In the report ‘Transforming contract management’, the National Audit Office (NAO) pointed to the power large suppliers have, even when there have been failures: “It was not acceptable for Government to give the impression that all business with Serco and G4S was halted whilst investigations took place, when in fact contracts were extended, new contracts were awarded and negotiations for new business continued.”
The NAO stresses: “Government must guard against suppliers becoming too important to fail, and encourage competition through, for example, disaggregating contracts to encourage SMEs to bid for work.”
The report draws attention to four keys areas of improvement for contract management: more cost-savings through contract management, better ethical standards from contractors, increased usage of smaller suppliers to prevent quasi-monopoly, and improved balance of contractual advantage for government.
Public Accounts Committee chair Margaret Hodge MP supports the NAO’s views on the influence of large suppliers and believes the move to open book accounting help drive improvements: “Departments have taken their eye off the ball and placed too much trust in contractors and relied too much on the information contractors supply. Contracts need to be managed at a sufficiently senior level, with strong accountability in place, by people with the right commercial expertise.
“Government’s current approach to contracting gives too much advantage to contractors. Open book accounting and published contracts should be the norm.”