already registered?

Please sign in with your existing account details.

need to register?

Register to access exclusive content, sign up to receive our updates and personalise your experience on brownejacobson.com.

Privacy statement - Terms and conditions

National Audit Office reports on outsourcing public services

14 November 2013

The National Audit Office's recent report on contracting with the private sector raises several questions about how outsourcing contracts operate.

In comparing the profitability of public sector contracts with their other activities the NAO concluded the average return made by large outsourcing firms on government contracts is lower than on private sector deals so its difficult to read from this that the public sector is getting a bad deal, but profit margins do vary between contracts.

However the NAO is concerned provisions such as "open-book" accounting, benchmarking and profit-sharing arrangements are used inconsistently across public sector deals.

Given outsourcing of public services is controversial to many, including mechanisms to ensure this type of transparency may be to everyone’s advantage. As the NAO warns, political pressure merely to reduce costs could cause providers to exit certain public sector markets, stifle innovation, reduce competition and possibly lead to higher prices.

The points raised by the NAO underline the importance of embedding transparency and a partnership ethos in outsourced contracts.

related opinions

English or Welsh 'fluency duty' to come into effect for public authorities

Part 7 of the Immigration Act 2016 will soon bring into force a “Code of Practice on the English language requirement for public sector workers”.

View blog

Claim allowed to proceed in restitution for failure to provide s.117 MHA 1983 after-care services

A recent judgment by Mr Justice Newey in Richards v Worcestershire County Council and another could have huge implications for local authorities and CCGs providing after-care services to patients.

View blog

Are agency workers protected if they blow the whistle?

The definition of ‘worker’ under the Whistleblowing legislation is already much wider than in other areas.

View blog

CQC secures first conviction for breach of fundamental standards

An adult social care provider was yesterday sentenced to a £190,000 fine at Bradford Magistrates' Court for failing to provide safe care and treatment.

View blog