that should be the norm when dealing with taxpayers’ money.

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