MPs table 22 ways to enhance government contracting

MPs on the Public Accounts Committee have tabled 22 recommedations to address "weaknesses" in government contracting, outlining lessons to learn if government it is to outsource effectively for the benefit of service users and taxpayers.

     1. We recommend that the Cabinet Office upgrade its ‘playbook’ and other guidance to the status of mandatory requirements.

2. We recommend that the Cabinet Office develop an approach to examining the market to provide it with better intelligence on the motivations and intentions of companies currently bidding for central government work.

3. There is no excuse for small and medium supplier businesses not being paid on time. We recommend that the Government considers a project bank account approach and reviews the impact on small business. We expect the government’s proposals for supporting SMEs to include measures to address:
   1. Delays in payment
   2. Retention payments
   3. Preferred supplier discounts
   4. Increasing the use of Project Bank Accounts
   5. Reducing the barriers to the direct bidding to Government
   6. Supporting consortia bidding.

4. We recommend that the government consult with SMEs on the most appropriate way to incorporate these measures into contracts.

5. We recommend that government set out how it will improve the reciprocal due diligence between the government and its suppliers. Government has a right to assure itself that a company is competent and capable of delivering the contracted service. The company also has a right to expect the government to specify accurately what service it is contracting.

6. Standard contracts, which are beginning to be used by government, should be used widely. Standard contracts should be designed to make it easier for SMEs to bid and make it clearer where variance occurs.

7. The government must ensure that the procurement process for more complicated projects includes a comprehensive sensitivity analysis and scenario planning.

8. Government should look at the lifetime cost and value of a contract, not just the bottom line at the point the contract is commissioned. Government needs to get better at managing contracts through their life. To do this it needs to facilitate significant uplift in skills.

9. Government should consider using a partnering model, as used in construction to create co-dependent relationships, for major, risky contracts to incentivise suppliers to deliver effectively alongside government, and to ensure government has proper oversight and skin in the game on vital public services.

10. Departments should provide the Cabinet Office with a request to enable extensions for contracts. That request should set out the reasons for requiring the extension, the analysis of the benefits of extending rather than rebidding, and an analysis of the performance over the course of the contract and record of performance across all of the company’s public-sector contracts.

11. We recommend that there be an expectation of including a social value evaluation in government procurements and that contracting bodies provide the Cabinet Office with an explanation if they wish to remove the provisions.

12. Government should, as part of every procurement tender, require plans to add social value and ensure social value is a weighted criterion for contract awards.

13. Government should enshrine winning bidders’ social value commitments into contracts and agree appropriate KPIs for monitoring delivery.

14. We recommend the government include terms in their standard contracts that provide assurance that the company has appropriate corporate governance and corporate social responsibility policies in place.

15. Government needs to step up its skill development within departments so that contracts are specified better from the outset.

16. We concur with their recommendation that the Cabinet Office establish a ‘Contracting Centre of Excellence’ that can collect best practice and learning and disseminate it across the wider public sector including the NHS and local government.

17. Cabinet Office should ensure departments adhere to Cabinet Office guidance and are required to respond to Cabinet Office challenge for large procurements. Where departments want to deviate from Cabinet Office guidance, they should write to Cabinet Office ahead of opening a tender, setting out their justifications for that deviation.

18. We recommend that the Cabinet Office review the Strategic Supplier Management Policy and its application. If RAG ratings are to be of use they need to be applied consistently and based on objective assessment. The Cabinet Office should consider whether it is appropriate that a supplier can appeal against a rating.

19. The Crown Representative system is at risk of under-resource and high staff turnover. The Cabinet Office should consider how to make the role sufficiently attractive to attract and keep individuals of an appropriate calibre.

20. The government should consider appointing an independent commissioner to provide independent assurance that suppliers are being held to the same standards across government

21. In response to this report, we expect the government to provide more detail about how the policy will be implemented; what the documents would contain; and how their contents would be scrutinised, assured and kept up to date.

22. More complex contracts are more likely to go wrong. We would expect the Cabinet Office to consider the burden of creating and maintaining the living wills and balancing that burden with the complexity of the project and the risk and impact of contract failure.