Government's commercial capability

Poor management of contracts is a long-standing issue. In our 2008 cross-government report Central government's management of service contracts we said that no commercial director or head of procurement rated the resources allocated to managing major contracts as 'good'. We highlighted poor risk management, inadequate performance measurement and limited use of performance incentives. The 2013 Cross-government Review of Major Contracts, instigated after the Ministry of Justice's discovery of overbilling on its electronic monitoring contracts, revealed continued weaknesses in the way major contracts were managed.

Government is now taking the issue seriously, and reforms since 2013 are going in the right direction. Government's December 2015 update to Parliament on progress with improving commercial capability set out how:

•  Departments are building on their 2014 contract management improvement plans and 2015 commercial capability reviews to produce 'Blueprints' setting out their target commercial capability. These are expected to reflect a government-wide shift of emphasis away from a procurement focus and more towards managing commercial relationships and delivering value for money throughout the life of the contract.

•  The Government Commercial Function in the Cabinet Office will focus on developing the commercial profession through central recruitment of senior specialists, skills assessment and development of existing staff, and a new commercial civil service fast-stream programme.

However, the problems are systemic, deep rooted and cultural, so will take sustained effort to address. There is a particular need for:

•  Reform to departmental governance to ensure contracts are properly overseen;

•  IT and information systems to support end-to-end contracting, including contract records management, performance and management systems, and data on spending;

•  An enhanced and more credible commercial profession, with a clearer role in managing providers, attractive career progression and professional development; and

•  The better integration of commercial specialists with the operational staff responsible for front line oversight of service provision.