Cash 'wasted' on private contracts

Despite spending £240 million a year on contract management, the Government is not holding private firms properly to account for failures, the National Audit Office warned. Its latest report found more than a third of contract managers, few of whom have any formal qualifications in the field, did not impose fines on suppliers for fear of spoiling relations.

And more than half of all contracts, worth a total of £12 billion in areas such as IT, security, catering and cleaning, had no contingency plan in case of supplier failure, the NAO said. Tory MP Edward Leigh, who chairs the Commons public accounts committee, accused officials of being "blase" with public cash.

"Despite the huge amount of cash lavished on these services, government departments do not take the process anywhere near as seriously as they should," he said.

"Often, they do not have people with the right experience and skills managing these contracts, nor do they have oversight of how good the services being provided are. Which results in a great deal of waste.

"And it beggars belief that, where the services provided are found to be wanting, Government departments do not always invoke penalty payments on suppliers, even when the contract stipulates that they can do so. If anyone were buying a service out of their own pocket, it is inconceivable that they would be so blasé in monitoring the service they receive and certainly not so backward in penalising failing performance."

NAO head Tim Burr said: "Central government spends around £12 billion each year on service contracts, many of which are critically important to the delivery of its objectives.

"Improving the way these contracts are managed would not only save money, but also improve services and reduce risk. There are examples where public bodies and suppliers have worked together to improve services and reduce costs. There remains a need for more qualified people to manage these contracts, and for clear performance indicators to show whether services match up to contract objectives."

In response to the criticisms, the Office of Government Commerce published a "good-practice framework" and called for extra co-operation from Departments. The OGC, an independent office of the Treasury charged with ensuring Government gets value for taxpayers' money, is due to produce revised guidance next year.