New guidance to help public sector managers judge whether outsourcing firms are operating in an ethical way has been launched, after a series of high-profile scandals involving service providers.
The UK public sector spends an estimated £187bn a year on goods and services delivered by third parties. But the government’s track record with outsourcing has been called into question in recent years by a number of high profile problems with suppliers – including a failure by contractor G4S to provide adequate security for the 2012 Olympics and the revelation that G4S and Serco had for years overcharged the for Ministry of Justice for electronic tagging contracts.
MPs warned last year that contractors needed to do more to “demonstrate the high standards of ethics expected in the conduct of public business”, and urged providers to be more upfront about their costs and performance.
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New guidelines issued this week by ethics watchdog the Committee on Standards in Public Life (CSPL) attempts to offer officials involved in commissioning services a checklist to avoid the kind of ethical failures that it warns “can be a major risk to the government” and undermine public trust in the state. While the committee says commissioners often “expect providers to conform to ethical standards”, it says they “rarely explicitly articulate ethical standards to providers”.
And it finds that there are currently “no consistent structures or arrangements” in the commissioning process to promote “the right ethical culture and behaviours” among providers.
In lieu of such arrangements, the committee recommends that those responsible for commissioning services use a number of criteria to judge the ethical commitment of outsourcing firms, including the tone set by management through their public statements and “day-to-day behaviour”.
There should also be some evidence of “board and individual responsibility for ethical standards”, the watchdog says, with ethics committees properly integrated into firms’ governance arrangements and not treated as a “bolt-on” extra.
Individual, annual sign-off of compliance with a firm's code of conduct, as well as an understanding of ethical expectations among the wider workforce are also listed as signs of a responsible organisation. Such a code of conduct should typically take the form of “a series of dos and don’ts” which are publicly available, properly monitored, and linked to performance pay wherever possible, the committee says.
And it stresses the need for adequate whistleblowing mechanisms to allow staff to raise concerns about their company’s conduct, as well as the publication of “good quality information in intelligible and adaptable formats” to help track performance in a meaningful way.
The committee calls on firms providing public services to show evidence “of good complaints handling” and a willingness to keep a close eye on subcontractors by making clear “the consequences of failing to meet the standards expected” throughout supply chains.
Launching the report, CSPL chair Lord Bew said: “Ethics matter. This is increasingly recognised by the business community as a necessary part of winning trust and building confidence in the public service markets. Ethical standards should not be taken for granted.
“Commissioners and providers need to be explicit with each other and the public as to the standards expected in the services which are being delivered.”