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Carillion: MPs propose outsourcing overhaul

A scathing report from the public accounts committee has attacked the government’s approach to outsourcing, claiming it allowed major suppliers to believe they were “too big to fail”.

The report, published today, demanded government proposals on delayed payment and retentions, stating there was “no excuse” for smaller suppliers not to be paid on time.

Standardised contracts were another recommendation made by the committee to protect and encourage SMEs to bid on government work.

It also called for the government to increase the use of project bank accounts in contracts.

MPs on the committee attacked the “merry-go-round procurement culture”, which they said meant that smaller numbers of companies bid contracts at prices that were undeliverable.

The report said the government must improve its understanding of the intentions of companies bidding for work, and that it needed to change its approach to this end.

MPs suggested departments explain exactly how it intended to improve due diligence of its suppliers.

The committee criticised the government for creating a system that drove companies to focus more on the process of tendering and winning bids, rather than on delivering the right service.

It called for the government to move beyond looking at “just the bottom line” of a contract and to consider the lifetime cost and value of an agreement.

This, the committee argued, would require a significant improvement in the skills of officials working in procurement throughout the public sector.

MPs asked the government to consider using a partnering model on high-risk contracts that created co-dependent relationships, incentivising suppliers to deliver effectively.

The committee suggested this approach would ensure proper oversight and that the government had “skin in the game” on vital public services.

It was also proposed that social value commitments be enshrined within public contracts.

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