Why a new approach is needed

JOSHUA REDDAWAY: I’m Joshua Reddaway. I’m the Director of Commercial and Contracting Value For Money at the National Audit Office. Essentially, that means I’m responsible for our relationship on the Value For Money side with the Crown Commercial Service and for leading our work on cross-government commercial issues. I think that the whole commercial landscape for government is fundamentally changing at the moment. Well, we thought that there was a real particular crisis of confidence around contracting over the last few years. There was this attitude that the important value in contracting out came from the buying.

You achieve greater value for public services and taxpayer through the competition and from competing and from disrupting what was there before, particularly if you thought that what was there before was a bit staid and not very economical. So the contract manager was just the people that came in afterwards to make sure that that deal was implemented properly. And there’s no value in contract management in that worldview. It’s just a risk mitigation exercise. It’s to make sure that all that value, that’s already been achieved when you sign the contract, happens.

And I think that’s totally wrong. In reality, the delivery of public services is very hard indeed. And it requires multi-disciplinary skilled people to work together day in, day out to drive value, to improve the service to the citizen, and to make it cheaper over time. And that doesn’t happen every four or five years when you are competing a contract. That happens all the time and over the long term. If you agree with us that the civil service is at a permanent disadvantage when it comes to its commercial capability, it’s not going to be able to out-negotiate all of its contractors all the time. There are more than 100,000 contractors. Civil service is not willing to out-negotiate them all the time.

So change the game. It shouldn’t be about out-negotiation. It shouldn’t be about who can get the best deal. It should be about creating relationships where the contractor’s incentives are aligned with that of the taxpayer and they are delivering services that work. That means the government needs to use all of its buying power to dictate terms, to create systems where it can see right the way down its supply chains and understand what is going on, but also where it can place reliance, using things like accountability, direct accountability of the contractors.

And that is a very important part of my job, to ensure direct accountability of the contractors to Parliament, ensuring transparency so it’s not just the civil service that’s holding the contractor to account, but it’s also the public as well. I think government is leading in a lot of this because the challenges are so acute in trying to work out what managing a commercial relationship is. Those discussions are being had for the first time in a very serious way. So actually, it’s quite an exciting development at the moment.