Report finds little progress in ensuring ethical standards among government outsourcers

Civil servants urged to find reserves of ‘moral courage’ to call out irregularities 

Civil servants working in professions across government need to have “greater moral courage” to highlight ethical breaches and irregularities in outsourced services in order to drive up standards, a review has found.

In a report examining government measures to protect and enforce ethical standards in outsourced public services, the Committee on Standards and Public Life concluded that not enough progress had been made since it last reviewed the issue in 2014.

This week’s update highlighted that the government had made little improvement in how it manages the ethical conduct of contractors offering services such as IT and back-office functions. According to the report, there was some limited evidence to suggest that the enhanced skills of the civil service have put pressure on suppliers, but this is often focused on performance delivery, not necessarily on ensuring the Seven Principles of Public Life – selflessness, integrity, objectivity, accountability, openness, honesty, and leadership, also known as the Nolan ethical standards – are followed by providers.

The report found the civil service had made limited progress on introducing formal measures to reinforce the application of ethical standards since 2014, and highlighted little had been done in the Whitehall strategies developed by the Government Commercial Function to break down isolated pockets of commercial knowledge and spread the application of ethical standards.

Sheila Drew Smith, who led on this series of reports for the committee before her five-year term of office ended in February 2018, told PublicTechnology sister publication Civil Service World the public expected services to be delivered responsibly and ethically, regardless of provider, and that “the nexus of ethical standards, value for money and quality” was increasingly prominent in debates about the future of outsourcing in light of the collapse of Carillion and high-profile problems at other providers.

Drew Smith said financial, audit, legal and actuarial professionals needed to be more willing to highlight problems.

“Almost all professional bodies have their own codes of conduct, based almost all on the Nolan principles originally, but I think there is a concern: are people acting bravely enough? And professionals do need to act bravely where they see a problem of poor behaviour or, indeed, worse than that.”

The report called on professional bodies such as the Chartered Institute of Procurement and Supply, the Chartered Institute of Public Finance and Accountancy and the Institute of Chartered Accountants in England and Wales, as well as the National Audit Office, to insist that financial, audit, legal and actuarial professionals demonstrate “moral courage” when they witness irregularities, and ensure they know where to go to make professional complaints about ethical standards breaches.

Drew Smith said that one of the current challenges to the greater application and monitoring of ethical standards across outsourcers was the lack of a framework on ethical standards.

“We haven’t got a framework that sets out ethical standards yet for many of these suppliers, so it is difficult to collect evidence,” she said.

The report called on commissioners in government to articulate the standards expected by commissioners, which Drew Smith said must start “right at the top of the government department”.

She highlighted that “departmental and management board don’t spend much time on ethical considerations” with this work instead “delegated down the line” to lower officials.

“But if you don’t set that framework right at the top of the department as a leadership issue around the ethical issues of commissioning and auditing contracts, then it is quite difficult for civil servants to take it on board,” she said, “If that is set right at the top it becomes easier for civil servants to monitor and comment where they see issues arising.”

This week’s The Continuing Importance of Ethical Standards for Public Service Providers report called on the code of practice for government boards to be revised to include ethical standards as a key areas for consideration.

“I think there is a concern: are people acting bravely enough? And professionals do need to act bravely where they see a problem of poor behaviour or, indeed, worse than that.”
Sheila Drew Smith, Committee on Standads and Public Life

Departments should require those providing services to prepare a statement of intent setting out their ethical standards, and how they will be established and maintained throughout a contact. “We think it would be in the public interest if the suppliers then set out, and hopefully made public, how they were going to achieve that desired framework”,

Drew Smith added. “Those setting out the contract would expect that the statement would be prepared, and the suppliers would then have their side of it, as it were, and then set out a programme of action on how they would deliver it.”

Such a statement could then form part of the performance management of the contact, and adherence would form part of the due diligence for any extension or future deals with that supplier, she added. “So, it is not a one-off element, it has to run as a theme right the way through the process. The government did extend our terms of reference to incorporate those who deliver public services, so there is an expectation that would be done.”

Drew Smith noted that the committee had finished its fieldwork before the collapse of Carillion, and said she did not want to prejudge ongoing reviews into the firm’s closure “but our view is that expectations of ethical standards might have made a difference”.

She added: “Undoubtedly lessons will be learnt in all sorts of ways, but consideration of the standards that the committee is responsible for would have assisted, I think.”

The report also calls for the Freedom of Information Act to be extended to private companies providing outsourced services.

Sam Trendall

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