Recommendation 4

Despite paying more for the new service than for COMPASS, the Department has not yet demonstrated that it is getting value for money in return. The Department asserts that COMPASS was under-priced and that its modelling indicated that the new services should cost between 20% and 31% more. Only three of the seven geographically based contracts initially attracted more than one bid, and three contracts were awarded to the sole bidder. Two of the contracts initially attracted no bids at all. In total only four companies submitted bids and the Department became a customer in a seller’s market. The Department is paying an estimated 28% more to providers, but with more bids it may have been able to secure better prices. Two of the three COMPASS providers continued to provide services under the new contracts, even though one of these had paid millions of pounds in service credits for performance failings. In return for paying more, the Department expects a better quality service and better support for vulnerable people. To be able to provide this better service, providers need to share data with each other, and with the Department. However, this has been hindered by an inability to share information automatically; instead relying on exchanging information by email and telephone, which is inefficient and more prone to errors. The Department is working to improve the automated sharing of data. Providers expect to make profits of between 5% and 13%, which the Department deemed reasonable when compared to other outsourcing contracts. The Department intended, from the early months of the contract, to use open book accounting to assess the providers’ profits, but this is not yet in place, meaning it cannot know whether it is paying a fair price for the services and therefore it cannot provide evidence to show contractors are not making more profit than is reasonable. The Department is overclaiming success Asylum accommodation and support transformation programme 7 and justifying