After last week’s reports by the National Audit Office (NAO) into how Government can better manage its big suppliers (see here), the Parliamentary Accounts Committee (PAC) called in senior execs of four of its biggest outsourcers Serco, G4S, Atos and Capita, which had been held up as examples.
PAC Chair Margaret Hodge questioned the supplier representatives – Paul Pindar, CE of Capita; Ursula Morgenstern, UK CE of Atos; Ashley Almanza, CE of G4S and Alistair Lyons, chairman of Serco - on what it would take to make Government a better customer.
But the real focus was on establishing a new level of major supplier transparency and accountability. Government views this as a top priority following the recent spate of scandals and problem contracts involving these big outsourcers – Capita’s problems with court translation services (see Capita trouble with ALS), Atos’ problems on Work Capability Assessments (see here), and fraud allegations against Serco and G4S on electronic tagging (see here and work back).
Hodge said she would like to see the NAO overseeing all contracts held by private suppliers of public services, and the use of open book accounting by all major suppliers. The NAO could ensure contracts are achieving value for the taxpayer by providing an independent check of project accounting in terms of revenue, cost allocation and profit. All four providers agreed to NAO oversight in principle, but it is apparently in the hands of the Prime Minister to give the NAO the green light.
Ursula Morgenstern said she had no problem with transparency so long as there is a level playing field for suppliers. Paul Pindar agreed, stating Capita has no problem with 'total open book', as well as use of third party auditors on contracts. Pindar also challenged Government to take a more ‘imaginative and creative’ look at the issue of supplier margin. He said that both parties should agree on what is ‘reasonable’, and then anything achieved above that should be shared. Pindar said this approach is already in place at Birmingham City Council and the BBC.
While progress is clearly being made, we are a far cry from this level of transparency today. Serco said that 80% of its Government contracts use open book accounting, but G4S apparently has ‘very few’. We get the impression that Capita and Atos are more used to open book, so this won’t be a huge issue to address. The challenge will be getting the rest of the pack playing along. This will take time and effort to achieve, all the while trust is being eroded in suppliers and the Government's ability to act.