3 Holding contractors to account

20. Increasingly the private sector is delivering public services on behalf of government and direct to the user, notably in areas such as health and justice. These are complex public services serving vulnerable groups and there need to be adequate controls and safeguards in place to protect users. The Committee of Public Accounts has made it very clear over the years that, when a private contractor is spending taxpayers' money and delivering a public service, they should be held to account.49

21. In its February 2015 response to the previous Committee's December 2014 report the Government disagreed with the Committee's recommendation that senior executives in contractors should be formally accountable to Parliament, arguing that Parliament is able to hold Departments to account for service delivery through Accounting Officers and Senior Responsible Owners.50 At our evidence session in February 2016 the Cabinet Office clarified that it had, we assume as opposed to disagreeing in principle, "only disagreed with the legal point of being accountable to Parliament. They cannot be because, as directors of a company, they are legally bound to be accountable to the company in the round-not even to the shareholders. They cannot legally be held accountable anywhere else." We made it clear that we will continue to call private contractors before the Committee when appropriate.51

22. On 11 January 2016 undercover footage from the BBC Panorama documentary showed children at the Medway Secure Training Centre being mistreated by G4S staff and staff being pressured into telling lies in order to avoid fines to G4S. The Ministry of Justice stated that "what went on was totally unacceptable" and explained its first response was to ensure the safety of the children in the centre. It told us that Kent Police and Medway Council's child protection team has launched an investigation, and the Secretary of State has set up an Improvement Board, which is tasked with "improving the oversight, scrutiny and challenge of monitoring arrangements in the centre."52 We questioned why the department's own systems had not brought these problems to light and the Ministry of Justice admitted that it was a troubling question, and that it is indeed conceivable that there might be problems in other contracts which are not being picked up.53 It told us that the Improvement Board is scheduled to complete its work by the end of March 2016.54

23. Reports in the media have alleged that asylum seekers in Middlesbrough have been targeted because their accommodation is identifiable by the doors being painted red.55 The previous Committee raised the issue of the red doors two years ago and the then G4S Care & Justice Services Managing Director said, "I cannot comment on the doors being painted red, but I will take that point away."56 We challenged the Home Office as to why neither the department nor the contractor seemed to have done anything about it. The Home Office acknowledged that concerns about red doors were raised in the Committee, but said concerns (about the doors) were not raised when about half the homes in Middlesbrough were inspected last year. It stated that "We have not had reports there of harassment or antisocial behaviour linked to it.", while accepting the 'basic point' that "we do not want asylum seekers visibly identified."57 When pushed to confirm that there were no definitive, provable cases of intimidation or violence against asylum seekers, as a result of the red doors issue, the Home Office said "Not that I am aware of".58

24. Consequently we questioned the effectiveness of the mechanisms through which vulnerable users, like the children at Medway and asylum seekers, can raise issues of concern. The Home Office did not agree with our view that it was difficult for an asylum seeker to complain, and told us that "They do have the ability. A hotline is provided to them. There are many very capable refugee organisations that monitor their accommodation quite carefully and look after them, and, when accommodation is being inspected, they have the opportunity to raise any concerns that they have. That is the data on which we need to rely."59 The Home Office subsequently provided further information about how asylum seekers can raise complaints with the contractor G4S, with the charity Migrant Help, and directly with local and national Departmental UK Visas and Immigration staff.60

25. The Ministry of Justice told us how the arrangements are supposed to work in children's centres: "..there are two avenues. One is the monitor, who is employed by the Youth Justice Board for the Secretary of State. That person is on site, so it is a direct route to us. The second is that Barnardo's is engaged not just as any NGO but as a service provider who is available physically and on the telephone to children in the centre. It ought to be the case that incidents can be reported and come to our attention very quickly. If it turns out that that was broken, I am extremely concerned and will have to act on it, but that is how it ought to work."61

26. There is not an easy enough route for users to complain directly to the department. Although there are other avenues, the main hotline available to asylum seekers is provided by the contractor G4S. In its April 2014 report on accommodation for asylum seekers the previous Committee expressed concern that the system for asylum seekers to register complaints was not working effectively and the Home Office accepted then that the quality and reliability of management information on complaints was poor."62 The Ministry of Justice also accepts that the situation in Medway was not picked up through its existing routes.63 The Committee recommended in March 2014 that "Departments should include a standard term in contracts requiring suppliers to … nominate designated officials within departments to receive disclosures from whistleblowers." That was after noting that although legislation enables contractors to do this, none did.64 However, the government disagreed, arguing that the existing framework was enough.65

27. The previous Committee recommended in December 2014 that the Cabinet Office should "mandate the inclusion of open book provisions in all government service contracts and set clear expectations for how these provisions should be utilised to manage the contract throughout its life."66 The NAO also published a report in July 2015 which showed that only 31% of government contracts had open book clauses. It also set out the different ways in which open book accounting can be used, including in fixed price contracts.67

28. The Cabinet Office assured us that transparency and open book is a direction government was going in, and that it will publish guidance on the use of open book by the end of February 2016.68 This will not recommend including open book clauses in all contracts but it will set out the conditions under which it should be used, depending on factors such as the level of competition available in the market.69 The Cabinet Office told us that open book contracts are not applicable in all cases but if applied correctly, they will save government money.70 The Ministry of Justice expects 'most' of its contracts will be open book, and that it would go for an open book arrangement wherever it could, but that there will be some contracts where the sector is "unwilling to go into an open book arrangement".71 The Home Office told us that it would expect to use open book for its 'big and complex contracts', where it was confident it would save money.72

29. Internal audit is also an important part of Departments' contract assurance arrangements. We questioned if internal audit arrangements were sufficient given existing procedures failed to uncover the problems at Medway or with asylum accommodation. The Ministry of Justice told us it has conducted 52 desktop qualitative reviews and 10 more in-depth audits of contracts in 2015 and that some of those audits have uncovered issues.73 In contrast, the Home Office told us it carried out two contract audits in 2015, along with audits of the contract letting process (a sample of 23 contracts) and single tender actions (a sample of eight contracts)." The Home Office explained that its internal audit function adopts a risk-based approach on the most critical contracts, part of its three levels of assurance: "first, through the relevant operations line management who report to their Director General; second, through the commercial contract management teams, reporting to the Chief Commercial Officer; and third, through risk-based internal audit, which provides an independent examination of contracts."74

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49 Q 144

50 HM Treasury, Treasury Minutes: Government responses on the Eighteenth, the Twenty First to the Twenty Fourth, and the Thirty Third reports from the Committee of Public Accounts: Session 2014-15, February 2015, Cm 9013, recommendation 7 of Twenty-third Report: Transfoming contract management; Cabinet Office (TCM0003) para 11.1 recommendation 7

51 Qq 144, 145

52 Q 84

53 Q 93

54 Q 119

55 Q 97

56 Q 49 in PAC oral evidence: Asylum Accommodation 5 February 2014, followed by Committee of Public Accounts report COMPASS: Provision of asylum accommodation, Fifty-fourth Report of Session 2013-14, HC 1000, April 2014

57 Qq 99, 110

58 Q 108

59 Q 111