Governance

3.2  The civil service culture needs to change so that senior officials take contract management more seriously. Like most programmes aimed at starting a cultural change, government is starting with its governance structures, roles and responsibilities. Departments need to establish systems of governance and oversight that enable senior officials to manage contracted-out services before problems arise. This includes clear ownership of contracts, processes of issues escalation, and senior challenge and scrutiny of contract management teams and contractors.

3.3  There are 5 levels at which departments need to govern contract management. Individuals' accountabilities and authority to make decisions need to be clear at each level. Departments and the Cabinet Office are improving governance at all 5 levels (Figure 9 overleaf):

•  Day-to-day contract management

Departments are reviewing their contract management processes to improve governance. The Department for Work & Pensions (DWP) commissioned an external review to identify good practice in its contract management and improve consistency. The Ministry of Defence has commissioned reviews of contract management in contracts not covered by the cross-government review.

•  Senior responsible owners

Departments have recognised they must assign every major contract a senior responsible owner (SRO). The Department of Health is reviewing its data to make sure ownership information is up to date. It is also strengthening its guidance for SROs.

•  Escalation routes

There need to be ways of those managing the contract day-to-day to escalate issues to SROs. There has sometimes been too wide a gap between an SRO and the day-to-day manager, meaning that issues are not escalated. The DWP is improving escalation routes by ensuring that all contracts have SROs within the most suitable procurement categories. For example, all facilities management contracts' SROs will report to the head of estates.

•  Strategic oversight

Commercial directors will be made responsible for contract management as well as procurement. Many departments are also strengthening senior groups responsible for strategic oversight. For example, the Ministry of Justice has established a new commercial and contract governance committee, which has a wider remit and greater seniority than its previous procurement board. Departments are also starting forums to share lessons at working-level with other departments that share common contractors and sometimes have shared the results with crown representatives.

•  Dispute resolution and arbitration

The Crown Commercial Service (CCS) complex transactions team has started to provide central support to departments with contractual disputes. The team supports departments, at their request, with contractual disputes and complex contract issues. For instance, it recently supported the DWP to close Atos's medical assessment contract for the Employment Support Allowance.

3.4  Departments are generally taking a risk-based approach to governance and so less attention has been given to smaller, less risky contracts. Departments will need to ensure that improved governance is rolled out to these proportionately.