19 November 2014

Yesterday’s launch of the Open Contracting Data Standard marked a significant step in enabling governments to be more transparent about their contracting arrangements of public services. Last week the Institute for Government, in collaboration with the CBI, looked at practical ways to change transparency in contracting from a ‘nice to have’ to the new default.

There is a crisis of trust in government’s use of private sector contractors. According to a recent Survation poll, only a fifth (21%) of the public trust private outsourcing companies, compared to more than a third (37%) who distrust them. There is also little trust in government’s ability to manage outsourcing contracts. Some 60% think the government fails to regulate outsourcing companies adequately. What’s more, a survey commissioned by the IfG for its Programme for Effective Government found that 50% of people felt that no-one takes responsibility when something goes wrong with outsourced services. These results are not, perhaps, surprising. The public’s perception of outsourced services is routinely shaped by ‘scandal accountability’ — high profile failures that result in Public Accounts Committee hearings, media investigations, and a deluge of freedom of information requests from journalists. This type of big-bang accountability has its place, particularly where contract management has resulted in grave misuse of taxpayers’ money. But it also brings risks. Specifically, the focus on naming and shaming specific providers can detract from the more important goal of generating a proper understanding of the relative success and failure of different providers and the government departments commissioning their services. Currently, we don’t really know how well outsourced public services are performing. While government has improved transparency by publishing a greater number of contractual agreements, the practice is still not universal and those contracts that are published are often heavily redacted. Contracts themselves provide at best a patchy indication of how much money suppliers receive. It’s very difficult to find out exactly who receives how much for what. And it’s still harder to work out whether they subcontract work to other suppliers and how well they, and the government departments managing their contracts, are performing once a contract is in operation. In our report Making Public Service Markets Work we argued that this needed to change. Specifically, we argued that government should be obliged to publish details of: •its spending with suppliers •details of major sub-contractors •information on supplier performance. These steps, we argued, would help establish clear and comprehensive accountability, improve competition and boost trust in outsourced public services. But while politicians, providers and the Civil Service all appear to agree with the idea of increased transparency of contract performance, little has been done to put this into practice. Why not? First, the focus has been on other types of transparency. Although it is now easier to find who has won contracts, how they are being executed in still hidden from view. While it is hard to criticise the direction of travel made on improving transparency, it is noticeable that efforts to expand into new areas such as contract performance have been slow. Second there are concerns—some legitimate, some not so—about introducing greater public transparency around cost and performance. Providers are concerned that government would be tempted to try to cut margins on the more lucrative contracts—while leaving thin margin /loss-making contracts untouched, raising the possibility they might withdraw from the government market. Commissioners worry that transparency will reduce their buying power. And commissioners and providers are worried that publishing performance against contract KPIs without appropriate context risks misinterpretation. The third reason is fear of the unknown. It’s an obvious point but it doesn’t diminish its importance. Government is particularly nervous about introducing greater transparency particularly in immature public service markets or ambitious reform programmes where failures are more likely. But it is not clear that the world will crumble if performance information is made public. After all, performance ratings in hospitals and the Major Projects Authority’s ranking are published and their main effect appears to be a more informed, rather than a more toxic, public debate. Importantly, none of these obstacles seem insurmountable—and there is a growing coalition who thinks the benefits outweigh the risks. The CBI, National Audit Office, Public Accounts Committee, Open Data Institute and Information Commissioners Office have all been pushing for more transparency. Building on the growing demand for change, the Institute for Government, in collaboration with the CBI, last week convened a taskforce to shift us from general agreement about the need for transparency in contract performance to a clearer view of improvements everyone can sign up to. Specifically, the taskforce explored how a standardised transparency clause could be introduced into government contracts as means of encouraging disclosure to become the default. In reality, a standardised clause approach may have its limitations. How can providers be encouraged to use it? How can it be tailored to fit the vast array of services that government outsources? But if government wants to expand the role of public service markets, it cannot afford debates on outsourcing to be dominated solely by high profile scandals. Like the Open Data Contracting Standard, we need the right set of tools and incentives that enable openness and accountability to become the default. A standard clause is an obvious addition to this toolkit.

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I agree this is highly desirable. My experience is that it is not governments that wish to hide performance of contractors but the contractors themselves are very reluctant to have their performance shared- particularly if unsatisfactory. What if the person responsible just didn't like them? Etc.

Anything this report can do to introduce fair reporting- equitable accountability will help towards achieving better transparency.