Government IT suppliers have a ‘free ride’ on the back of taxpayer cash, with many of their contracts unchecked on value for money, a powerful group of MPs has warned.
The Committee of Public Accounts found that in nearly one third of contracts where suppliers were dealing with personal or security information, there was no risk register for identifying, analysing and managing risks.
Some 41 percent of government contract managers had not tested the value for money of new services purchased under existing contracts. Around £240 million pounds was spent annually on managing contracts costing £12 billion for IT, security, cleaning and catering.
In an alarming 56 percent of contracts, there was no contingency plan in case of supplier failure. Additionally, less than half of government organisations surveyed had an individual with overall responsibility for contract management, and there was no documented plan for managing 28 percent of deals.
The report, ‘Central government's management of service contracts’, said Whitehall’s failure to properly manage contracts had a direct impact on the public, highlighting the major problems with paying students their Education Maintenance Allowance last year.
In contrast, the Home Office had saved £17 million a year on an IT contract with Fujitsu by benchmarking the service against market prices.
The report accused the government of being “too cosy” with suppliers, after 38 percent of contract managers failed to apply financial penalties where suppliers under-performed.
Richard Bacon MP, a member of the committee, said the government needed to “wake up” following “a litany of cut corners and complacency” on the part of contract managers.
In over a third of contracts there was no provision for financial incentives for improved performance, he said.
“A good contract should include both sticks and carrots in order to encourage suppliers to improve their game,” he said. “Sadly, the moment the ink on the contracts was dry, the government appears to have lost interest in doing the job properly."