The collapse of Carillion inquiry launched

15 January 2018

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.

Following the news of the collapse of Carillion, 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 single company.

Chair's comments

Chairman of the Committee, Bernard Jenkin MP, says:

"Seeing what has happened to Carillion and given the concentration of outsourced public sector contracts into such a small number of large companies, we need to ask if the rules on oversight and accountability of public services need to change?"

Submit your views

The Committee invites written submissions on the following questions:

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

Public services, and their constituent parts, are now delivered by a range of different providers some in the public sector and some private. Decisions about how public services are sourced are therefore crucial. This is not just the choice of which sector will deliver a particular function, be that private contractors, other parts of the public sector, or delivered in-house, but also the extent to which considerations about sourcing shape policy development.

  • 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?

Carillion highlights the risks of concentrating a large proportion of contracts within a single contractor.

  • 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?

Parliament currently scrutinises the work of Government departments and agencies. Scrutiny of private contractors is generally only through the lens of a specific contract or service. Where a large supplier has contracts across the public sector should Parliament, or another body, have a role in scrutinising its work and the cumulative risk it may pose to public services?

4. Are there limits to what can be outsourced?

5. What lessons can be learned from PFI?

Evidence can be submitted to the inquiry using the written submission form.

Further information

Image: iStockphoto

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