Weak markets

In 2014 the House of Commons Public Accounts Committee published Transforming Contract Management. The report, published in the wake of revelations that G4S and Serco had been overcharging the Ministry of Justice for years on electronic tagging, made a series of recommendations as to how contract management could be improved to achieve better value for money. A key finding was that ‘as public service markets develop, quasi-monopoly suppliers are emerging who squeeze out competition, often from smaller companies with specific experience.’ It recommended that government guard against suppliers such as G4S or Serco becoming too big to fail and encourage SME’s to bid for work by disaggregating contracts.

Locality/Vanguard 2014 argue that large public sector contracts are damaging and do not increase efficiency. They result in: ‘costly administrative burdens of tendering, compliance and monitoring’ which is ‘…particularly troubling for third sector organisations, who strive to maximise resource allocation to the frontline and away from management and administration’. This may be troubling, if as the Revolving Door Agency argue: ‘Voluntary organisations can play a key role in influencing commissioning, through demonstrating the effectiveness of interventions that public sector organisations may be unwilling or unable to test themselves, and through building partnerships in local areas’. 

Boviard, 2016 suggests that: ‘Super sized providers should be viewed with scepticism. Providers should stay locally appropriate, locally determined and locally accountable’ and that ‘In personal services economies of scope may be far more important than economies of scale.’