Civil servants’ contract skills ‘lacking’; Almost two-thirds of British companies believe civil servants’ ability to negotiate public sector contracts is lacking

February 18, 2014 11:29 pm

Civil servants’ contract skills ‘lacking’

By Gill Plimmer

Nearly three years since David Cameron called civil servants the “enemies of enterprise”, British business says the government’s commercial skills have failed to improve or deteriorated.

Almost two-thirds of British companies believe civil servants’ ability to negotiate public sector contracts is lacking, according to a survey by the CBI employers’ group. They also say work is being awarded to the cheapest bidder, at the expense of quality and long-term costs.

The findings come as the government’s ability to manage complex, sensitive contracts comes under the spotlight. Troubled deals from the West Coast railway franchise to the referral of G4S and Serco to the Serious Fraud Office for overcharging on electronic monitoring contracts has put the relationship between suppliers and government departments under scrutiny.

Jim Bligh, head of public services at the CBI, said British business welcomed a number of government initiatives to improve procurement procedures but there was a need to turn “policy into practice”.

“The government pledged to reform public services in July 2011 but businesses tell us that two and a half years on, progress on improving commercial skills, standardising procurement across Whitehall and opening up more contracts to smaller firms has been painfully slow.”

With £20bn of central government spend lying with just 39 suppliers, the CBI urged the government to deliver on its commitment to using more smaller businesses. But it added that the initial selection process remained costly and time consuming, which worked in favour of large companies with strong balance sheets. It also said the government used too many bespoke contracts, when the process could be standardised, making it cheaper for smaller companies to compete.

“Too often government wants a government iPhone, when all it really needs is just an iPhone for government,” one business said.

The Cabinet Office said spending on small and medium-sized companies increased from £3bn in 2009-10 to £4.5bn in 2012-13. It added that the new Crown Representatives team was expected to improve the government’s relationships with suppliers and had already saved £800m by renegotiating excessive and expensive contracts.

The findings come almost three years after the prime minister pledged to “throw open the bidding process to every single business in our country” as part of plans to reform public services. Mr Cameron told the Conservative spring forum in Cardiff that he would take on what he called the “enemies of enterprise” in Whitehall and town halls across Britain.

The CBI said it was concerned the shortfall in civil servants’ skills may have been exacerbated by an 85 per cent drop in the use of external consultancies, leading to “high-profile contract failures”.

“The CBI is concerned the brakes may have gone on too hard in retrospect, creating a gap in major contract management skills that will take time to address . . . and will require the recruitment of staff with the right levels of commercial skills,” it said.

The findings on civil servants echoed a National Audit Office report, which also found that “below the senior levels there is little commercial experience. This has restricted the extent to which the Cabinet Office has been able to build industry knowledge.”

The Public and Commercial Services union said: “With Serco under investigation by the Serious Fraud Office, Atos being the focus of a national demonstration on Wednesday and other providers hauled over the coals for poor performance, it’s a bit rich for businesses to blame the public sector for the failures of privatisation.”

The CBI also welcomed government initiatives, including reforms to EU procurement directives, which were passed last week. The UK, Europe’s biggest outsourcing market, has been pushing Brussels to make the changes, which will make it possible to blacklist suppliers that consistently fail to deliver.

The Cabinet Office said: “As part of our long-term economic plan this government is reforming the way Whitehall does procurement, stripping out bureaucracy and making it easier for firms of all sizes to win contracts. We are pleased the CBI recognises our progress but agree that more needs to be done.”