Public Administration and Constitutional Affairs Committee

Sourcing public services: lessons learned from the collapse of Carillion inquiry

Inquiry status: Concluded

Report published


Scope of the inquiry

Following the news of the collapse of Carillion, the Public Administration and Constitutional Affairs Committee launches an inquiry into how the Government and public sector manages the risks of outsourcing the delivery of public services.

The inquiry will look at how Government and the public sector makes decisions about how to source the delivery of public services, including the risks of concentrating a large number of contracts with a small group of large companies.

Terms of reference

The Committee invites written submissions from the public and interested organisations on:

1. Does Government make effective decisions on how to source the delivery of public services?

  • What framework should the Government use when deciding what the most appropriate approach to sourcing a function or service is? Are decisions made systematically and consistently?
  • Do policy makers have the right skills, information and incentives to make sourcing decisions effectively – including do they have the operational and commercial expertise to be able to understand what is deliverable
  • Does the public sector have the capacity to deliver services in-house when that is the most appropriate route?

2. What lessons need to be learned from the collapse of Carillion about how Government and the public sector manages the risk from suppliers throughout the life-cycle of outsourcing a public service?

  • Is the supply side of the market for outsourced public services too concentrated? What are the risks and benefits of a concentrated market?
  • What steps has, and could, Government taken to maintain a competitive market amongst suppliers?Does Government have the right skills to be able to procure and manage contracts with SMEs? Should contracts or tenders be structured differently? Are there other steps it can take?
  • Does the Government effectively monitor and manage risk for its largest suppliers, and does it have effective failure regimes in place? Does Government understand the public sector’s cumulative exposure to individual contractors? Is there effective co-ordination between different public sector bodies in managing contractors?
  • Do current procurement rules and policies allow risks to be managed effectively?
  • Does the public sector have the right skills and resources to manage and monitor contracts with suppliers effectively?

3. Given the concentration of outsourced public sector contracts into a small number of large companies do the rules on oversight and accountability of public services need to change?

4. Are there limits to what can be outsourced?

5. What lessons can be learned from PFI?

Terms of reference: Sourcing public services: lessons learned from the collapse of Carillion

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