1 NAO, 'Commercial and Contract Management: Insights and Emerging Best Practice', November 2016, p.3. This is not entirely apples-for-apples since the £242 billion includes goods and construction, but services dominate, and particularly ICT, facilities management and professional services.
2 Ibid.
3 Alan Travis, 'G4S agrees to repay £109m for overcharging on tagging contracts', The Guardian, 12 March 2014.
4 Based on the average of the annual returns for the past five years, adjusted in several cases by information provided to the author by senior executives.
5 Isabelle Fraser, 'Serco chief cites his grandfather Churchill in plea for better prisons', The Daily Telegraph, 9 November 2016, p.8.
6 Crown Commercial Service, 'Mystery Shopper Progress Report 2015-2016', https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/553294/Mystery_Shopper_Progress_Report_2015_2016.pdf. Given how much government spends on procurement, the 233 complaints a year, even at the peak, reflect an insignificant level of engagement with the service.
7 United Kingdom Homecare Association, 'Evidence Submitted by UKHCA for the Community and Local Government Committee's Adult Social Care Inquiry', 22 August 2016, p.6
8 Care Quality Commission, 'The State of Health Care and Adult Social Care in England, 2015/16', HC706, 12 October 2016, p.43.
9 Rosemary Bennett, 'Crisis-hit care firms pay millions to owners', Times, 5 December 2016; Rachel Sylvester and Alice Thomson, 'Thousands of care workers earning less than the minimum wage', The Times, 13 December 2016.
10 Robert Lea, 'Mitie taken to the cleaners after homecare fiasco', Times, 22 November 2016.
11 NAO, 'Contracted-Out Health and Disability Assessments', HC609 Session 2015-16, 8 January 2016, pp.9, 10 & 38.
12 Alex Ralph, 'Cutbacks put G4S on more secure footing', Times, 9 March 2017.
13 Robin G. Milne, Graeme Roy and Luis Angeles, 'Competition, Quality and Price: Evidence from Compulsory Competitive Tendering in Local Government in Great Britain, 1987-2000', Fiscal Studies, (2012) 33:4, pp.513-546.
14 Robin G. Milne, 'Contractors' Experience of Compulsory Competitive Tendering: A Case Study of Contract Cleaners in the NHS', Public Administration, (1993) 71, pp.301-321 at p.320.
15 Sir Michael Latham, 'Constructing the Team', Final Report of the Government/Industry Review of the Procurement and Contractual Arrangements in the UK Construction Industry', HMSO, July 1994, p.58.
16 Peter Gershon, 'Review of Civil Procurement in Central Government', April 1999, Section F.
17 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003, p.12.
18 Crown Commercial Service, 'Procurement Policy Note - Procuring Grown Balance Scorecard', Action Note PPN 09/16, 14 October 2016.
19 NAO, 'Home Office and NHS England: Yarl's Wood Immigration Removal Centre', HC508 Session 2016-17, 7 July 2016, pp.18-20.
20 David Williams, '700 Jobs at Risk as NHS England Signs £330m Capital Deal, Health Service Journal, 11 August 2015.
21 Rebecca Thomas, 'Minister: Capita 'Inadequately' Prepared for Primary Care Contract', Health Service Journal, 9 November 2016.
22 E.C. Cappen, R.V. Clapp and W.M. Campbell, 'Competitive Bidding in High-Risk Situations', Journal of Petroleum Technology, (1971) 23, pp.641-653.
23 This term comes from game theory and refers to the challenge of cooperation between independent parties under particular conditions.
24 See for example, Danny Ertel, 'Getting Past Yes: Negotiating as if Implementation Mattered', Harvard Business Review, November 2004, pp.60-68.
25 NAO, 'Contracted-Out Health and Disability Assessments', HC609 Session 2015-16, 8 January 2016, p.39.
26 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003, p.16.
27 Crown Commercial Service, 'Procurement Policy Note - Onerous Practices in Procurement and Contracting', Action Note PPN 10/16, December 2016. The NAO has also referred to this problem without acknowledging its extent - NAO, 'Contracted-Out Health and Disability Assessments', HC609 Session 2015-16, 8 January 2016, p.8.
28 Government Commercial Function, 'Government Commercial Operating Standards', Iteration ii, October 2016, p.9.
29 Ministry of Defence, 'Limiting a Contractor's Liability and Indemnities', August 2015, paras.4 & 5.
30 Ibid., para.19.
31 House of Commons Defence Committee, 'Defence Acquisition', HC9, 5 February 2013, p.5.
32 Stewart Macaulay, 'Non-Contractual Relationships in Business: A Preliminary Study', American Sociological Review, (1963) 28:1, pp.1-19, at pp.7 & 9. Macaulay's analysis is much more complex than these brief passages might suggest. For a recent study of relational contracting in the private sector, see Monika Maria Möhring and John Finch, 'Contracts, Relationships and Innovation in Business-to-Business Exchanges', Journal of Business & Industrial Marketing, (2015) 30:3/4, pp.405-413.
33 Anna A. Amirkhanyan, 'Collaborative Performance Management: Examining and Explaining the Prevalence of Collaboration in State and Local Government Contracts', Journal of Public Administration Research and Theory, (2008) Vol.19, pp.523-554; New Zealand Treasury, 'Contracting for Social Services', Wellington, c.2012; Meeyoung Lamothe & Scott Lamothe, 'What Determines the Formal Versus Relational Nature of Local Government Contracting?', Urban Affairs Review, (2012) Vol.48, No.3, pp.322-353; Alison Porter et al, 'Commissioning Healthcare for People with Long Term Conditions: The Persistence of Relational Contracting in England's NHS Quasi-Market', BMC Health Services Research, (2013) Vol.13 (Supplement 1): 52.
34 Clayton M. Christiansen, The Innovator's Prescription: A Disruptive Solution for Health Care, New York: McGraw Hill, 2009, p.xxiv.
35 Ibid., p.xxv.
36 'Chairman's Overview', 'Government Procurement Service: Annual Report and Accounts, 2011/12', HC417, London: The Stationery Office, 9 July 2012, p.6.
37 See Werner Troesken, Why Regulate Utilities? The New Institutional Economics and the Chicago Gas Industry, 1849-1924, Ann Arbor: University of Michigan Press, 1996.
38 For a recent example, see House of Commons International Development Committee, 'Conduct of Adam Smith International', HC939, Seventh Special Report of Session 2016-17, 12 February 2017; Tracy McVeigh, 'Overseas Aid under New Pressure as MPs Freeze Contracts', The Guardian, 12 February 2017.
39 Gill Plimmer, 'Fast Expansion is Big Source of Contractors' Woes', Financial Times, 23 March 2017.
40 See Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405. But see also Australian Competition and Consumer Commission v Woolworths Ltd [2016] FCA 1472, where the court ruled that demanding payments from suppliers to close the financial gap at year-end was not unconscionable conduct, although the circumstances were different from those in ACCC v Coles and the decision seems to have been influenced in large part by the way in which the ACCC conducted the case.
41 Lisa Zipparo and Stephanie Cooke, 'Private Contractors' Perceptions of Working for the NSW Public Sector', Sydney: Independent Commission Against Corruption, January 1999, p.3.
42 'The Hidden Threat to E-Government - Avoid Large Government IT Failures', OECD Public Management Policy Brief No.8, March 2001; House of Commons Defence Committee, 'Defence Acquisition', HC9, 5 February 2013, p.24.
43 M.S. Bentham, Suggestions for the Better Management of the Civil Concerns of the Navy, Taken from the Papers of the Late Brigadier-General Sir Samuel Bentham, K.S.G., London: Longman, Brown, Green and Longmans, 1850, p.89.
44 Sir Michael Latham, 'Constructing the Team', Final Report of the Government/Industry Review of the Procurement and Contractual Arrangements in the UK Construction Industry', HMSO, July 1994, p.59; Sir Peter Levene, 'Construction Procurement by Government', 1995.
45 Prisons and Probation Ombudsman for England and Wales, 'Report of the Inquiry into the Disturbance and Fire at Yarl's Wood Removal Centre', October 2004, p.135.
46 See, for example, NAO, 'Individual Learning Accounts', HC1235 Session 2001-2002, 25 October 2002, pp.22-23; NAO, Home Office: E-borders and Successor Programmes', HC608 Session 2015-16, 7 December 2015, pp.33-42; NAO, 'Contracted-Out Health and Disability Assessments', HC609 Session 2015-16, 8 January 2016, p.35.
47 Richard Bacon and Christopher Hope, Conundrum, Biteback Publishing, 2013, Chapter 11.
48 ANAO, 'Offshore Processing Centres in Nauru and Papua New-Guinea: Procurement of Garrison Support and Welfare Services', Report No.16, 2016-17, Commonwealth of Australia, 2016, pp.39 & 43.
49 NAO, 'Contracted-Out Health and Disability Assessments', HC609 Session 2015-16, 8 January 2016, p.38.
50 NAO, 'Home Office and NHS England: Yarl's Wood Immigration Removal Centre', HC508 Session 2016-17, 7 July 2016, pp.18-20.
51 NAO, 'Ministry of Defence: Military Flying Training', HC81 Session 2015-16, 12 June 2015, pp.10, 42-43.
52 NAO, 'Home Office: E-Borders and Successor Programmes', HC608 Session 2015-16, 7 December 2015, p.28.
53 Ibid, p.31.
54 NAO, 'UK Trade and Investment: Investigation into the UKTI Specialist Services Contract with PA Consulting', HC20 Session 2016-17, 10 June 2016, p.24.
55 Nicholas Timmins, 'Universal Credit: From Disaster to Recovery?', London: Institute for Government, 2016, p.39.
56 Emma Reddington, 'Good People, Good Systems', London: Serco Institute, 2004.
57 Conversation between Steve Robson and the author, May 1995.
58 NAO, 'Department of Health: Investigation into the Collapse of the UnitingCare Partnership Contract in Cambridgeshire and Peterborough', HC512 Session 2016-17, 14 July 2016.
59 NAO, 'PFI: The STEPS Deal', HC530 2003-04, 7 May 2004, p28. See also NAO, 'Ministry of Defence: Using the Contract to Maximise the Likelihood of Successful Project Outcomes', HC1047 Session 2005-2006, 7 June 2006, p.10.
60 Nicholas Timmins, 'Universal Credit: From Disaster to Recovery?', London: Institute for Government, 2016, p.34.
61 NAO, 'Allocation and Management of Risk in Ministry of Defence PFI Projects', HC343 Session 2007-08, 30 October 2008, p.9; NAO, 'Department for Work & Pensions: Welfare Reform: Lessons Learned', HC77 Session 2015-16, 29 May 2015, p.20; NAO, Home Office: E-borders and Successor Programmes', HC608 Session 2015-16, 7 December 2015, pp.34 & 39-40.
62 Tom Gash, 'Building Government's Commercial Capability', London: Institute for Government, February 2017, p.4.
63 Peter Gershon, 'Review of Civil Procurement in Central Government', April 1999, Section E.
64 Public Accounts Committee, 'Improving Departments' Capability to Procure Cost-Effectively', HC541 Session 2003-04, 14 October 2004, p.14.
65 NAO, 'Cabinet Office: Improving Government Procurement', HC996 Session 2012-13, 27 February 2013, pp.33-34.
66 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003, pp.6 & 17.
67 Tom Gash, 'Building Government's Commercial Capability', London: Institute for Government, February 2017, p.4.
68 Sir Ian Byatt, 'Delivering Better Services for Citizens'" A Review of Local Government Procurement in England', DTLR & Local Government Association, June 2001, p.5.
69 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003, pp.3-4.
70 HMT, 'Transforming Government Procurement', January 2007, p.16.
71 HM Government, 'Cross Government Review of Major Contracts', Autumn 2013, p.14.
72 NAO, 'Improving Procurement', HC361-I Session 2003-2004, 12 March 2004, pp.8, 12 & 47. See also Public Accounts Committee, 'Improving Departments' Capability to Procure Cost-Effectively', HC541 Session 2003-04, 14 October 2004, p.5. See also HMT, 'Transforming Government Procurement', January 2007, pp.15-16.
73 Peter Gershon, 'Review of Civil Procurement in Central Government', April 1999, Section E.
74 House of Commons Public Accounts Committee, 'Cabinet Office: Improving Government Procurement and the Impact of Government's ICT Savings Initiatives', HC137, 6th Report of Session 2013-14, 20 September 2013, p.11.
75 NAO, 'Improving Procurement', HC361-I Session 2003-2004, 12 March 2004, p.33.
76 NAO, 'Cabinet Office: Improving Government Procurement', HC996 Session 2012-13, 27 February 2013, p.42.
77 For the NAO's own list, see NAO, 'Commercial Skills for Complex Government Projects', HC962 Session 2008-09, 6 November 2009, Appendix 2, pp.1-2.
78 NAO, 'Home Office and Ministry of Justice: Transforming Contract Management', HC268 Session 2014-15, 4 September 2014, p.18.
79 Interview with Vincent Godfrey, Civil Service World, 6 February 2015.
80 Public Accounts Committee, 'Improving Departments' Capability to Procure Cost-Effectively', HC541 Session 2003-04, 14 October 2004, p.10; OGC, 'Procurement Capability Review Programme. Tranche One Report', pp.11-12.
81 OGC, 'Procurement Capability Review Programme. Tranche One Report', 2007, pp.11-12; NAO, 'Commercial Skills for Complex Government Projects', HC962 Session 2009-09, 6 November 2009, Appendix Two, p.1.
82 NAO, 'Cabinet Office: Improving Government Procurement', HC996 Session 2012-13, 27 February 2013, pp.29-30.
83 NAO, 'Transforming Government's Contract Management', HC269 Session 2015-15, 4 September 2014, pp.9 & 10.
84 HM Government, 'Cross Government Review of Major Contracts', Autumn 2013, p.7.
85 Ministry of Justice, 'Contract Management Review: Findings and Recommendations Report', December 2013.
86 Government Commercial Function, 'Government Commercial Operating Standards', Iteration ii, October 2016, p.11.
87 House of Commons Public Accounts Committee, 'Cabinet Office: Improving Government Procurement and the Impact of Government's ICT Savings Initiatives', HC137, 6th Report of Session 2013-14, 20 September 2013, p.9.
88 DeAnne Julius, 'Understanding the Public Service Industry', Department for Business, Enterprise and Regulatory Reform, July 2008, p.iv.
89 Francis Maude, 'Speech at the Commissioning Academy Launch', 31 January 2013.
90 NSW Treasury, 'NSW Government Commissioning and Contestability Policy: Policy & Guidelines Paper', TPP 16-05, November 2016, p.3.
91 Sir Ian Byatt, 'Delivering Better Services for Citizens'" A Review of Local Government Procurement in England', DTLR & Local Government Association, June 2001, p.6.
92 Public Accounts Committee, 'Improving Departments' Capability to Procure Cost-Effectively', HC541 Session 2003-04, 14 October 2004, p.32.
93 Sir Peter Gershon, 'Releasing Resources to the Front Line', Independent Review of Public Sector Efficiency, July 2004, p.26.
94 See, for example, PricewaterhouseCoopers, 'Children's Homes and Fostering', Department for Education & Skills, 2006; PricewaterhouseCoopers, 'The Childcare Market', Department for Education & Skills, 2006; PricewaterhouseCoopers, 'Market for Disabled Children's Services - A Review', Department for Children, Schools & Families, 2006; OGC, 'Improving Competition and Capacity Planning in the Municipal Waste Market', OGC Kelly Report to the Financial Secretary to the Treasury, May 2006; Deloitte, Construction Demand/Capacity Study', Office of Government Commerce, June 2006.
95 Kate Blatchford & Tom Gash, 'Testing New Commissioning Models: A Guide to Help Policy Makers Learn about Publicly Funded Markets', London: Institute for Government, 2012; Tom Gash & Theo Roos, 'Choice and Competition in Public Services: Learning from History', London: Institute for Government, 2012; Michael Hallsworth, 'System Stewardship: The Future of Policy Making?', London: Institute for Government, 2012.
96 CordisBright, Assessing Social Care Market and Provider Sustainability. Part A: A Guide for Local Authorities', produced for the Department of Health, the Local Government Association, and the Association of Directors of Adult Social Services, June 2015; Institute of Public Care, 'Market Shaping Toolkit', produced for the Department of Health, the Local Government Association, the Association of Directors of Adult Social Services and the Care Provider Alliance, June 2015; Improving Social Care in Wales, 'Developing a Market Position Statement: A Commissioner's Toolkit', March 2014.
97 Oliver Hart, 'Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships', The Economic Journal, (2003) 113, pp.C69-C76.
98 See for example, Richard Harding, 'Private Prisons', Crime and Justice, (2001) 28, pp.265-346 at pp.332-333; J.G. Rynne, 'The Regime Impacts of Privatisation on Prison Quality in Queensland, 1989-2000', unpublished doctoral thesis, Griffith University, 2004; Gary L. Sturgess, 'Competition: A Catalyst for Change in the Prison Service', London: Confederation of British Industry, July 2003.
99 See, for example, Trevor L. Brown, Matthew Potoski and David M. Van Slyke, Complex Contracting: Government Purchasing in the Wake of the US Coast Guard's Deepwater Program, Cambridge University Press, 2013.
100 Deloitte Haskin & Sells, 'Report on the Practicality of Private Sector Involvement in the Remand System for the Home Office', February 1989, pp.7, 33
101 John Louth and Trevor Taylor, 'Beyond the While Force: The Concept of the Defence Extended Enterprise and its Implications for the Ministry of Defence', London: Royal United Services Institute, 2015, pp.1-2.
102 Gary L. Sturgess, George Argyrous and Sara Rahman, 'Commissioning Human Services: Lessons from Australian Convict Contracting', Australian Journal of Public Administration, forthcoming, available at http://onlinelibrary.wiley.com/doi/10.1111/1467-8500.12234/pdf
103 Bruno S. Frey and Felix Oberholzer-Gee, 'The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out', The American Economic Review, (1997) 87:4, pp.746-755; Iris Bohnet, Bruno S. Frey and Steffen Huck, 'More Order with Less Law: On Contract Enforcement, Trust, and Crowding', American Political Science Review, (2001) 95:1, pp.131-144.
104 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003, p.18.
105 Sir Ian Byatt, 'Delivering Better Services for Citizens'" A Review of Local Government Procurement in England', DTLR & Local Government Association, June 2001, p.6.
106 Susan Helper and Rebecca Henderson, 'Management Practices, Relational Contracts and the Decline of General Motors', Harvard Business School, Working Paper 14-062, 28 January 2014, p.19.
107 Public Accounts Committee, 'Improving Departments' Capability to Procure Cost-Effectively', HC 541, 14 October 2004, p.7.
108 Kate Jenkins, Karen Caines and Andrew Jackson, 'Improving Management in Government: The Next Steps', Efficiency Unit Report to the Prime Minister, London: HMSO, 1987.
109 Nehal Panchamia and Peter Thomas, 'The Next Steps Initiative', London: Institute for Government, 2014, pp.8 & 11.
110 David Mortimer, 'Going to the Next Level: The Report of the Defence Procurement and Sustainment Review', Commonwealth of Australia, 2008, pp.58-62.
111 Bernard Gray, 'Review of Acquisition for the Secretary of State for Defence', October 2009., especially Section 9.
112 Lord Levene of Portsoken, 'Defence Reform: An Independent Report into the Structure and Management of the Ministry of Defence', June 2011, p.51.
113 R.B. Ekelund, Jr., 'Jules Dupuit and the Early Theory of Marginal Cost Pricing', Journal of Political Economy, (1968) 76:3, pp.462-471. While Dupuit is usually given personal credit for these innovations, it is evident that he was drawing on the work of others - Theodore M. Porter, Trust in Numbers: The Pursuit of Objectivity and Science in Public Life, Princeton University Press, 1995, p.58.
114 See, for example, Alvin E. Roth, Who Gets What and Why: The New Economics of Matchmaking and Market Design, New York: Houghton Mifflin Harcourt, 2015.
115 Office of Government Commerce, 'Increasing Competition and Improving Long-Term Capacity Planning in the Government Marketplace', OGC Report to the Chancellor of the Exchequer, December 2003.
116 DeAnne Julius, 'Understanding the Public Service Industry', Department for Business, Enterprise and Regulatory Reform, July 2008.
117 Oxford Economics, 'The UK Market for Business Services', London: BSA, January 2015.
118 Andy Cowper, 'It's Time to Pay Them Some Attention', HSJ/Serco Inquiry on Maximising the Contribution of NHS Non-Clinical Staff, Final Report, November 2016.
119 Simon Domberger, Paul H. Jensen and Robin E. Stonecash, 'Examining the Magnitude and Sources of Cost Savings Associated with Outsourcing', Public Performance & Management Review, (2002) 26:2, pp.148-168.