To turn from carillion “can be repeated” because the government has not yet learned to effectively delegate work, a group of MPs has warned.
Public services deteriorated as the government prioritizes spending over all else in decision-making, outsourcing, said in a damning report from the public administration and the Committee on Constitutional Affairs.
At the same time, the public sector has become too dependent on a small handful of large companies that are “too big to fail”, how they work is a huge part of the state services with little effective competition.
The bell tower, the second largest British Builder and a major supplier of outsourcing services, fell in January.
He went into liquidation with debts of £1.5 bn, resulting in more than 400 government contracts in Rage, and tens of thousands of suppliers and contractors paid.
“It is staggering that the government is trying to push the risks that he does not understand, work, and understand their costs. He took rates lower than it costs to provide the service, so the contract should be renegotiated,” said the Chairman of the Committee sir Bernard Jenkin.
“The crisis of the bell tower was well organized, but it could happen again, if not to draw lessons about risk and contract management and the strengths and weaknesses of the industry. Public trust requires that the best outsourcing reflects the values of public service.
“The government should use this moment as an opportunity to learn how to effectively manage your contracts and relationships with the market.”
With carillion – what went wrong
The government stated that the official response to the report “in due order”. Press Secretary of the Cabinet of Ministers added that the government has already announced a package of new measures to improve how it works with suppliers since the collapse of the bell tower.
Deputies found the public sector is not always right to follow your own principles, to ensure value for money when contracts, which means that costs and risks are not always correctly evaluated.
“Public confidence in outsourcing has recently been seriously damaged. This is due to the large number of failures, including a profile the recent failure of carillion,” the Committee said.
“The government must restore confidence in the process of making decisions about outsourcing. The government can only achieve this by being transparent about how and why he takes the decision about purchasing goods or services.”
Once a buyer in the major markets, the government “has enormous power… to set prices, quality standards and determine the behavior of participants,” – said in a statement.
But still it failed to correctly identify risks associated with specific projects, with the result that the government “is often given the risks for contractors that they can’t manage.”
Sir Bernard Jenkin said, similar to the crash “could happen again”
In the case of carillion, the company hyperfine fields and the subsequent collapse cost the taxpayer an additional £148 million, the national audit office found.
“There must be a complete rethinking about how the government evaluates the quality of work of the commissions”, – is spoken in the message of the Committee.
“This will encourage service providers to pay more attention to quality and to ensure that there is less chance of aggressive vendors deliberately undermining the applications with the aim to potentially renew a contract later.”
He also called for a halt to any new PFI (Private Finance initiative) projects, until the government can prove that there are benefits from the use of private funds, usually more expensive than public Finance.
Currently it is “clear beyond a reasonable doubt” that PFI is only used so“ that the debt should not be shown in the national accounts or the national debt.”
With carillion – what went wrong