0370 270 6000

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

Safer maternity care: a new approach to learning from harm

On 28 November 2017, the government announced its refreshed maternity safety strategy to prevent avoidable serious incidents in maternity services.

View blog

Stop press! No news on the Law Commission deprivation of liberty reform proposals

The Government has made an interim statement in response to the detailed proposals for reform on the law on mental capacity and deprivation of liberty.

View blog

NHS Resolution publishes 'five years of cerebral palsy claims'

In line with its greater strategic focus on prevention and learning to improve safety, NHS Resolution has today published ‘Five years of cerebral palsy claims’.

View blog

Charlie Gard – European Court of Human Rights to hear case

It would be hard to find a more tragic set of circumstances than Charlie Gard’s case and the understandable anguish for his parents.

View blog