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Cabinet Office proposes increased contractor oversight

Cabinet Office minister David Lidington has defended the crown representatives that monitor government contractors and suggested increasing their numbers following Carillion’s collapse.

Mr Lidington was responding to MPs Rachel Reeve and Frank Field, chairs of the business and the work and pensions select committees respectively, following their joint inquiry’s damning report into Carillion’s liquidation.

He said he was “disappointed” that the committees had suggested there was “no noticeable purpose” to crown representatives, which monitor each of the government’s 30 biggest suppliers.

In a letter to the MPs, Mr Lidington said crown representatives were supported by a full-time markets and suppliers team and that Carillion had a full-time partnering manager in place from May 2017.

In January Construction News revealed that the government had no crown representative in place to liaise with Carillion from September to November last year, during which time the contractor posted a £1.15bn half-year loss.

Mr Lidington said: “Government will draw important lessons from events leading up to and following the liquidation of Carillion.

“But my initial view is that the role of crown representative is highly valuable and that the temporary vacancy that occurred during three months in 2017 did not compromise our ability to recognise Carillion’s problems and construct an appropriate response.”

He added: “I feel we could improve our supplier management by increasing the number of crown representatives and strategic partnering managers we have.

“At the time of Carillion’s July profit warning, we had 14 crown representatives and 10 partnering managers covering 30 strategic suppliers.

“Increasing the number of these resources would allow us not only to cover more suppliers, and hence more of our spend, but would also mean that we have fewer temporary gaps in cover.”

CN reported this month that, shortly before its collapse, Carillion directors had sought protection from fines and other penalties incurred by regulators relating to what it did before July 2017 when it revealed a £845m writedown.

It also wanted government customers to be prevented from terminating contracts with the company, and a commitment that the public sector would award Carillion its “fair share” of work in the future. 

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