pens Carillion-proofing playbook: Let's run pilots of work before we outsource it, check firms' finances

Also makes vendor-luring pledge to take its fair share of risk

The UK government has outlined a series of safety nets designed to prevent another Carillion disaster in what it is calling an "Outsourcing Playbook".

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The document sets out 11 policies, some of which – like "living wills" or publication of KPIs – have been trailed over the past year.

Ostensibly, the Cabinet Office's playbook (PDF) is supposed to protect the government from a repeat of the Carillion debacle, when it had to go through a painful and risky process of untangling the construction firm from its many public sector contracts when the company liquidated in January 2018.

Businesses, including those in tech, will be required to run a pilot for work that is being outsourced for the first time, and all complex projects will have to go through a review process that was previously reserved for major projects.

Their financial standing will also be assessed, to see how likely it is they will go bust before the work is complete, and the government must carry out a "make versus buy" assessment to see if it could do it better alone.

That assessment will also include a "Should Cost Model", which aims to stop departments plumping for the cheapest option and ending up forking out more down the line. Any "abnormally low bid" – more than 10 per cent less than the average of all bids or the should-cost model – will be sent for central assessment.

Wait, outsourcers! Don't run from us like a startled fawn

The playbook, however, also seeks to make the government a more attractive client for outsourcers. Departments, for instance, will publish commercial pipelines to help suppliers understand long-term demand.

There will also be measures to tackle "inappropriate risk allocation", supposedly a "perennial concern" for suppliers, and something the UK’s spending watchdog has picked up on. Instead, the government must scrutinise risks more closely and ensure they "sit with the party best able to manage them".

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Departments will be expected not to ask that suppliers take on unlimited liabilities, they must co-sign a risk register with bidders and must not hold suppliers responsible for "errors in data… where they are unable to complete due diligence".

This brings to mind Capita's botched Primary Care Services project. Execs admitted there wasn't enough due diligence at the outset and said they had ended up "working blind" because of a lack of information – which led MPs to query whether the NHS had its part to play in the failure.

It is, then, perhaps no coincidence the playbook was drawn up with the suppliers the government is both courting and policing – including Capita. (Apparently civil servants and political powers were undeterred by the impact that working with businesses that have made some major cock-ups in delivering essential services might have.)

Indeed, the Cabinet Office even gave Capita boss Jon Lewis the opportunity to shoe-horn in a line about how important outsourcers are to the public sector in its canned statement.

"Capita is working closely with government to develop these reforms," Lewis said. "This is a sea-change, both recognising the vital contribution the private sector makes in delivering first-rate public services, and then finding ways to do this even better."

Some Reg readers may disagree with Mr Lewis. ®

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