The government is exposed to accusations of fraud and overcharging over £40bn worth of outsourced public service contracts, following revelations of poor contract management, by the government watchdog, the National Audit Office (NAO). The NAO also found that five government contracts are being investigated by the Serious Fraud Office.
The NAO has released a report on their investigations, where they point to the need for widespread changes – “In most of the contracts reviewed across government there were weaknesses in the way those contracts were managed. Widespread problems were found in administration, including poor governance and record keeping and capacity issues.”
A test sample of 60 government contracts found that more than half – 34 – had ‘issues in the amount billed’, while when 73 contracts were tested against a good practice framework, auditors found that ‘many elements’ of the deals were at risk of over billing. The report notes that the problem could be much wider.
The investigation was launched following the revelation from government ministers last year that outsourcing companies G4S and Serco has significantly overbilled the taxpayer in regard to electronic monitoring contracts for offenders, with overbilling dating back to 2005, which led to inquiries by the Serious Fraud Office.
See the Guardian article, ‘Government open to fraud after failings on outsourced contracts, report says‘, The Guardian, 5 September, 2014