There have been a succession of reports over the years which have warned about the failure to allocate appropriately skilled people to the management of service contracts, and the risks involved in moving staff responsible for contract management around too often.77 When the NAO reported on the Home Office and the Ministry of Justice in September 2014, it concluded that, compared with procurement, contract management had carried low status, and there was limited understanding of what best practice involved. Many departments were struggling to recruit and retain experienced contract management staff.78 The former director of commercial and contract management in the Ministry of Justice agreed, acknowledging that, 'while we put an awful lot of effort into procurement, contract management hadn't had the same level of focus and investment'.79
For a long time, contract management was not identified as a distinct capability separate from procurement, a dangerous mindset since it confused two completely different functions.80 That has changed over time, but lately it has been seen as a form of commercial capability.81
The creation of the Government Procurement Service as an agency within the Cabinet Office in 2011, and the intense focus on category management and the standardisation and centralisation of government purchasing, may have weakened the emphasis on contract management at the centre of government. When the NAO reported on the new arrangements in February 2013, there was confusion as to whether the GPS or line departments were responsible.82 The following year, it observed that: 'the Cabinet Office has focused on using government's collective buying power to make savings, rather than improving individual departments' contract management':
Traditionally, the procurement profession has had a low status in the civil service, while contract management has been seen as low status within the procurement profession.83
The fundamental importance of contract management had been rediscovered following the controversy surrounding several high-level contracts in the Ministry of Justice. A cross-government review of 28 major contracts found some examples of good practice in contract management, but 'the Review's overall conclusion is that in the majority of contracts there are weaknesses, some of which are significant, in the way these contracts are managed'. These included:
• A lack of senior level engagement in overseeing ongoing management of 9 of the contracts.
• Excessive numbers of KPIs, and an over-reliance on self-reporting by suppliers in 22 contracts.
• Weak approvals processes for contract changes in 10 of the contracts.
• A material gap between the numbers and capability of staff allocated and the level of knowledge and capacity actually required to manage 17 of the contracts.84
The Ministry of Justice commissioned its own review of contract management across a sample of 15 contracts with a total value of £425 million per annum. This also revealed 'longstanding and significant weaknesses in contract management' within the department.85
The rediscovery of the importance of contract management is welcome, but the focus has been overwhelmingly on the commercial aspects of this function. Government Commercial Operating Standards include a section on contract management, but it is largely concerned with performance reviews and commercial competency.86 When the Public Accounts Committee focused on this question in 2013, the Cabinet Office responded by pointing out that it was:
• keeping a central record of strategic suppliers' performance across government, allowing action to be taken;
• setting and publishing minimum standards for supplier reliability based on past performance;
• requiring bidders to obtain certificates of past performance from both public and private sector clients.87
Based on the comments made by survey participants, it appears that some departments and agencies have interpreted enhanced contract management as requiring an aggressive application of financial abatements whenever suppliers depart from the strict terms of the contract.
The emphasis on the commercial aspects of contract management is long overdue, but there is a great deal more to the successful management of a contract than performance reviews and financial penalties. In particular, such an approach is likely to overlook the challenges involved in ensuring that two autonomous organisations work together, and underestimate the significance of the human relationships in making sure that organisations cooperate to deliver better public services.
In her report for government on 'the public service industry' in 2007, Dr. DeAnne Julius recognised that the appointment of commercial directors in departments and agencies would be insufficient to address ongoing questions of delivery. She recommended the appointment of a 'Director of Service Delivery' in all departments and local authorities with a substantial service delivery function - whether services were delivered through contract or in-house.
Their involvement would extend through the full commissioning cycle - not just the initial procurement - and they would be the high-level client interface when problems with service delivery arose. They would also ensure that their procurement and contract monitoring staff receive adequate training, supported by OGC and DCLG to accelerate 'learning by doing' and sharing of experience.88
This might not have been a practical solution, but she did understand that commercial directors have only a limited contribution to make to the ongoing challenges of service delivery.
The two pages of 'Contract Management Principles' published by the Crown Commercial Service are welcome, but they are no substitute for a deep understanding of how contract management works in practice. Once again, it should be noted there is not a readily-accessible literature which explains how the ongoing delivery of complex public services under contract actually works, and without this, it will be virtually impossible for contract management staff to learn their craft.