The Government has called for a new balance of risk in public sector outsourcing and for complex contracts to be piloted before risking wider public sector exposure.
The new outsourcing guidance - the Outsourcing Playbook - is designed to reform how 'government allocates risk between itself and its suppliers', and follows Carillion's collapse last year.
'New complex contracts will be piloted with the private sector before rolling out fully, enabling the government to learn from experience and deliver better public services,' the Cabinet Office said.
Cabinet Office minister Oliver Dowden said: 'Our new measures will improve how the government works with industry and provide better public services for people across the country.
'I can today provide reassurance that the Playbook makes explicit that, when designing contracts, departments must seek to mitigate, reduce and then allocate risks to the party best able to manage it.'
The Civil Engineering Contractors Association (CECA) said the guidance meant that from now on, all outsourcing projects will conduct market health and capability assessments, Project Validation, Reviews at an early stage, undergo ‘Make versus Buy’ assessments, and will follow the ‘Should Cost Model.’
Director of external affairs for CECA, Marie-Claude Hemming, said: 'Following the collapse of Carillion last year, it is welcome that the Government has listened and is implementing important changes that will optimise the procurement of public projects by the private sector in future.
'In particular, we welcome the recognition that the procurement process is best undertaken by close co-operation between government and industry at the earliest possible stage.
'At the same time, we call on government to move away from evaluating projects solely on price, and towards a new model that measures the social benefits of different types of infrastructure schemes to support business cases for future investment.'
Measures in the Playbook include:
- Requirement for Pilots - enabling the government to learn from experience and deliver better public services
- Risk Allocation - to ensure contracts are set up for success from the outset
- Key Performance Indicators - KPIs from every new outsourcing contract will be made publicly available
- Resolution Plans (Living Wills) - For the rare event of the supplier’s corporate failure
- Publication of Pipelines - Departments will be required to regularly publish their upcoming requirements, to help suppliers plan ahead
- Make versus Buy Decisions - To identify when it is best to deliver public services in house or when there is benefit to drawing on the expertise of the private sector