Case studies

We have seen many cases of ineffective performance measures. Our 2014 report on the Work Programme found that flawed measures meant the Department for Work & Pensions had to make incentive payments to even the worst performing suppliers. We recommended that it should review whether different groups need different minimum service standards; monitor minimum service standards by group; and gather other standard measures of services. Also, our work on contracted-out health and disability assessments (2016) and on transforming rehabilitation (2016) highlighted the challenges in developing service level agreements that measure quality and the need to understand the trade-offs between quality and other factors when setting the service level agreements. It is important for the Department to gain good information to be able to manage performance, incentivise providers and identify emerging risks.

Changes to performance measures during a contract have been rare but we have seen good practice:

•  The Ministry of Defence told us that it considers reviewing key performance indicators for each contract every year. As part of this exercise, it reduced 140 key performance indicators to eight on a facilities management contract after considering whether the benefits of this change outweighed the costs and risks of the process. The Department told us that it is also looking to renegotiate a current estates management contract because the effort of measuring performance outweighs the benefit it gets from measurement.

•  On the Work Programme (2014 report), the Department for Work & Pensions changed the way that it approached performance measurement two years into the scheme in response to the difficulty of monitoring and enforcing minimum service standards. It was able to get a better oversight of performance and provide better incentives to suppliers as a result.

•  We found the Home Office's contract for Yarl's Wood immigration removal centre (2016 report) distracted the teams from what mattered - the Department is now reducing the number of key performance indicators from 120 to around 30.