5th Sep 2014 12:13
LONDON (Alliance News) - The British Government still has much work to do to strengthen its contract management procedures, including widespread changes to the culture within the civil service and its capability when it comes to procuring and managing commercial contracts, according to a report by the National Audit Office.
The government spending watchdog opened an investigation into the handling of commercial contracts by Whitehall departments last year following the announcement in July 2013 of significant overbilling dating back to 2005, primarily in the electronic monitoring contracts the Ministry of Justice had handed to G4S PLC and Serco PLC. The overcharging by G4S and Serco amounted to tens of millions of pounds and the two firms are now subject to a probe by the Serious Fraud Office.
On the back of those revelations, the Ministry of Defence and the Cabinet Office both commissioned further reviews of other commercial contracts, including other major deals handled by G4S and Serco.
The NAO report said that in most of the contracts reviewed as part of its probe, there were weaknesses in the way the contracts were managed, in particular in the administration of the contracts, including poor governance and record keeping and capacity issues within government departments.
In the new report, the NAO said that while the government was making the right kind of reforms, a range of other measures need to be taken. These include beefing up its systems and processes to ensure contracts are managed efficiently and effectively and ensuring the responsibility for the delivery of services contracted to private sector suppliers rests with the contractors.
"Current reforms are going in the right direction and government is taking the issue seriously," said Amyas Morse, Head of the NAO.
"There is, however, much to do, and the acid test will be whether the resources and effort needed for sustained improvement are carried through into the future performance of the departments in procuring and managing contracts," Morse added.
Shares in FTSE 100-listed G4S were down 0.8% on Friday to 264 pence, while shares in FTSE 250-listed Serco were down 1.1% to 321.6 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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