CIPFA calls for radical approach to the way government manages outsourced public spending

26-03-2015

CIPFA, the Chartered Institute of Public Finance and Accountancy, has today issued a call for all of the public sector to enforce Open Book Contract Management (OBCM) when delivering significant public services through private companies. 

There have recently been some serious and high profile examples of contract failures in the delivery of public services., including the over charging for services by G4S, the failure to deliver NHS contracts by Serco or the underperformance of CAPITA in court services. These examples and others illustrate the pressing need to strengthen the management of the significant amounts of public money which are spent each year on contracted out services.

In the policy briefing note published today, CIPFA argues that if we are to have confidence in the way public money is used when spent through private contractors, a radical approach to enforcing OBCM is required. 

It proposes that in order to be awarded any major public sector contract, businesses should agree to follow rigorous OBCM rules to ensure that costs are kept down; the contract is delivered in the intended way and that taxpayer resources are used effectively.

In particular CIPFA argues that as a condition of winning a large contract businesses should agree that their own external auditors will provide a report to the public sector body commissioning the service, confirming that the amounts charged have been costed properly, are consistent with the contractor’s own financial management and external reports.

Speaking on the publication of the briefing note, CIPFA Chief Executive Rob Whiteman said: 

“The amount of taxpayers’ money being spent through third parties to deliver public services is increasing. Meanwhile there are a growing number of scandals and disappointing contract failures which demonstrate just how significant the risk is to the public sector when these arrangements go wrong.

“It is therefore far too important an area for Government to just let slide, and it needs leadership and direction from those who decide where public resources are spent. 

“This is why CIPFA is calling on the civil service and government ministers to seriously consider enforcing OBCM as a way not just to mitigate the risk of failure of private contracts but to improve efficiency and delivery and to make sure that every pound of public money is spent well.”

ENDS

Notes to editors:

A copy of briefing note: Open book contract management - Following the public pound can be found on the CIPFA website.