Procurement and contract management generate intelligence on suppliers and contractors. Maximising that knowledge would help to:
According to the Commons Public Administration Committee, the evidence behind decisions about services and whether to use the private sector was “thin or non-existent”.[1] Carillion’s implosion showed the scale of exposure to contractual risk. Clients were simply unaware of its financial liabilities across government or its commercial exposure in the UK and abroad. Nor did councils and departments log their dealings with the firm. The Cabinet Office started registering their vulnerability after Carillion gave cause for concern, but even then did not grasp the extent of the company’s reach into local government, the NHS, the Highways Agency and other bodies. The Cabinet Office even had to ask Carillion itself for details. [2] Without the necessary data, there was no way of assessing how dependent public bodies were on this one company – or to anticipate the costs of its demise. Research by Unite suggests this could eventually total more than £150m, including redundancy of £65m and lawyers’ and liquidation fees of £70m. [3]
Similarly, in residential care, it was only after Southern Cross collapsed that its market dominance was disclosed, along with the numbers of vulnerable people who were put in jeopardy as local authorities faced major operational and financial difficulties. Councils did not register their dealings with the firm: neither the Department of Health, the Local Government Association (LGA) nor the Care Quality Commission (CQC) maintained a database.
Probation, primary care support and refugee housing show other recent examples of contract failure. Each has specific features, but their commonalities are characterised by “the failure to deliver on promised savings and revenue, underperformance against contract requirements and ineffective risk transfer”. [4] Repetitions only become visible when contract data is widely available – and visible across all sectors.
[1] PACAC (2018). “ After Carillion: public sector outsourcing and contracting ”
[3] Unite, 2018. “ Carillion Redundancy Payments Will Cost Taxpayer Millions ”
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