Extend FOI to public contracts with private providers, say MPs

The freedom of information regime should be extended to cover public contracts with private providers, the Public Accounts Committee has said.

In a report, Contracting out public services to the private sector, the PAC said the Cabinet Office should explore the scope for an FOI provision to be included in standard contract terms.

The committee also called for the National Audit Office to have access rights and for the introduction of a requirement for contractors to open their books up to scrutiny.

According to Cabinet Office figures, only a third of government contracts are on an open-book basis. “Even then, departments rarely use the access provided and have a shortfall in the capability required to do so,” the report said.

The PAC report said: “Neither the Cabinet Office nor departments should routinely use commercial confidentiality as a reason for withholding information about contracts with private providers. A clear explanation for any exceptions must be provided and the Cabinet Office should check that departments are treating disclosure as their default position.”

Margaret Hodge MP, chair of the committee, claimed there was a lack of transparency and openness around the Government’s contracts with private providers, “with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information”.

It was vital that Parliament and the public were able to follow the taxpayers’ pound to ensure value for money, she added.

Hodge said four private contractors that met with the committee – G4S, Atos, Serco and Capita – had suggested they were prepared to accept the measures.

“It therefore appears that the main barriers to greater transparency lie within Government itself,” the PAC chair said.

In the report the committee also said:

• The Government was “clearly failing to manage performance across the board, and to achieve the best for citizens out of the contracts into which they have entered”.
• The Government needed "a far more professional and skilled approach" to managing contracts and contractors.
• Contractors needed to demonstrate the high standards of ethics expected in the conduct of public business.
• The contracting process at present excluded SMEs, “and therefore the innovation which could be generated by a wider group of suppliers is not available to Government”.
• So far, the contracting out of services had led to the evolution of privately-owned public monopolies, who largely, "or in some cases wholly", relied on taxpayers’ money for their income. “The state is then constrained in finding alternatives where a big private company fails.”
• Accounting Officers should be required to take responsibility for and show leadership in relation to contract management. “One of the consequences of devolving this role to relatively junior officials is they regard contract management as an exercise in catching people out, rather than working closely with contractors to improve the quality of services.”

The report said the public’s trust in outsourcing had been undermined by a number of events, such as Capita’s failure to deliver court translation services and G4S and Serco’s overcharging on electronic tagging contracts.

“These high profile failures illustrate contractors’ failure to live up to standards expected and have exposed serious weaknesses in Government’s capability in negotiating and managing private contracts on behalf of the taxpayer,” it added.

Capita was fined just £2,200 when it failed to fulfill the court translation services contract – “despite the substantial extra costs to the criminal justice system of delayed trials”, the report revealed.