‘High risk’ groups face outsourcing ban

The performance of troubled Olympics contractor G4S will be reviewed “very carefully”, the Cabinet Office has warned, in a shake-up of outsourcing contracts across government that has already seen two IT companies struck off its list for future tenders.

The department’s decision to look at G4S’s record comes as Nick Buckles, chief executive, is due to appear before the Commons’ home affairs committee on Tuesday to explain why the private contractor failed to provide a promised 10,400 venue guards for the Olympic Games.

Fujitsu, the IT group whose contract was terminated in 2008 over a £900m deal to install electronic patient records across the south of England, has been deemed for the time being too “high risk” to take on new public sector deals along with another unnamed IT services contractor, according to people close to the situation. The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted.

Ahead of Mr Buckles’ appearance, Francis Maude, the Cabinet Office minister, said he understood the public anxiety over G4S’s performance because of its status as a main supplier to government. It has contracts with the police, probation and welfare services, and runs six prisons.

“When the dust has settled on the Olympics and Paralympics, we need to look with the Home Office very carefully at what the out-turn in performance was from G4S and take a view at that stage,” Mr Maude told the Financial Times.

The latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture. He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. Mr Crothers said his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Fujitsu, which is suing the Department of Health for £700m, confirmed it had received a letter from the Cabinet Office about its position as a “longstanding and important supplier”.

Even before its Olympics fiasco, G4S, the world’s biggest security company by revenues, was in the spotlight over the growing role of the private sector in delivering public services – particularly after it won a £200m deal to staff and build Lincolnshire’s new police station and custody block.

Keith Vaz, chair of the home affairs committee, said he welcomed the tough approach Cabinet Office ministers were taking over public sector contracting arrangements. “G4S admitted to the committee earlier this summer that they had presided over a humiliating shambles at the Olympics,” he said. “It’s important that we look at their record across the board when awarding new contracts.”

G4S pointed to its positive record in prison management, the welfare-to-work programme, and on electronic monitoring of offenders but declined to respond to the Cabinet Office’s comments.

Additional reporting by Gill Plimmer