Information Commissioner's Office calls for transparent public sector outsourcing

For greater transparency, public sector buyers and suppliers should be open about their dealings before signing contracts, says ICO

Public sector organisations and suppliers should be open about their dealings even before contracts are signed, if a current reduction in transparency is to be reversed.

The Information Commissioner's Office (ICO) published a report saying that an increase in outsourcing has led to less transparency. Private companies are not covered by the Freedom of Information (FOI) act, so when services are outsourced, they fall outside transparency rules. 

“A transparency gap has opened up in the provision of public service,” said the ICO's report.

“It isn’t a secret that the growth in outsourcing has led to a fall in transparency, as FOI laws haven’t always been able to follow the public pound," said ICO head of policy, Steve Wood. "But this isn’t an insurmountable problem. We’re calling on public authorities and contractors to consider transparency from an early stage, before a contract is even signed. And we’re asking whether the government might need to step in to make sure the public can access the information they should be entitled to from big government-funded contractors.”

Spending on outsourcing in public services accounts for about half of the £187bn that the government spends on goods and services, according to the ICO report.

ICO survey finds public appetite for outsourcing transparency

Read more about transparency in government contracts

  • A secret payment made to Royal Bank of Scotland (RBS) by software supplier CA Technologies has fuelled controversy over the investigation into the IT failure that hit RBS customers in June 2012 and highlights a lack of transparency in an industry critical to the UK economy.
  • A poll of over 1,000 people found 68% of the UK public want to be consulted on public-sector outsourcing, with Labour and UKIP supporters most in favour.
  • Whitehall has published many contracts almost in full after a compromise that allows suppliers to keep secret some information on the grounds of commercial confidentiality.

A survey carried out for the ICO found that 75% of people said it was important that private companies acting on behalf of public authorities should be subject to the Freedom of Information act (FOI). Meanwhile a recent poll of over 1,000 people, conducted by campaign group We Own It, found 68% of the UK public want to be consulted on public-sector outsourcing.

The Public Accounts Committee, recently stated: “We expect to see all government bodies that contract out functions and public services, and the contractors themselves, having transparency, not commercial sensitivity, as their default position.”

Wood said: “This level of uncertainty is no longer acceptable. One solution would be for public authorities and contractors to better consider what is held on the public authority’s behalf at the outset of their relationship. Another approach would be for the government to change the law, to give a more specific steer to public authorities about when information held by the contractor would be caught. There is also merit in considering whether certain contractors should be designated as public authorities under the Freedom of Information act.

“We’d like to see a better reflection of the importance of transparency, both as a tool to promote democratic accountability, but also as a means of improving service delivery.”

Computer Weekly's research of the public contracts the government has published under its transparency programme since 2010 found £5bn of public deals without contracts published at all, just by looking up a random shortlist of the coalition's major projects.

When Computer weekly recently requested information from the publicly owned Royal Bank of Scotland (RBS), the bank cited commercial sensitivity as a reason to refuse revealing the details of a settlement with CA Technologies over an IT failure that froze thousands of customers' bank accounts.

Four steps to improving transparency

The ICO said there are four options for promoting greater transparency in public-sector outsourcing.

  1. It said better contracts are critical. “A fundamental problem in relation to FOI requests related to outsourcing is deciding whether information is in the scope of a request. More precisely, the question is whether a contractor is holding information on behalf of a public authority,” said the ICO report.
  2. There must be transparency by design. “We advocate earlier consideration of access to information, at the start of the contracting process,” said the ICO.
  3. The report also said legislation could be used to extend the scope of the FOI act. “This would be a decision for the government to make, with options to extend the act to cover work done by contractors, or indeed to designate the contractor themselves as a public authority.”
  4. Standard contract terms is the fourth option. “The use of standard contract terms would provide a consistent approach to FOIA in all  outsourcing contracts, without the need for any change to the law,” said the ICO.


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