UK.gov outsourcers must prove their 'social value' to win contracts

The UK government has revealed plans to rate outsourcers on "social value", require them to publish KPIs and meet higher cybersecurity standards to tackle the fallout caused by the collapse of Carillion.

In a speech at the Reform think tank in London today, Minister for the Cabinet Office David Lidington announced measures the government hopes will convince the public that contract awards are based on more than just the bottom line.

This includes extending the requirements set out in the Social Value Act on outsourcers – a move ministers claim will level the playing field for co-operatives, mutuals and social enterprises.

"We will extend the requirements of the Social Value Act in central government to ensure all major procurements explicitly evaluate social value where appropriate, rather than just 'consider' it," Lidington said.

"By doing so, we will ensure that contracts are awarded on the basis of more than just value for money – but a company's values too, so that their actions in society are rightly recognised and rewarded."

The government has been repeatedly criticised for allowing itself to get locked in to long-term, high-value contracts with a small number of suppliers. The effects of this became clear when Carillion collapsed, laying bare just how dependent many public services are on a few firms.

Lidington's comments indicated that Whitehall was not planning to move more services in house, emphasising that the government "cannot do everything itself". There are many "clear" benefits of outsourcing, he added, such as benefitting from the economies of scale provided by contractors and giving the government access to specialist skills.

However, he went on to say that the government needed to build a more diverse marketplace of suppliers and that they would need to offer up more information in order to help boost public trust.

As well as asking suppliers to publish data and action plans on "key social issues" – such as on the gender pay gap, representation of minority groups and efforts to tackle modern slavery – they will also be given a number of other rules to play by.

This includes higher standards for cybersecurity – prompted by the WannaCry attack that almost crippled the NHS – and to develop "living wills" that allow rapid contingency plans to be put in place if needed.

Firms providing crucial contracts will also be told to publish data on various KPIs, including response rates, on-time delivery and customer feedback – an idea that has been mooted by the Public Accounts Committee during its inquiry into government outsourcing.

In an evidence session last week, Capita boss Jon Lewis said he would be open to it – but suggested the government should do the same.

"I think, as a taxpayer, I'd want to see the value for money I'm getting for services performed internally by a government department, as well as the value for money I'm getting for outsourced services," he told MPs.

Elsewhere in his speech, Lidington added there will be "further transparency initiatives" aimed at building public trust in the coming months.

One such idea pushed by those outside government is to extend the Freedom of Information Act so that it covers contractors working on behalf of public authorities. At the moment they escape the public scrutiny in-house projects could be given.

Labour MP for Hammersmith Andy Slaughter is attempting to put this idea into action through a Private Members Bill, which was introduced to parliament last year – although these bills rarely become law. ®