Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Accepted
Require departments to rigorously adhere to public money principles for all company interventions.
Recommendation
As with any activity involving public money, a department must adhere to the principles of regularity, feasibility, propriety and value for money set out in the Treasury’s Managing Public Money. A department will likely be required to carry out a formal Accounting Officer Assessment when considering an intervention in a private company.44 The Treasury told us that if a department is seeking to provide financial support to a company and “it is highly likely to be novel, contentious or repercussive”, it is likely that it will require Treasury’s approval.45
Government Response Summary
The government states the recommendation to adhere to principles of regularity, feasibility, propriety, and value for money for interventions is already implemented. It outlines existing guidance in Accounting Officer Assessments, Managing Public Money, and the Sourcing Playbook, along with support from finance directors and commercial teams.
Government Response
Accepted
HM Government
Accepted
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 Guidance documents require Accounting Officers (AOs) to consider commercial risks in their decision-making, including around the financial resilience of suppliers. Individual departments are then responsible for providing their AO advice in line with this guidance. 3.3 The AO Assessments Guidance sets out four standards when considering projects and proposals. AOs must consider value for money, which includes evaluating risks from third party involvement. The feasibility standard also requires AOs to consider commercial factors. 3.4 Managing Public Money (MPM) complements the above guidance and sets out responsibility for ensuring an organisation’s procurement, projects and processes are systematically evaluated to provide confidence about suitability, effectiveness, prudence, quality, and good value. MPM includes specific expectations on assessing risks and provides links to commercial guidance. 3.5 The Government Commercial Function’s ‘Sourcing Playbook’ sets out a recommended approach to assessing the economic and financial standing of bidders, determining their capacity to deliver as part of the initial selection process. There is a chapter on resolution, providing guidance on monitoring and contingency planning for the failure of suppliers (underpinned by a detailed resolution planning note). 3.6 The Orange Book provides detailed guidance on risk management, including risks from supplier failure and mitigations to manage this. 3.7 In addition to the above guidance, departments and AOs are supported by professionally qualified finance directors and specialist procurement and commercial teams. MPM requires all draft assessments to be approved by a department’s senior finance officer before being submitted to the AO.