Greater transparency needed over Government supplier performance, says spending watchdog

The watchdog has published two new reports into Government outsourcing arrangements. It said that the Government spent approximately £40 billion on third party services in 2012/13, with about a quarter of that sum being with 40 "strategic suppliers", but found that Government contractors "can contribute more to the overall austerity programme".

However, the NAO said that a lack of transparency currently makes it hard to ascertain whether rewards suppliers make from Government contracts are fair and called for the Government to take steps to better understand whether contractors are delivering for the taxpayer.

"Parliament, the Government and the public have clear expectations of the standards expected of all public services," the NAO said. "These include honesty, impartiality, openness, fairness, integrity, transparency, objectivity, and reliability, carried out in the spirit of the law, in the public interest, to high ethical standards and achieving value for money. The government relies heavily on the contract to ensure that standards are met in contracted-out services. This has not, however, traditionally allowed the government to assess or set requirements for how contractors maintain their corporate culture and environment."

"The Government and public need transparency about performance. Transparency is needed to ensure that no one within the contractor can hide problems and that it is in the contractors’ commercial interest to focus on their client’s (the Government’s) needs. This requires more than just the key performance indicators reported to the client. For instance, it also requires public reporting and openness to public scrutiny; whistleblowing policies that encourage staff to report problems up the supply chain; and user feedback," it said.

Suppliers that fail to put in place "rigorous controls" to ensure it acts in taxpayers' interest should face penalties, the watchdog said.

"Government needs to ensure that it is in the contractors’ financial interests to focus their control environment more widely on meeting the standards expected of public service," it said. "This involves using contractual entitlements to information, audit and inspection to ensure standards are being met. And it is likely to involve financial penalties, banning from competitions and political fallout when problems are found."