National Audit Office (NAO) - Cabinet Office: Managing Government Suppliers - HC 811

In this memorandum 'Managing government suppliers', the NAO welcomes the fact that the Cabinet Office is now asserting government's position with contractors in way that its scale as a customer merits. Specifically, this has enabled government to get greater value from contracting and has sent signals that government is willing to be tough on underperformance. However, the Cabinet Office still faces a number of challenges in developing a more mature approach. It is currently focused on short-term savings and has adopted a robust approach with departments and suppliers, which has enabled it to report significant savings from contract renegotiations. However, this approach will become harder over time, and risks missing out on achieving longer-term value for money through innovation and investment. There is a balance to be struck between tough negotiations and maintaining relationship with suppliers in the long term, if government is to maintain competition in public sector markets. The Cabinet Office is seeking to reform commercial practice across Government with the development of the Crown Commercial Service. There is a risk that the ambitions are not matched by the right resources, capability and information. It has gaps in commercial experience and expertise below senior levels, while its information on its 40 strategic suppliers is inconsistent and incomplete. A related report 'The role of major contractors in the delivery of public services' (HC 810, session 2013-14, ISBN 9780102987027) sets out some of the benefits that can be achieved through contracting but highlights issues that deserve greater public scrutiny.