Contracting for public services

Government now spends about £240 billion a year with private and voluntary providers. The role of providers in the public sector has evolved from relatively simple contracts to provide goods or established services, to innovative high profile commissioning arrangements in sensitive public service areas such as health and justice.

The NAO and the Public Accounts Committee have both acknowledged improvements in the government's management of contracts in recent years. But there is much more to be done for government contracting to be effective, meet expected public service standards and provide better value for money for the taxpayer.

Areas for further improvement include: greater transparency of suppliers' performance, costs and revenues; more effective competition for government business, both reducing over reliance on a small number of single suppliers and encouraging more small- and medium-sized enterprises into the market; stronger commercial skills within government when purchasing services, managing contracts and dealing with provider failure. Providers also need to demonstrate the standards of integrity expected from those delivering public services.

We see six themes in our work on government commercial and contracting:

Government's
commercial
capability

Managing
contracted-out
service delivery

Accountability
and
transparency

Government
as one customer

Managing
markets for
public services

Using new
commercial
models