UK Government calls on outsourcers to agree to 'living wills'

28 November 2018 Authored by Consultancy.uk

In a bid to safeguard public services and funds from a future collapse of an outsourcing provider, the British Government has called on a number of professional services companies to draft IT cheat-sheets to be used in the event of their administrations. Volunteers Capita, Serco and Sopra Steria are understood to have created so-called ‘living wills’ already, with others to follow suit.

When Carillion entered into its shock liquidation at the start of 2018, it was one of the largest suppliers of outsourced services used by the UK Government. It had been involved in major projects such as the HS2 high-speed rail line, as well as managing schools and prisons, and was the second biggest supplier of maintenance services to Network Rail. Such was the extent of its influence at the Ministry of Defence – for which it maintained 50,000 homes – news of its collapse even saw Defence Secretary Gavin Williamson trigger a meeting of the Government's Cobra emergency committee to discuss the situation.

In the fallout, the Government and the professional services world have both been pilloried by Parliament and the public for their seemingly oblivious approach to the ailing company’s future. Wolverhampton headquartered Carillion issued three profit warnings over 2017, having run up unsustainable debts totalling around £1.5 billion, yet continued to receive new contracts from the Government to provide keystone services. Meanwhile, Big Four firm KPMG faced a probe from the Financial Reporting Council regarding its auditing work, with suggestions that failures to adhere to ethical and technical industry criteria had caused a lack of transparency regarding Carillion’s health.

UK Government calls on outsourcers to agree ‘living wills’

Now, as the Cabinet Office looks to insulate public services from a possible recurrence, it has looked to a trio of IT outsourcers to provide the Government with ‘living wills’, in case they collapse. The Government struggled to gather the information necessary to step in and take over for services provided by Carillion after its collapse, and Capita, Serco and Sopra Steria’s 'living will' cheat-sheets will help aid the process "in the unlikely event of business failure where another may need to step in," the Cabinet Office said.

According to reports from news site The Register, Capita, Serco and Sopra Steria all "volunteered" to do this, and will complete these so-called living wills "within weeks", while other contractors are slated to follow. The idea is also expected to help the Government address drastic situations such as Capita's allegedly dangerous handling of its Primary Care Services contract. Earlier in the autumn, it was reported that the firm had put patients at risk, when it failed to deliver almost 50,000 letters relating to cancer screening information across England, including between 150 and 200 abnormal results. With the NHS taking this back in-house, executives have since admitted that there wasn't enough due diligence at the outset of Capita’s appointment, while they are now "working blind" because of a lack of information.

David Liddington, Minister for the Cabinet Office, said that Carillion was a "complex business" and that the government "did not have the benefit of key organisational information that could have smoothed the management of the liquidation" when it collapsed. He added, “By ensuring contingency plans can be quickly put in place in the very rare event of supplier failure, we will be better prepared to maintain continuity of critical public services."

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