2.2 Since the 1990s central government has increasingly sought to involve the private sector in providing public services (Figure 7 on pages 30 and 31). Government:
• launched the private finance initiative (PFI) in 1992;
• started to outsource administration, such as ICT, call centres and pensions administration from the mid 1990s; and
• towards the decade's end, started to contract-out services such as prisons, electronic tagging and medical assessments.
2.3 We reported on these trends in 1999. We said that contract management had become more important as contracts moved from simple fixed-price deals to more complex contracts with performance incentives, requiring tighter performance monitoring.25
2.4 By 2005 there were mature contracts across many parts of government. We started to notice that some teams managed contracts particularly well, but many did not. Our 2006 report on the Ministry of Defence found that it did not share pockets of good practice routinely within the department.26 Our 2007 PFI benchmarking report 27 and 2008 report on changing PFI contracts 28 found few departments used market-testing to give competitive tension to high-value changes to PFI contracts.
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25 Comptroller and Auditor General, Modernising Procurement, Session 1998-99, HC 808, National Audit Office, October 1999.
26 Comptroller and Auditor General, Using the contract to maximise the likelihood of successful project outcomes, Session 2005-06, HC 1047, National Audit Office, June 2006.
27 Comptroller and Auditor General, Benchmarking and market testing the ongoing services component of PFI projects, Session 2006-07, HC 453, National Audit Office, June 2007.
28 Comptroller and Auditor General, Making Changes in Operational PFI Projects, Session 2007-08, HC 205, National Audit Office, January 2008.