It is also difficult to comprehend how, after all these years, government agencies and private providers can sign a legally-binding contract when they have not reached agreement on the task which the provider will be required to perform. This is such a fundamental failing that it's recurrence should cause government to undertake a comprehensive overhaul of all its procurement arrangements.
In its 2015 and 2016 reviews of health and disability assessments, the NAO reported that there had been insufficient challenge of targets and assumptions before the contract was signed. It was recommended in the first report that 'the Department model and test assumptions and encourage challenge from providers', and while there was some improvement over the subsequent year, the NAO found that:
. . . in more recent contracts the Department has continued to develop targets and assumptions without sufficient evidence. Getting such assumptions right is crucial for bidders to determine whether the Department's requirements are deliverable and at what price.
Examples of such behaviour included: setting high volume targets without fully considering feasibility; rejecting provider concerns; failing to share evidence about operational assumptions; and failing to inform providers about wider policies affecting the contract.49
In letting the recent contract for healthcare services at Yarl's Wood Immigration Removal Centre, the NHS declined to use a recent health needs assessment as the basis for the service specifications, due to time pressures. The NAO commented: 'It published the invitation to tender with the intention to review the service specification following contract award.'50
With a contract for core military flying training, the NAO found:
. . . when the Department contracted for an external provider it had no robust baseline for actual training time and cost, or aircrew ability at each stage of training from selection to combat ready. This lack of robust data limits the ability of the Department to understand performance or set Ascent meaningful performance targets.51
With e-borders, the Home Office and the contractor failed to grasp the scale and the complexity of the task. To a significant extent, this related to the number of stakeholders that would be involved in developing a solution:
. . . it does not appear that they [departmental officials] had fully appreciated the multiple challenges and risks inherent in such a broad programme spanning different travel industries and with so many diverse carriers and government bodies with varied systems.52
There were legal constraints on the collection of data, which the Department failed to properly evaluate. So, when the contract was signed in late 2007, 'the business case still included no specific acknowledgement of these legal constraints'. Specialist external advice was first commissioned on this question in 2010, as the contract was being terminated.53
When a UKTI contract for specialist services was signed in 2014, they had still not finalised key elements of the contract, such as the volume of work, the staff mix, specialist day rates and fixed price elements.54 Nick Timmins observed similar behaviour in the contracts for the delivery of Universal Credit.55
These examples have been drawn from reports published over the past 18 months, and there are many more. This goes to the very heart of the contracting system. Customers and suppliers are signing contracts worth hundreds of millions of pounds without having agreed on the nature of the task and the associated risks. It would be risky behaviour even under a system of relational contracting; given the aggressively commercial environment which has developed in the UK over the past five or six years, it is reckless in the extreme.