10. The Cabinet Office described a history of deskilling in the civil service, which it believed was a major factor in government's weak contract management.[15] The Ministry of Justice acknowledged it had reduced staff numbers involved in contract management.[16] The Cabinet Office told us how it thought government had too few experienced staff working on contract management and too many at junior levels. They believe this capability is too often focused on the procurement phase than on the management of operational contracts.[17] The NAO report also highlighted the low status of the commercial profession in government and its vulnerability to under-investment.[18]
11. We asked the Confederation of British Industry about the apparent asymmetry between the client (government) and contractor, whereby the client does not have comparable knowledge and expertise to deal effectively with contractors on large complex projects. The CBI argued that it is difficult for a government client to have every skill in-house, but that support should be available from other departments or third party advisors. The CBI went on to say "You have to ask yourselves, if you are going to commission large, complex contracts as part of Government, you need to have the people who can do that and who are paid the right amount of money to do that for you."[19]
12. There are signs that government is beginning to take skills development seriously. We heard about the growing involvement of external crown representatives, who the Cabinet Office told us are bringing private sector commercial experience from which civil service staff can benefit. However at present the Government is too often relying on internal staff from the Civil Service to fulfil the role of external crown representatives. The Cabinet Office also highlighted government's 'commissioning academies', which are providing six days of training for cohorts of civil service staff, and a new commercial fast stream programme to provide graduate careers focussed on commercial activity. But numbers are limited in the context of the step change required.[20] We welcome the focus on improving skills in the civil service but fear that the current efforts are not on a scale to address the seriousness of the capability gap. The Comptroller and Auditor General, while recognising the steps being taken to develop skills in government, cautioned against any over-optimistic suggestions that government would ever be able to match and maintain the level of skills and expertise available to the private sector; making the point that this made it all the more important to tilt the balance of contractual relationships back towards the government and taxpayers' interests. [21]
13. The Ministry of Justice and the Home Office both told us about the difficulties they had had recruiting and retaining commercial experts.[22] The NAO reported it was doubtful that the capability gap compared to the private sector could ever be closed completely, given the differences in pay and incentives between public and private sector commercial staff.[23] The Cabinet Office agreed that remuneration incentives are not currently sufficient to attract and motivate the best experienced commercial staff.[24] The Ministry of Justice drew a contrast with quite different organisational structures in the private sector, with higher rates of pay for extremely scarce expertise and lower rates of pay for people doing more basic jobs.[25]
14. The Cabinet Office described to us how it believes the civil service needs to change in order to tackle the cultural issues and barriers that have led to the capability gap compared to the private sector. The Cabinet Office told us that it did not think government needed to pay staff a lot more, but also said that the civil service should not be frightened of performance payments as part of remuneration packages. It also said that the civil service does not do enough to reward good people in terms of career progression to more senior and influential commercial roles, or to remove people who are not performing.[26] Neither Accounting Officer from the Home Office or the Ministry of Justice was able to convince us that they had significant direct contract management experience themselves, but they reported encouraging signs that permanent secretaries in future would increasingly have operational and commercial experience. [27]
15. Recommendation: We welcome progress to improve the government's commercial and contract management skills, but this needs to be supported by concerted Cabinet Office action in two areas: to increase the attractiveness of careers in commercial disciplines including pay, status and career development; and do more to raise the commercial awareness of operational managers so they can work with the commercial professionals to achieve value for money throughout the life of contracts.
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15 BQ 54, BQ 95
16 AQ 143
17 BQ 71, 95
18 C&AG's report, Transforming government's contract management, Paragraph 12
19 BQ 24-27
20 BQ 58, 59, 66-71
21 BQ 122
22 AQ 163
23 C&AG's report, Transforming government's contract management, Paragraphs 12, 2.21
24 BQ 57
25 AQ 168
26 BQ 57
27 AQq 111-115, 216