13 The Government is taking the findings of contracting problems very seriously. Since autumn 2013, accounting officers and senior commercial officials have met regularly to oversee the reviews and the resulting change programmes. The group is known as 'Markets for Government Services (Officials)' (MGS(O)) and is led by the Head of the Civil Service and the Cabinet Secretary. The group is coordinating government's strategic response including market development, contingency plans for supplier failure and transparency (Figure 2). Its focus on contracting provides a window of opportunity to embed a sustainable change in how government manages providers.
Figure 2 The government's response The government, led by the 'Markets for Government Services (Officials)' group has taken the findings very seriously. In response it has: • Secured payments of £179.4 million from G4S and Serco related to overbilling issues. They also demanded that both companies change, and both companies proposed formal processes of 'corporate renewal'. • Undertook a number of reviews across government to test for overbilling and assess the quality of contract management. • Asked all departments to put in place plans to improve their contract management. These change programmes are currently underway. • Launched commercial capability reviews to test how far departments have embedded changes. • Increased its focus on some of the underlying issues, by: • Examining how government can maintain and further develop competitive markets for government services, to encourage new entrants through both overall market design and specific procurement competitions. • Starting to work with independent groups such as the CBI to review the transparency around procurement competitions, ongoing contract performance and the use of open book. • Starting to test departments' contingency planning so government is better-placed to deal with supplier failure. • Improving data on government's strategic suppliers and managing its relationships more strategically as a single customer through the use of crown representatives. • Further reforming the public procurement process to speed up procurement and make procurement more accessible to SMEs. • Improving government's overall commercial capability through the establishment of the crown commercial service and initiatives to improve commercial recruitment, training and development. Source: Interviews with officials and review of MGS(O) papers |
14 Departments have launched significant change programmes to improve how they manage contracts. The Cabinet Office asked all departments to put in place plans to improve their contract management by February 2014. All accepted the need to improve. Our accompanying report looks in detail at the changes under way in the Ministry of Justice and the Home Office. Together with the Department for Work & Pensions and the Ministry of Defence, they are the most advanced in their change programmes. The Cabinet Office and HM Treasury are undertaking commercial capability reviews on departments to test how far departments have embedded these changes.
15 The Cabinet Office is also trying to improve its management of common goods and services. The CCS was launched on 1 April 2014. Departmental commercial staff and responsibility for procuring certain categories of goods and services have already started to move across to the new service. Concentrating commercial expertise in a single organisation is likely to help with general capability constraints. However, moving staff to CCS may make departmental reform more complicated in the short term. Furthermore, the CCS is still developing its own capability, with recent changes to its senior management and governance, and new systems and procedures being introduced to manage contracts.