Successful partnerships: the experience of central government

This is a transcript of the remarks made during a discussion with Keith Davis, Director for Cross Government Studies, National Audit Office, at an event held on Thursday 23 January 2014 by the think tank, Reform.

Reform Comment

The pressure on public finances means that successful public service reform will remain a priority for UK central government in this Parliament and for years to come. Successful public sector reform is often delivered in partnership with private sector organisations. Central government spent an estimated £40 billion with third parties in 2012-13; 21 per cent of estimated total public sector spending on goods and services. These services ranged from procurement to provision of front line services across different departments and agencies. Since 2010 the Cabinet Office has tried to establish a firmer grip on supplier management across central government. The challenges are varied and include contract negotiation, performance management measures and information management throughout the term of the contract. Such a diverse and complex relationship needs careful management and investment on both sides for it to be a real “partnership”.

The National Audit Office (NAO) has conducted two studies recently on delivery of public-private partnerships; in these reports the NAO challenged government and its private sector suppliers to work together more effectively in the taxpayers’ interest and to address the issues behind the current lack of confidence in government’s use of contractors. Contracting defines the terms of the relationship and the risk and reward apportionment must be clearly laid out with acceptable costs, gains and measures; together with clearly defined roles and responsibilities.

If the “crisis of confidence” that exists in partnering is going to be addressed, central government must lead the way in tackling these challenges. This includes growing its own contracting skills base, making effective use of open book arrangements to monitor service delivery and ensuring open and fair competition in the bidding and tendering process. There can be a perception of “current incumbent advantage” which is a barrier to fair competition. The taxpayer must be confident that there is a level of competitiveness which ensures that central government is getting value for money, and contract lengths must allow for this. Private providers should also be given confidence that the cost of the public sector customer will be worth the gain.

A true partnership is an agreement to cooperate and requires trust in all aspects of the relationship. If all these aspects align, mutual confidence in the contract will lead to appropriate accountability and trust. The open data agenda, as well as the growth of skills in the Civil Service with the newly opened Commissioning Academy and the Government’s commitment to increasing competition by making the bid process cheaper, are all steps in the right direction. However, change is a means to an end, not an end in itself, and more needs to be done to take advantage of these commitments to achieve an optimal partnership and value for the taxpayer. Tackling these challenges requires a public-private relationship that is informed and honest from the outset and communicative and trusting throughout, to ensure that contracts are both designed and managed to give the public value for their money. The size of this task should not be underestimated and there is still much more work to be done.


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