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Home >> Blog >> IfG calls for major contract review

Date Published: July 18, 2013 by Stephen Frost

 

A Report "Making Public Service Markets Work" published by the Institute for Government (IfG) has claimed that Whitehall must slow down its plans to expand markets in public services because it lacks the expertise to design and manage complex contracts effectively.

 

New research has found mistakes in the design and management of public service markets in areas such as care for older people, schools, probation and employment services.

 

Acccording to the report, public service markets are now estimated to be worth close to £100bn and growing - However, the pace of the current shift towards using markets to deliver key services outstrips the ability of those in Whitehall charged with designing and implementing them.

 

The report which is an industry study involved interviewing over 80 senior figures within the commissioning, design and supply chain of public services. It identified that markets can work well in some services such as refuse collection, but complex areas needed much more thought into design. In addition, some of the commonly experienced problems were barriers to informed choice, 'gaming', barriers to exit and funding  imbalances.

 

The report recommends

 

~The Treasury or the Cabinet Office should conduct an urgent cross-government review to ensure public service markets are truly competitive - and not dominated by a few providers.

~Government should introduce a statutory obligation to publish a compulsory ‘competition impact assessment’ to be conducted by the OfT (or similar body) before implementing outsourcing programmes worth more than £100million.

~Full transparency on the contracts, income, performance and sub-contracting arrangements of all private, voluntary and public sector service providers.

~A lead official (Senior Responsible Owner) to be placed in charge of each public service market worth over £100 million p.a. – to stay in post for at least 3-5 years.

~More thorough testing of new market models, using high-powered commercial advisory boards [excluding those with a specific commercial interest] and scenario and simulation exercises to predict potential pitfalls.

~Increased flexibility in contracts - for example, through introducing performance-related break clauses.

 

 

The report can be read here

The Institute for Government (IfG) calls for major contract review

About the author

 

Stephen Frost is the owner of Provensa Consulting Ltd, a company whose core business is to provide bid and tender writing solutions to public, private, and Not-for-profit sector organisations. He holds a BSc(hons) and MA and is a Member of the Chartered Management Institute (MCMI) and Institute of Economic Development (MIED).      

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