Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
Mapping multi-tiered public service supply chains presents significant complexity and cost challenges.
Recommendation
The National Audit Office (NAO) reported that the Cabinet Office’s markets, sourcing and suppliers team were in the early stages of exploring how departments map their supply chains, and whether a similar approach could be taken for public service supply chains.22 The Cabinet Office spoke about the example of UKCloud, which provided secure cloud data services to several government departments and went into liquidation in 2022.23 It explained how this was a “very difficult-to-spot problem” because it was “four tiers down” and it would be very costly and difficult to maintain a database that mapped “other subcontractors to people way down our supply chain”.24 Retaining corporate knowledge
Government Response Summary
The government states the recommendation to improve supply chain mapping is already implemented. It describes existing measures such as the Lead Government Department approach, improved supplier monitoring via the ‘Sourcing Playbook’, and Cabinet Office monitoring of strategic suppliers.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 The government uses a Lead Government Department (LGD) approach to cover all phases of emergency planning, response, recovery and risk assessment. Usually, the LGD is the department with primary policy responsibility for the risk and expertise for the area impacted by the emergency scenario. 1.3 LGDs should escalate supplier and company risks through their internal escalation routes and to Cabinet Office and HM Treasury as required, for example should the department identifying the risk not be the clear lead for response, if intervention is being considered and HM Treasury spending approval may be required, or for additional expert support. 1.4 Monitoring of suppliers for financial distress has improved significantly since Carillion’s liquidation in 2018. The Government Commercial Function’s ‘Sourcing Playbook’ and associated guidance provide recommendations to departments regarding regular monitoring of suppliers’ financial performance. 1.5 The Cabinet Office monitors the strategic suppliers to government and proactively engages with public sector stakeholders to share intelligence, including bringing together customers of a common supplier where appropriate. Where there is a high level of exposure across multiple departments, the Cabinet Office may coordinate a response. 1.6 Responsibility for supply chain resilience and corresponding intelligence lies with LGDs. The government has published several strategies to ensure resilience in supply chains for critical sectors, for example on semiconductors, batteries and critical minerals. Supply chain intelligence is regularly gathered by sector teams from conversations with industry and shared with ministers and between officials.