33. The Government's RAG rating system is not working, either as a carrot, or as a stick. The RAG rating system is a management tool that provides civil servants with a shorthand assessment of a supplier's performance. A decline in a company's RAG status appears to have no material impact, other than to trigger closer scrutiny from the Cabinet Office as set out in the Strategic Supplier Risk Management Policy. (Paragraph 107)
34. We do not accept Cabinet Office's rationale for failing to give Carillion a High-Risk rating. Given the caution with which Government treats risk assessments we believe it is highly improbable that a High Risk rating would become public. The Cabinet Office's decision not to do this undermines its own Strategic Supplier Risk Management policy. (Paragraph 108)
35. Recommendation: We recommend that the Cabinet Office review the Strategic Supplier Management Policy and its application. If RAG ratings are to be of use they need to be applied consistently and based on objective assessment. The Cabinet Office should consider whether it is appropriate that a supplier can appeal against a rating. (Paragraph 109)
36. We consider that the Cabinet Office overstated the potential impact of publishing the past risk assessments relating to the Government's remaining Strategic Suppliers. However, we accept that some material risk of damage exists and particularly to smaller supply chain businesses and their employees, and have therefore decided not to publish the documents in full at this time. (Paragraph 110)
37. Recommendation: The Crown Representative system is at risk of under-resource and high staff turnover. The Cabinet Office should consider how to make the role sufficiently attractive to attract and keep individuals of an appropriate calibre. (Paragraph 112)
38. The circle of civil servants working closely with Strategic Suppliers is small. It is important that in the cut and thrust of commercial discussions, undertaken on behalf of taxpayers, Crown Representatives do not get too close to suppliers. Without effective oversight of these relationships there is a risk that Strategic Suppliers become secretive 'sub departments' of Whitehall. (Paragraph 113)
39. Recommendation: The Government should consider appointing an independent commissioner to provide independent assurance that suppliers are being held to the same standards across government. (Paragraph 114)