Cabinet Office must drive improvements in use of open-book accounting, says NAO

Report by the National Audit Office says centre of government must do more to ensure departments make better use of information about outsourced public services, including standardising data and improving Whitehall skills

By Sarah.Aston

01 Jul 2015

The Cabinet Office must do more to improve the way Whitehall collects and interprets information on the success of outsourcing contracts, the public spending watchdog has concluded.
A report by the National Audit Office, published this morning, finds that while some government departments are successfully using open-book accounting -  a process where suppliers share information about profit margins and costs - to understand and evaluate the cost-effectiveness of major contracts, other departments are still uncertain of how and why to use the process.
In March 2015, the Cabinet Office published a paper on the principles of transparency for public contracts, which set out the government’s expectation that all “strategic suppliers” provide it with bi-annual open-book data for contracts over £20m. 

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However, the watchdog says only 31% of existing government contracts “have a clause allowing government to receive open-book data”, while only 23% of organisations “have a policy on when to include open-book accounting in a contract”. 

“Although there is now a greater acceptance that open-book should be used, we often find uncertainty and confusion as to how and for what purpose,” the report says. 
“The Cabinet Office should set up a task force of government, suppliers and other stakeholders to explore how to establish a common standard for open-book data.”
As well as raising concern about the lack of open-book consistency, the report says more must be done to improve civil service capability and officials’ willingness to manage contracts in “greater detail”, and recommends including supply-chain assurance in the Cabinet Office’s commercial skills programme. 
In November 2014, consultancy firm Strada assessed the strength of 20 government teams using open-book accounting on behalf of the Cabinet Office. Of the 20, Strada's report found that 15 teams “felt they did not have the right level of resources or competencies within their teams to use open-book accounting effectively”. 
“Contract management is not a desk job. We are reminded of this in all the best practice and the worst failures we see,” NAO chief Amyas Morse said.
He added: "For government to be accountable for contracted out public services; for it to understand its suppliers; for it to exercise oversight; and for it to promote value for money, it requires its contract managers to take a ‘hands-on’ approach and to go and see for themselves what their suppliers are doing.”
A spokesperson for the Cabinet Office welcomed the watchdog’s findings, saying steps are already being taken to improve Whitehall’s commercial capability.  
She added: “We welcome this report and recognise the value of this data to help secure better value for money for taxpayers, particularly on complex, high value, multi-year service contracts.
"The Cabinet Office is developing open-book guidance to support and share expertise with departments through the Crown Commercial Service."



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