By Jo Best, 28 April 2009 16:16
NEWS
Public sector suppliers are not being penalised when they fail to deliver, according to the government's spending watchdog.
According to a report published today by the Public Accounts Committee (PAC), dealings between government and the vendors who provide the public sector's IT, facilities management and BPO services are far too comfortable.
"The failure to enforce financial penalties whenever suppliers under-perform increases the risk that relationships between central government and suppliers are too cosy. Central government organisations should apply financial penalties when contracts entitle them to do so unless there are very exceptional circumstances why they should not," the report said.
The PAC found that 38 per cent of contract managers did not always apply financial penalties when suppliers didn't measure up.
Conversely, the spending watchdog also found that central government is only making "limited use" financial incentives to encourage suppliers to increase their performance.
While £240m was devoted to managing the government's £12bn of service contracts in 2007/2008, not one single government organisation rated the level of resources devoted to contract management as 'good'.
"As a result, opportunities for securing better value for money may be missed and risk may not be managed effectively," the report said, adding: "Central government organisations are not providing adequate support to their contract managers."
The PAC report recommends better risk management procedures for regular reviews of contract management for the largest contracts, along with better training and information sharing for contract managers and value-for-money testing on contracts every three years.
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1. misceng
Getting bad companies off contracts.
As an engineer in the Civil Service I dealt with contracts for building services. There was an approved list of contractors from whom we had to seek tenders. The only way to get a contractor off the approved list was to have fully documented proof that he had failed on two contracts. What sort of engineer would let two contracts be messed up to get rid of a contractor when he could just not invite him to tender? But the administrators had other ideas. They set up a system where a contract officer with no engineering experience would add a tenderer to the list if he had not been on a tender list for some time. So the bad guys got a chance to tender and we were pressured to accept the lowest tender. Result disasters.
Until professionals with real knowledge have control of contracts the failures we see in Health and other Government contracts will continue.