MPs voice outsourcing fears

Government departments need better risk management strategies to avoid big outsourcing contracts turning into costly failures, according to Whitehall watchdog the Public Accounts Committee (PAC).

The PAC report, Managing Risks to Improve Public Services, acknowledges that the public sector has made significant improvements in managing risk since an initiative launched by Prime Minister Tony Blair in 2002 but warns that more work - particularly around outsourcing - still needs to be done.

The government's decision to keep the details of the Office of Government Commerce (OGC) 'Gateway' project reviews under wraps for reasons of commercial confidentiality is questioned by the PAC report.

"One view is that if such reviews were published they might no longer be sufficiently critical or open in their assessment of risks, and therefore of less value to officials in departments managing programmes. Information included in such assessments could, however, also enhance parliamentary scrutiny of how decisions have been reached and whether they were soundly based taking account of risks," the PAC said.

The report also encourages a more open and frank relationship between departments and outsourcing suppliers early on to determine whether the services can be delivered to the required standard on time and within budget.

"One way to encourage contractors to provide comprehensive and accurate data with which to monitor performance is to develop a common purpose and sense of openness with contractors to encourage them to be frank about risks they are running and potential problems before they arise," the report said.

But the report adds that risk should not be reduced to the point where it suppresses the innovation needed to improve public services.

"Taking opportunities to improve public services requires taking risks, and the ability to manage those risks requires officials to have the skills, knowledge and training to do so... risk management and innovation should be more widely recognised as competences required to progress to senior posts," the report said.