An independent regulator with fines to impose penalties and binding obligations could help cut the cost of public procurement fiascoes such as the offender tagging contract, a thinktank has proposed. Reform says that while scrutiny of public-private partnerships has increased since the collapse of outsourcing giant Carrillion, bodies such as the National Audit Office and parliamentary select committees lack power to enforce change.
'By having a complete overview of outsourcing contracts from signing to completion, a new regulator would be able to intervene and prevent bad deals spiralling out of control' the report, The Price of Poor Procurement, concludes.
As examples of bad deals, the report identifies five contracts which incurred heavy additional costs - ranging trom 81.9% of the contract value in the Seaborne Ferries procurement and 81.9% in the project to decommission nuclear submarines to 46% in the offender tagging contract. Reform says that investigations into such fiascoes should be driven by evidence rather than politics. 'Dogmatic beliefs – in either the value of public-sector markets or the benefits of in-house provisions – risk poor policy making'.
The collapse of Carillion in January 2018 marked a turning point in the scrutiny of public-private partnerships, Reform states. In the 19 months following Carillion’s demise, 41 official investigations were carried out, producing an average of one report every two weeks. The bodies behind the investigations include the Justice Committee, Financial Conduct Authority, Home Affairs Committee, and Serious Fraud Office. In all, it identifies 11 official organisations, bodies, or watchdogs involved in examining procurement or outsourcing issues.
Although the National Audit Office does 'sterling work', neither it nor parliament's Public Accounts Committee has the ability or authority to enforce changes to the extent that regulators and watchdogs such as the Competition and Markets Authority or Ofcom can.
'The NAO’s and PAC’s bark needs to be accompanied by a body with more bite: an independent regulator,' the report concludes. An Office for Public Procurement (Ofpro) could either be a non-ministerial government department or an independent regulator like the Financial Conduct Authority. It should have a 'substantial, statutory ability to intervene and respond to issues that pose a financial, political, reputational, or physical risk to either citizens, a public sector market, or a public body'.
This would include powers to impose penalties such as fines and enforcement orders on individual and to bar companies from bidding for contracts if found guilty of failing to adhere to guidance or best practice.
Ofpro would cost between £30m and £90m a year, a sum that would be far outweighted by the procurement savings, Reform claims.