The government has committed to providing greater visibility around suppliers’ performance, costs and revenues when outsourcing services.

A Public Accounts Committee (PAC) report in March accused the government of failing to manage private companies that provide outsourced services, and said these contractors had to be more ethical when dealing with the government. 

The report followed hearings with major suppliers Atos, Capita, G4S and Serco, and with the Cabinet Office, the Department of Health, the Ministry of Defence and the Ministry of Justice. It stated: “Government needs a far more professional and skilled approach to managing contracts and contractors, and contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs.”

The government spends £187bn a year on goods and services from third parties, with about half of this contracted to outsourcers. IT products and services make up a major part of this spend.

The Treasury has now released government responses to a number of PAC reports in the Treasury Minutes for June 2014, including responses to the issues surrounding contracting out public services to the private sector.

One of the measures suggested is to explore the workings of the Freedom of Information Act (FOI) and how it could be extended to increase the transparency of contracts.

In particular, the PAC report suggested that neither the Cabinet Office nor government departments should routinely use ‘commercial confidentiality’ as a reason for withholding information about contracts with private providers. The report said a clear explanation of exceptions must be provided, and the government has agreed to this.

A government statement said: “Some information held by government will be commercially sensitive and will require careful handling to protect government’s long-term commercial interests. But the presumption should always be in favour of disclosing information wherever possible.”

The government has committed to ensuring that, by the end of this year, departments will provide a high-level explanation of any redactions in their contracts when they are published.

The government has also agreed to the use of open-book accounting for contracts above an agreed level of expenditure.

The Cabinet Office has agreed to work with departments over the next six months to trial the wider use of open-book accounting, with a view to mandate it for contracts where the evidence suggests it will enhance value for money without disproportionately affecting SMEs.

The government has also agreed that the Cabinet Office should ensure the Comptroller and the Auditor General have adequate access rights to contractors. 

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