Cost and not quality is the government's priority in outsourcing services, say MEPs

Cost and not quality is the government's priority in outsourcing services, say MEPs

Public services suffer from the government's recent priority to prioritize cost over quality when outsourced to the private sector.

The collapse of Carillion has highlighted fundamental shortcomings in the government's commitment to provide £ 250 billion in services and projects each year, the Committee on Public Administration and Constitutional Affairs (PACAC) found.

The public's trust in the system has been "seriously damaged" because the Baugigant Carillion is going down, MEPs said.

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Services deteriorated as contractors know that the government prioritizes price over quality, the report said.

And the government has been unable to provide real evidence to substantiate its main message that outsourcing produces better public services for less money, parliamentarians said.

The study found that the government's top priority in outsourcing is "to spend as little money as possible while forcing contractors to take an unacceptable financial risk".

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The report said: "It is unacceptable that the government spends £ 250 billion with little evidence that it is currently pursuing its own procedures to achieve good value for money.

"The government's concern about the price has been noticed by the market and gives cause for great concern.

"The fact that the government does not judge the quality of services and their costs is regrettable."

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MEPs noted that the government's "concern over costs" has forced it to renegotiate more than £ 120 million worth of contracts since the beginning of 2016 to "ensure that public services continue".

The committee said: "Ultimately, this has resulted in poorer public services, as it has given a clear signal to companies that the cost and not the quality of services is the government's priority.

"The contractors told us that it is well known that the government prioritizes costs over all other factors for all procurement factors, which lowers prices below the cost of services required by companies.

"Worse yet, the government has been unable to provide substantive evidence for the basic claim behind outsourcing: that it provides better services for less public money, or a rationale for why or how it decides to outsource a service. "

MEPs also criticized the workings of the Private Finance Initiative (PFI).

The committee said it was "shocking" that the government admitted that the "whole (PFI) structure should keep the debts on record".

PACAC Chairman Sir Bernard Jenkin said: "It is shocking that the government has been trying to blame contractors for risks that it does not understand and has misunderstood its costs.

"It has accepted bids below the cost of providing the service, so the contract had to be renegotiated.

"The Carillion crisis itself was well organized, but it could happen again if lessons are not learned from risk and contract management and the strengths and weaknesses of the sector.

"Public trust requires that outsourcing better reflect public service values, and the government needs to use that moment to learn how to effectively manage its contracts and relationships with the marketplace."

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