Recommendation 3

In 2015, the Ministry failed to protect taxpayers’ interests through its naïve approach to the outsourcing of facilities management services. The Ministry admits that its approach prioritised delivering at speed and achieving predicted £79 million in cost savings at the expense of the quality of the service provided. It outsourced a complex service without fully understanding what it was contracting out, the condition of the assets in the prison estate or the services required, and without properly testing its assumptions. Demand for reactive maintenance work as a result of poor-quality assets or vandalism has cost the taxpayer almost £143 million more than expected. In attempting to outsource a problem rather than first understand and address it, the Ministry has repeated many of the mistakes that we observed in its Transforming Rehabilitation programme. Five years after the contracts were first let, the Ministry still does not fully understand the condition of the assets within the prison estate. We have seen across government that once a fundamental mistake is made, it can take years to unpick. The Ministry’s contract with Carillion went badly wrong, but it asserts that the terms of the contract it agreed meant it was too expensive for the Department to exit early. The consequences of its poor handling of outsourcing facilities management services could be felt for many years to come. The Ministry must learn lessons from its failed approach and get a better grip on its assets and providers. Recommendation: On completion of its asset survey across prisons, the Ministry should write to the Committee explaining how it: • has applied learning from this exercise to improve facilities management services and inform future commercial decisions; and • will ensure that it captures detailed asset records up front for new prison builds to avoid repeating past mistakes.