Ministerial demands for greater transparency in contractual dealings is a reminder that the client/contractor relationship is in fact a three-way affair involving the client organisation, the contractor and last, but certainly not least the taxpayer. More often than not, it is events at contractors that grab the headlines. For example, the resignation this week of the Chairman of Serco due to their falling share price as a result (in part at least) of some significant failings in service delivery on a number of its major government contracts. These failings led to Serco repaying almost £70m to government due to overbilling – something that was undetected by the clients.
Whilst these examples reflect poorly on the contractors, they also raise serious questions over the rigour and quality of client side management controls. The client organisation is the steward of taxpayer money and so carries ultimate responsibility for how this money is used. Failure to meet this responsibility can have serious consequences for those responsible for contract management, casting doubt over their capabilities. To that end, open book provisions represent a compelling contractual mechanism enabling the client to ratchet up its scrutiny processes so that it remains fully aware of contractor performance.
Given the attention on value-for-money and the spotlight on the travails of some major contractors, you should, as a matter of urgency, consider the following:
- Do you have open book provisions across your contracts?
- If so, have you invoked the provisions?
- If not, why not (and how can you be assured that the contract is delivering value-for-money to the taxpayer)?
- Where there are gain share provisions, how do you know you are receiving the right amount of profit?
By having and invoking an open book clause, you will be able to probe deeper into the operations of your contractors, paving the way to discuss in a more informed manner, further opportunities to improve the efficiency and effectiveness of service delivery. As contracts become larger in scale, longer term in duration and increasingly flexible and complex, open book reviews should form an integral part of your contract management regime. Taking action will contribute to your wider value-for-money objectives.
For further information on how our open book reviews can help you, please contact Adrian Brook or Jay Hussain.
Public Sector team
Open book reviews brochure