Government contracting: Where does your money go?

“Contracting with third parties is an important element of public service delivery, but there is currently a lack of transparency over the role that contractors play, the business that they do, the rewards that they make and the way that they perform.”

National Audit Office, November 2013

The Institute for Government and Spend Network have been working together to try to understand more about where public money is going. This event saw the launch of a special Whitehall Monitor report that uses government data to understand government spending on third party contracts.

Introducing the event, Jim Bligh, head of public services reform at the CBI, explained that the report had analysed 38 million transactions between 2012 and 2013 to build up a picture of who the government’s biggest suppliers are.  The analysis showed not only how the government spends its money, but also revealed some of the inaccuracies of government data. Although the data is very rich, it can be extremely poor in providing the information needed to take on different challenges.   

Ian Makgill, Managing Director, Spend Network, introduced the report as being the first attempt to understand what happens with public procurement by using public data, and acknowledged that it wouldn’t be possible without the government’s transparency agenda.

He outlined some limitations of the data:

• When analysing PFIs and Joint Ventures, it was hard to establish the beneficiaries of transactions with some of the operating companies
• Understanding corporations in legal terms was very difficult –so we couldn’t establish the ultimate beneficiaries of some contracts
• Some duplication of data was found in the figures for Hewlett Packard and the DWP, an error which also affected Fujitsu.  Mr Makgill apologised and said that the report would be updated.
• There were still gaps in the data – too many people don’t publish it, and the resource required to gather it isn’t available

The overall message was that using and publishing the data holds the Spend Network, the Government and suppliers to scrutiny, and that there is an iterative process in improving the data.

Mr Makgill then explained some of the top messages from the report:

• Most government spending by category is on IT, though expenditure on both IT and Construction is decreasing.  There has been a continuing rise in outsourcing expenditure.
• Contracts tend to be between one supplier and one buyer – for example 84% of Cap Gemini’s business is with HMRC
• It hasn’t been possible to replicate the government’s analysis of spend on SMEs – data for 24 months shows large fluctuations and no obvious trend.  However, he stated that spend on local government with SMEs is much higher than central government.
• Most of the top 20 are working with central rather than local government, understandably – as they work on national programmes. 

Tom Gash, Director of Research, Institute for Government said he hoped that the work of checking and validating data would prompt governments to publish data in an easy to use format in the future.  He identified the following steps improve transparency:

• Lowering the threshold for transactions that are published from £25k –providing far more data, particularly for smaller organisations.
• Establishing a reporting regime for PFI and Joint Ventures so we can see the ultimate beneficiaries
• Publishing annual reports in machine readable format, to take advantage of algorithms which pick up big fluctuations (and therefore, possibly, errors) in data

He said we also need to know much more about the performance of suppliers, sub-contracting arrangements and contractual terms to understand value for money. A standardised transparency clause would help with this.

However he noted that transparency alone would not ensure a diverse range of suppliers and effective competition. The government needs to actively manage the process. Instead of going directly to just one supplier they need to use a range of suppliers and coordinate their activities.    

The IfG also recommended more careful consideration of big outsourcing reforms, with stronger central scrutiny of outsourcing in very complex service areas. 

Ollie Buckley, Deputy Director, Cabinet Office, leader of the Transparency and Open Data team

Ollie said spoke about the motivations for prioritising transparency and open data. There were three main reasons for this:

• Accountability – shining a light on government decisions so citizens can hold them to account.
• Improving public services by identifying areas where government can do better, and empowering citizens to make informed choices.
• Economic growth – businesses can build value on the back of open data.  For example, City Mapper provides information which has benefits to consumers.

He pointed out the ways the government has improved transparency and opened up data:

• Publication of all government spend above £25k, all local government spend above £500, and all government contracts over £10k.
• Creation of data.gov.uk, arguably the world’s leading data portal.
• Publishing the world’s first National Information Infrastructure – identifying the datasets most likely to be driving social and economic value.
• Pushing open data at an international level and playing a leading role in the Open Government Partnership.

Further improvements can be made by identifying core reference data so that disparate data sets can be linked together, and doing more with local government data  so that learning can be shared more effectively

Ed Green, Deputy Director, EU and domestic procurement policy, Crown Commercial Service

Ed discussed the role of the Crown Commercial Service. As well as the 20,000 existing contracts on Contract Finder it also publishes details of opportunities – what might be bought 2-3 years from now.  This is important so that SMEs are able to gear up in time to be able to deliver the requirements.   

The Crown Commercial Service brings together all those involved in procurement at the centre of government and the departmental level. It will create a complex transaction team which will not just put in place framework agreements, but will move towards providing a fully managed service, giving the centre a much better idea of where money is flowing.

The Whitehall Monitor report was timely he said as it responded to the PAC committee’s call to have greater transparency in contracting. The published response sets out some of the actions that will be taken: a working group to establish draft transparency principles, a six-month trial of open-book provisions, and a code of practice to make sure private providers cooperate with freedom of information requests.

Jacqui Taylor, CEO, Flying Binary and member of the Open Data User Group

Jacqui talked about the role of the Open Data User Group in advising on the open data agenda. They have challenged the supply-led approach and asked questions about who is using the data and what it is for.  They have developed a road-map based on demand for open data was produced.

They have noticed that demand is changing – while data is predominantly used by individuals, the last year has seen an increase in requests from the public sector itself.  Almost 10% of data requests relate to spending data such as that published the Whitehall Monitor report. 

She outlined three main barriers to open data provision, other than the need for data to be in machine readable formats:

• Licensing issues, particularly for commercial use – the cost was prohibitive.
• Unreliability, in the widest sense – some data is missing. 
• Departments tend to publish figures as often as they can – but it would be better to publish it on a regular, predictable cycle.