The Committee calls on the Cabinet Office "to raise its game, be more assertive and challenge those departments that are lagging behind, as well as supporting them where necessary".
The Committee also highlights weaknesses in the way contractors are held to account for meeting the needs of users, especially vulnerable groups—finding that "government continues to rely on whistleblowers and journalists to bring contracting issues to light".
The previous Committee reported in 2014 that "problems with contracting are widespread, long standing and rooted in the culture of the civil service", since when the Cabinet Office has led a cross-government programme to improve commercial capability.
Government "not effectively challenging departments"
This new Report follows a progress review by the Committee and is informed by evidence heard last month from the Cabinet Office, Home Office and Ministry of Justice.
The Committee concludes the centre of government is not effectively challenging departments on slow progress in commercial capability reform, also finding "there is more to do" in changing the culture around contract management in the civil service.
The Report calls on government to "tackle the long standing problem of a civil service culture that does not place enough value on commercial expertise…so that we see a civil service which is first rate at managing commercial contracts."
Cabinet Office should "improve the status of commercial roles"
It urges the Cabinet Office to improve the status of commercial roles, which "are not attractive enough to potential candidates", and to increase the weighting of commercial competence when considering senior civil service promotions.
The Committee recommends a series of new measures to improve contractor accountability, such as government departments codifying accountability arrangements in contracts.
By the end of 2016, all departments should also introduce a rolling programme of assurance "including greater transparency and effective use of open book and internal audit to ensure contractors deliver what they are supposed to".
Departments should ensure service users "are clear on what they can expect from contractors and should publicise a direct route through which users, especially vulnerable groups, can escalate issues".
Meg Hillier MP, Chair of the PAC, said:
"Poor contract management comes at a cost, failing service users and hitting taxpayers in the pocket.
As evidence heard by this Committee in recent months bears out, change isn’t happening consistently or quickly enough. Time and significant sums of money have been wasted.
Long-term problems with contractor performance in providing health and disability assessments, a sensitive and hugely important factor in the lives of hundreds of thousands of people, provide a clear illustration of what is at stake.
Contracts between government and third parties are signed on behalf of the public and must operate in the interests of the public. Government has a responsibility to ensure taxpayers’ money is well spent and that prompt action is taken when contractors fall short.
We are particularly concerned that in cases where service users are being failed they have an effective means of raising the alarm and can have confidence remedial action will follow.
Government must step up its commitment to holding to account all contractors who receive public funds.
Contracting out a service does not mean government can dodge responsibility for poor service delivery. We urge it to respond swiftly and positively to the recommendations set out in this Report."
In 2014 the previous Committee concluded that government would not achieve value for money from its contracts unless it improved its contract management.
While government has made encouraging progress in some areas, the pace of change is disappointing. We expect the Cabinet Office to raise its game, be more assertive and challenge those departments that are lagging behind, as well as supporting them where necessary.
Given the increasing scale and complexity of government's contracts, departments need to focus on the governance, systems and assurance frameworks around their major contracts, as well as recruiting more commercial staff.
Civil Service does not value commercial expertise
The government also needs to tackle the longstanding problem of a civil service culture that does not place enough value on commercial expertise.
We expect the Cabinet Office and individual departments to accelerate the pace of change and be able to demonstrate tangible improvements by the end of this parliament, so that we see a civil service which is first rate at managing commercial contracts.
In the meantime we will continue to hold departments and their contractors to account for their performance, with a particular interest in safeguarding the interests of vulnerable users of public services.