Newspaper article The Journal (Newcastle, England)

Government Behaved 'Badly' over Contracts

Newspaper article The Journal (Newcastle, England)

Government Behaved 'Badly' over Contracts

Article excerpt

Byline: HOLLY WILLIAMS Business writer

THE boss of outsourcing giant Serco has accused the Government of "behaving badly" by passing off unreasonable contracts to suppliers, ignoring its own guidelines and shrouding its decisions in secrecy.

In a Commons hearing on lessons learned from the collapse of Carillion, chief executive Rupert Soames told MPs that a raft of "well run and well respected" outsourcers have lost vast amounts of money in recent years working on government contracts with "unmanageable amounts of risks".

Mr Soames - a grandson of Sir Winston Churchill - claimed the Government has previously tried to pass off controversial and "unreasonable" contracts to outsourcing firms, while also routinely expecting suppliers to shoulder the risk of major law and policy changes.

He said: "It's not unknown for Government to behave quite badly.

"It's a monopoly buyer, it's also the regulator, the referee and the giver out of business."

He said the recent woes in the outsourcing sector, which led to the collapse of Carillion and forced a number of its rivals to raise emergency capital to bolster their finances, was "astonishing".

"It's been a massive, massive disruption in the supplier sector, the likes of which I've never seen - PS8bn written off of the supplier sector and billions of pounds being raised to recapitalise."

He added: "There's a very good PIN (prior information notice) saying how departments should behave and what's reasonable to ask firms to do and it is widely ignored among departments."

The Government process for deciding when to outsource and its decisions on contract bids are also "shrouded in opaqueness", but should be transparent and audited by the National Audit Office, he added.

Mitie chief executive Phil Bentley, who was also giving evidence in the hearing, told MPs on the Public Administration and Constitutional Affairs Committee that he believed inaccurate data was also to blame for some failed outsourced contracts and called for greater data sharing and transparency. …

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