NAO Overview Looks at UK Government Commercial and Contracting Activity

The UK’s National Audit Office released a report last week titled Government Commercial and Contracting: an overview of the NAO’s work.

This reviews the government’s commercial activity and capability across a range of key issues. Really, this is a summary and pulling together of NAO reports from the last few years that addressed government procurement and related activities.

Not another dull, 80-page report with lots of text, no pictures and convoluted auditors’ language, I hear you groan. But no! This is a resolutely 21st century communication, an “interactive pdf”, a graphics filled document with loads of hyperlinks and a couple of brilliant infographics that contain hard data but presented in a way that is clear and easy to understand.

But it is not all style and no content – hopefully the snazzy new format won’t detract from the hard messages it contains. Overall, whilst it recognises that improvements have been made in some areas, it is still critical of the execution of entire key processes such as contract management, and casts doubt on the government’s to implement its goals in areas such as transparency. As the NAO says under the “Why is it important” heading:

“Areas for further improvement include: greater transparency of suppliers’ performance, costs and revenues; more effective competition for government business, both reducing over reliance on a small number of single suppliers and encouraging more small‑ and medium‑sized enterprises into the market; stronger commercial skills within government when purchasing services, managing contracts and dealing with provider failure. Providers also need to demonstrate the standards of integrity expected from those delivering public services”.

There are some very useful graphics and an attempt at making a definitive statement about the size of “public sector procurement” – NAO comes up with £190 billion per year on revenue expenditure and £36 on capital.  Six key sub-headings and topics are then covered, with some narrative around each, including thoughts on strengths and weaknesses, and the n links to relevant reports that NAO has published gong back over the last five years or so. The topics are:

Government’s commercial capability, which focuses heavily on contract management

Managing contacted-out service delivery, which talks about market weakness as well as poor behaviour from suppliers

Accountability and transparency, which is very interesting as NAO says government may not have the ability to be transparent (even if it wants to be)

Government as one customer, focusing in the main on the work of the Crown Commercial Service (NAO does still seem to have a little too much faith in “economies of scale” for our liking, it should be said)

Managing markets for public services, which highlights the risks of over-reliance on certain suppliers, as well as risks around provider failure

Using new commercial models, such as payment by results, JVs, social impact bonds and mutuals

As we say, a very useful and interesting piece of work. Indeed, we plan to come back and cover each of those six topics in more detail shortly, but for the moment, you can get hold of the report here.

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