Source · Select Committees · Public Accounts Committee
Recommendation 23
23
Accepted
Randox’s published accounts do not yet cover the entire period of the contracts we considered.
Conclusion
Randox’s published accounts do not yet cover the entire period of the contracts we considered. Its accounts for the year to 30 June 2021 reflect how the company has already expanded as a result of increased business through the pandemic. At June 2021, 40 Qq 22, 49; C&AG’s report, para 11 41 Qq 23–25 42 Qq 39–40 43 C&AG’s Report, para 14 44 Qq 37–38 45 Q 57; Randox Laboratories Limited, Annual report and financial statements for the financial year ended 30 June 2021; Randox Laboratories Limited, Annual report and financial statements for the 18 month financial period ended 30 June 2020. Randox originally reported a loss of £14.9 million for the 18 month period to 30 June 2020, but this was restated in the latest accounts to a profit of £1.2 million due to the correction of an accounting error. 46 Randox Laboratories Limited Annual report and financial statements for the financial year ended 30 June 2021 47 Q 57 Government’s contracts with Randox Laboratories Ltd 15 the company had net assets of £171 million, a ten-fold increase on its net assets of £17 million in June 2020. The company further noted that it had doubled its workforce since
Government Response Summary
The Government Commercial Function has published the The Sourcing Playbook which sets out the key commercial principles that underpin commercial activity across Government and provides commercial, finance, project delivery, policy and other professionals with comprehensive guidelines, rules and principles that will help them to get more projects right from the start.
Government Response
Accepted
HM Government
Accepted
6: PAC conclusion: The Department did not do enough work to determine whether Randox was making excess profits from its contracts with Randox. 6: PAC recommendation: The government should strengthen its commercial guidance on ensuring that profits are not excessive, by including profit level expectations and obligations to benchmark in contract decision making. 6.1 The government agrees with the Committee’s recommendation Recommendation Implemented 6.2 The Government Commercial Function has published the The Sourcing Playbook which sets out the key commercial principles that underpin commercial activity across Government and provides commercial, finance, project delivery, policy and other professionals with comprehensive guidelines, rules and principles that will help them to get more projects right from the start. 6.3 The Sourcing Playbook describes the activities to be undertaken by commercial teams throughout the commercial lifecycle, with a series of supporting guidance notes covering delivery model assessments, bid evaluation and cost modelling tools. 6.4 There is further enhanced guidance covering risk allocation and pricing approaches and assessing and monitoring the economic and financial standing of suppliers to enable commercial teams to better understand cost-drivers and profit margins. 6.5 The standards to be achieved are specified within published Government Functional Standards: • GovS 008 Commercial • GovS 002 Project Delivery • GovS 006 Finance