Rewarding Failure: ‘Startling’ Number of Government Outsourcing Firms Not Hitting Minimum Targets

Around half of the Government’s biggest private outsourcing partners are failing to hit their minimum contractual targets, Byline Times can reveal.

This newspaper used government data to assess the performance of the ‘strategic suppliers’ – a group of 40 elite firms including G4S, Serco and BAE Systems – which receive the most lucrative and esteemed government contracts. 

But in findings that have been labelled “startling”, Byline Times found that around half of the suppliers assessed failed to hit minimum targets set for them in at least one contract. 

Despite those problems, the Strategic Suppliers seem to be managing a significant and growing share of public services. According to one report by data firm Tussell, they not only receive roughly 11% of public sector spending, but their income from government contracts rose by 24% between 2019-2020 and 2021-2022 alone.

The research was based on the Government’s quarterly release of key performance indicators (KPIs) on government contracts, which list contracts and whether their providers have hit their minimum primary target.

The new analysis may underestimate the problem, however, as huge swathes of government contracts get no such rigorous assessment – according to the National Audit Office just 8% of government spending on major projects had robust evaluation plans in place.

This means that many of the contracts won by the strategic suppliers do not appear in government KPI disclosures. Of the 40 strategic suppliers, only 33 had any of their many contracts assessed in the last year.

Among those, 18 were failing to hit the minimum targets outlined in at least one of their contracts, for several they were failing in dozens of contracts. Many had a higher contract failure rate than the average recorded across the entire KPI spreadsheet, with some failing to reach minimum standards rates in half of the dozens of contracts they work on.

Many of the failures are reminiscent of the controversy around the Government’s PPE procurement scandal during the pandemic. Byline Times has previously reported how, between February and November 2020, 98.9% of COVID contracts – worth £17.8 billion – were awarded without any competition, while those with links to the Government or Conservative Party at large were awarded more than £2 billion in COVID-related contracts.

Dr Gavin Hayman, executive director of the Open Contracting Partnership, said Byline Times’ findings were “startling”.

“You would think that the major outsourcers would perform better than firms with less experience of working with the government, but it seems that they are doing worse,” he said. “It would then be logical to do less business with them but, no, it seems we are doing more.”

The Cabinet Office did not comment.