Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Department's reliance on separate negotiations for IT integration carries risks.
Conclusion
Integrating digital systems is a common source of contractual failure and dispute. Contractors can use difficulties in the roll-out of a new system as justification for not 27 Q 32 28 Q 42; Civil Service People Survey 2022: Benchmark Scores, table 3 29 Qq 2, 37, 43 30 Qq 6, 21 31 C&AG’s Report, para 2.7 32 Q 62; C&AG’s Report, para 18 14 Revising health assessments for disability benefits performing to the contract.33 The National Audit Office identified three sources of this integration that the Department will need to successfully manage: rolling out an IT system for its interim service contractors to use, working with contractors to test its new Health Assessments services using the case management system it is developing, and then rolling out the Health Assessment Service and IT system into new contracts in 2029. The Department told us that it had included sufficient flexibility in its contacts with providers to allow it to change them to include the scaling of the service, testing, and integration of systems that it needs. However, the NAO found that the Department is using standard service contracts and each change will need to be negotiated separately, which can be time consuming and introduces the risk of both cost increases and delay.34
Government Response Summary
The government agrees, stating that current Functional Assessment Service (FAS) contracts include levers for supplier involvement and transformation. It commits to mitigating competitive advantage through market transparency and developing a future health commercial strategy from 2024 to explore new contracting mechanisms.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The Functional Assessment Service (FAS) contracts contain specific contractual levers and mechanisms to enable the supplier involvement required to support transformation. This includes test and learn activity and the expansion of the new Health Assessment Service (HAS). Suppliers are incentivised strategically by being a partner in the development of future services, and through mechanisms such as gainshare where suppliers share the rewards that transformation drives. 4.3 Competitive advantage by incumbent suppliers can never be completely overcome, but the department will mitigate this through market transparency and robust procurement processes to encourage competition and increased participation. The department has demonstrated the ability to achieve this in the recently awarded FAS contracts, with two new suppliers. 4.4 The department’s future health commercial strategy will be developed from 2024, putting the department in a strong position to replace services in 2029 and commence transformed services. The strategy will follow Sourcing Playbook best practice, considering the department’s role and interaction with the Market, through application of a delivery model assessment. It will focus on understanding the role of suppliers in the transformed HAS, including whether any element would be best delivered directly by the department; development of the right marketplace for those services, transparency of information with that market as the department continues to develop HAS, the opportunity for market input to the development of services in readiness for procurement, and how best to procure future services. 4.5 The strategy will also explore new contracting mechanisms offered by new UK Procurement Regulations that the department expects to provide more flexibility for contracting authorities in such complex procurements.