Government plans open book accounting for public contracts

The government plans to implement open book accounting for public procurement contracts to improve oversight and accountability, as well as securing better value for money over the annual £187bn spend.

The move comes following recommendations by the Public Accounts Committee (PAC) for greater transparency around public sector procurement. The annual value of contracts goods and services with third parties is £187bn, around half of which is estimated to be spent on contracting out services.

PAC said that ‘there needs to be far greater visibility to government, parliament and the public about suppliers’ performance, costs and revenues.

The Cabinet Office will mandate the use of open-book accounting for contracts above an agreed level of expenditure and the system will be introduced by the end of 2014, although there are no details yet about the minimum contract value.

The latest Treasury minutes, issued 19 June, said that ‘the government believes that open book accounting for appropriate contracts can be beneficial –indeed some departments, particularly the Ministry of Defence (MOD), have already used open book accounting to strengthen their oversight of certain contracts enabling better value for money to be secured’.

The Cabinet Office will work with departments over the next six months to trial the wider use of open book accounting and to identify the sorts of contracts and the enhanced departmental capability necessary to secure the maximum benefit from open book accounting.

The results of the trial will be reviewed autumn 2014 with a view to mandating open book accounting for contracts where the evidence suggests it will enhance value for money, without disproportionately affecting small to medium-sized businesses (SMEs).

There will also be a new set of guidance for departments on how and when to use open-book accounting.

The Cabinet Office will also trial the use of the new Model Services Contract published in January 2014. The trial period will run until autumn 2014.

The government will review its use and consider any improvements to it in light of the trial period to conclude autumn 2014. It is likely to be used as the basis for appropriate contracts.

There are also plans to improve contractor transparency and a new code of practice to comply with Freedom of Information (FoI) requests will also be issued this autumn. This follows concerns by PAC that companies were not disclosing information due to confidentiality issues.

Departments are already required to publish contracts over £10,000. The Treasury has confirmed that the Crown Commercial Service is currently considering a replacement for the ‘contracts finder’  to expand its capability and make it easier for people to use, particularly for SMEs, who are looking to tender for public contracts.

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