32. In 2010, when Francis Maude began to reform government contracting, he found that he was unable to find a record of what contracts were provided by each of the Government's suppliers, and he had to go to the companies themselves to find out the level of involvement government had with each company. There has been an improvement in the quality and extent of the data held by Government, but it is still not good enough.41
33. The Government appears to have limited understanding of how some of these markets operate, and the role that it plays in sustaining the market.42 There is a balance to be struck between tough negotiations and maintaining relationships with suppliers in the longer term. Unless the risks are understood and mitigated, there can be implications for competitiveness in certain markets because of suppliers exiting areas of public sector business, or new entrants being deterred.43
34. The Government should be more confident and assertive in forming the market. The approach will vary in different sectors but the Government's aim should be to have smaller and less concentrated risks.44
35. The Government has created a merry-go-round procurement culture that encouraged a small number of companies to bid for contracts that they knew they would be unable to deliver for the agreed price.
36. The Government's procurement process incentivised both Government and companies to focus more on the process of tendering and winning bids than on ensuring the right supplier could provide the right service at the right price.
37. The Government has failed to use its unique position in the market to encourage competition in the market; and appears to have no plan or targets for the development of the markets in which it operates; nor does it have the underlying data necessary to develop such a plan.
38. The Government is a uniquely powerful player in these markets but has failed to understand or manage the market. Public sector contracts cover a wide range of activities and are provided by a wide range of companies. Government has little understanding about how it influences the market and displays little strategic thinking into how it could, or should, be examining or influencing those markets.
39. Recommendation: We recommend that the Cabinet Office develop an approach to examining the market to provide it with better intelligence on the motivations and intentions of companies currently bidding for central government work.
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41 Q 679; see National Audit Office, Memorandum for Parliament: The role of major contractors in the delivery of public services, Session 2013-14, HC 810, 12 November 2013
42 See Report by the Comptroller and Auditor General, Reform of the rail franchising programme, Session 2015-16, HC 604, 24 November 2015; Cabinet Office, Chancellor of the Duchy of Lancaster speech to Reform, 25 June 2018, accessed 12 July 2018; Q 680
43 National Audit Office, Memorandum to Parliament: Managing government suppliers, Session 2013-14, HC 811, 12 November 2013
44 Oral evidence taken before the Liaison Committee on 7 February 2018, HC (2017-19) 770, Q26