“Last year, central government spent £12 billion on service contracts. These contracts covered computers, security, cleaning and catering. However, due to the government’s weak management of these contracts, potential savings of over a quarter of a billion pounds are being lost.

“Education is just one area where poor contract management has caused severe damage to public services. Earlier this year, problems at contractor ETS Europe caused delays to the Sats results for 1.2 million 10 and 11 year-olds, with groups of children marked as absent even though they sat the test, and test papers being lost or returned unmarked.

“All this shows that central government still isn’t taking contract management seriously enough. Taxpayers deserve well run services offering value for money, not this confused and naive approach which seems to assume that contractors will always perform properly without adequate scrutiny.”

Mr Bacon was speaking as the National Audit Office (NAO) published its report into central government’s management of service contracts.  In 2007-08, central government spent £12 billion on contracts for services such as IT, security, catering and cleaning. 

The report finds that better contract management could potentially save up to £290 million a year.  Organisations do not always allocate appropriate skills and resources to management of their contracts and contract management does not always get the priority it deserves.  Although service contractors deliver business-critical services, not all organisations applied the best risk management processes and 56 per cent of contract managers surveyed by the NAO had no contingency plan in case of supplier failure.

In August 2008, ETS Europe was sacked from its £39.6 million contract with the Qualifications and Curriculum Authority (QCA), after problems marking the Sats tests of 1.2 million 10 and 11 year-olds. A report into the Sats fiasco by Lord Sutherland blamed ETS Europe and said the QCA “did not manage the contract it held with ETS effectively”.