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1 CARILLION: TWO YEARS ONIfG INSIGHT | MARCH 2020SummaryTwo years after the collapse of Carillion, and a year after the government published itsOutsourcing Playbook containing reforms to the way it outsources services, this reportprovides a stocktake of whether changes have been implemented. Overall, there areencouraging signs of progress. But improvements in key areas are patchy, and thereforms remain a long way from being fully embedded.The government will need to provide further political support and investment ifcontinued problems with outsourced contracts are to be avoided.The Cabinet Office has done well to establish the new guidance in Whitehall and rollout training, at a time when the civil service has been under substantial pressure. Thedepartment has improved its relationship with big suppliers, the reforms have widesupport from industry and there is some evidence that the guidance is being useddirectly to change poor behaviour by departments. Efforts to improve outsourcing havealso been bolstered by the success of a longer-term initiative to bring in commercialexpertise from outside government.However, many suppliers still complain of poor practice. Several departmentscontinue to ignore aspects of the new guidance, and many have not updated theirinternal policies. There is little evidence of improvements to the way governmentassesses risk and balances cost and quality. And scrutiny of departmental plans is notyet rigorous enough, meaning good practice is still dependent on individual ministersand senior officials.Carillion: Two years onTom Sasse, Colm Britchfield and Nick Davies2 CARILLION: TWO YEARS ONThe incomplete implementation of these reforms is to be expected. Only a smallnumber of contracts have passed through the process in central government since thenew guidance was brought in – meaning the full impact will not be apparent for at leastanother year. It is also not clear whether the guidance is being followed on lower valueand less complex contracts, which the Cabinet Office does not monitor.And there appears to be little awareness of the reforms beyond Whitehall, in localgovernment and public bodies, including the NHS. These bodies manage procurementspend worth over £100bn annually, but the Cabinet Office currently has no remit orbudget to extend the reforms beyond central government.1In the wake of Carillion, Theresa May’s administration outlined significant changesneeded to improve government’s approach to outsourcing and construction projects.In our September 2019 report, Government Outsourcing: What has worked and whatneeds reform,2 we praised this approach, and argued that implementing the reformscontained in the Playbook fully would address most of the problems in governmentoutsourcing. We recognised this would be difficult. But the new Johnson administrationmust commit to delivering those changes. Without continued political support, they willbe forgotten amid other priorities.The team in the Cabinet Office providing training and support must also be centrallyfunded for the rest of the parliament and enabled to support local government, theNHS and other public bodies to improve their procurement practices. Reflecting onthe experience of reforms so far, the government should also take further action tostrengthen compliance and address continued problems around risk transfer andlow-cost bidding.Carillion’s collapse was also a stark illustration of a rotten corporate culture: thecompany took imprudent risks, acquired huge debts, and disguised its problems withaggressive accounting practices.3 That the company was able to behave so recklessly forso long demonstrated that the system of checks and balances was wholly inadequate.These weaknesses had been made apparent before, for instance with the 2015 inquiryinto the sale of British Home Stores, and again after Carillion during the collapse ofThomas Cook in September 2019.4But Carillion may yet prove a crisis large enough to spur action. Five inquiries into how tostrengthen UK corporate governance have been launched since the company’s collapse;several have returned serious proposals for reform. Implementing recommendationsfrom these reviews – and ensuring no company can get away with such behaviour infuture – is essential if government is to show it has truly learned the lessons of Carillion.3 CARILLION: TWO YEARS ONThe collapse of CarillionCarillion’s collapse on 15 January 2018 sent shockwaves through government andindustry. In the corridors of Whitehall, it raised concerns about the day-to-day runningof services on which the public relies, and prompted reflection on the wider health ofgovernment’s outsourcing markets. In the boardrooms of government suppliers, it was astark warning of where a high-risk, low-margin business model could lead – and a clearindication that government’s largest suppliers would be allowed to fail.Government’s immediate response to Carillion’s collapse was effectiveCarillion was the UK’s second-largest construction and services company, with 18,000employees in the UK and global revenues of more than £5bn. At the time of its collapse, itheld 420 UK public sector contracts, including for the construction of hospitals, highwaysand railways; the maintenance of army homes; and cleaning in schools and prisons.5In the schools and prisons where Carillion provided services, the company’s collapsemay not even have been noticed, but for a change of company logos. Most of Carillion’sgovernment contracts were handed over to new suppliers and continued relativelyseamlessly. This was a major success of contingency planning initiated by government inadvance of Carillion’s collapse, with alternative suppliers agreeing to pick up contracts.Some projects proved more difficult to unpick. Carillion’s private finance initiative (PFI)contracts to build new hospitals in Liverpool and Birmingham were severely delayedas government had to find new suppliers and renegotiate complex arrangements. Thehospitals are currently set to be up to five years late, harming patients who urgentlyneed upgraded facilities.6 Other construction contracts also saw delays.Government refused to bail out Carillion, despite the company issuing what MPsdescribed as a “last-minute ransom note” in early January requesting £160m ofsupport.7 Carillion’s chairman claimed this was necessary to avoid “enormous costs togovernment, far exceeding the costs of continued funding [as well as] widespread lossof employment, operational continuity, [and] impact on our customers and suppliers”.8In reality, the most recent update put the company’s liquidation cost at £62m – less thanhalf the amount Carillion asked for – and this figure could fall further yet.*,9 The jointparliamentary inquiry into Carillion concluded that government had made the correctcall in refusing a bail out, arguing that taxpayers should not have to cover private sectorlosses or allow rewards for failure.10 Government’s refusal to step in also established animportant precedent for others seeking government support.* The government initially made £150m available for liquidation and the National Audit Office (NAO) originallyreported costs of £148m, but the official receiver provided an update in December 2018, reporting an estimatedfigure of £72m, and a further update in September 2019, reporting an estimate of £62m, with the possibility offurther reductions.4 CARILLION: TWO YEARS ONNot everyone came out of the collapse well. More than 2,000 employees were maderedundant, although the official receiver minimised job losses by finding employmentfor over 11,000 staff where contracts were transferred.11 The firm also owed around£2bn to 30,000 of its suppliers, subcontractors and short-term creditors, many of whomlacked trade insurance against its default.12 On 25 January 2018, insurers reported theyhad paid out only around £31m to firms that were covered, while most of Carillion’sassets also went to secured creditors during liquidation.It is unclear exactly how much subcontractors lost because government has notmeasured the impact on Carillion’s supply chain.*,13 A survey found that, on average,small businesses in Carillion’s supply chain were owed £141,000; medium-sized firms(those with 50–250 employees) £236,000; and large firms £15m.14 Analysis by theaccountancy firm Moore Stephens suggested 780 small UK construction companiesentered insolvency in the first quarter of 2018, up one fifth on the same period theprevious year, which the firm attributed to Carillion’s collapse.15But without better data it is not possible to draw firm conclusions. As previous Institutefor Government research has argued, the government should improve the data it holdson its supply chains by requiring contractors to publish contract award notices forsubcontracts worth over £25,000.16These outcomes are unfortunate, but companies (including those in Carillion’s supplychain) are ultimately responsible for the risks they take on, and taxpayers cannot beexpected to sustain a reckless, failing business, in which investors have lost confidence.On balance, in its immediate response, government played a difficult hand well – andsucceeded in minimising disruption, costs to taxpayers and redundancies.Carillion’s recklessness was mostly to blame for its downfall, but governmentalso bears some responsibilityCarillion’s rise and fall was, in the words of the joint parliamentary inquiry, “a story ofrecklessness, hubris and greed”.17 It took on a string of low-margin, high-risk contractsin the UK and abroad, and hit problems when these projects started to go wrong. Adispute over payments on large contracts in Qatar, and big losses on the Royal LiverpoolHospital and Battersea Power Station projects, destroyed the company’s cash flow,which fell from £512m in December 2016 to just £29m a year later.18* The Department for Business, Energy and Industrial Strategy set up a lending facility for affected companies buttake up has been low. Comptroller and Auditor General, Investigation into the Government’s Handling of the Collapseof Carillion, Session 2017-19, HC 1002, National Audit Office, 2019.5 CARILLION: TWO YEARS ONFigure 1 Timeline of Carillion’s collapse, share price in pence (Sterling)0p50p100p150p200p250pJan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18Figure X: Timeline of Carillion’s share price…Note: CRB = Commercial Relations BoardSource: Institute for Government analysis of Carillion share price, investing.com,https://uk.investing.com/equities/carillion-historical-data, retrieved 27 February 2020.10 Jun: Carillion pays recorddividend to shareholders andawards performance bonusesto senior executives10 Jul: Profit warning– chief executivequits amid seriousproblems in Middle Eastconstruction ventures17 Jul: Consortiumincluding Carillion wins£1.4bn HS2 contract20 Jul: Governmentbegins contingencyplanning29 Sep: Second profitwarning. Half-yearresults show a £1.15bnloss in 2017 planning6 Nov: Carillion wins twocontracts with NetworkRail worth £200m overthree years17 Nov: Third profitwarning – Carillonexpects to breach theterms of its borrowing15 Dec: CRB agrees not toraise Carillion’s risk ratingfrom red to ‘high-risk’31 Dec: Carillion formallyrequests governmentfinancial support15 Jan: Carillioncollapses andthe governmentrejects bailoutSource: Institute for Government analysis of Carillion share price, sharesmagazine.co.uk, www.sharesmagazine.co.uk/shares/share/CLLN/historic-prices, retrieved 02 March 2020, retrieved 27 February 2020. CRB = CommercialRelations Board.Carillion exemplified bad business practices. It was renowned for bidding aggressively(and unsustainably) low to win work, undercutting other companies. Even as its debtspiled up, it continued to take huge risks, acquiring companies for more than their valueand bidding for work in uncertain markets, particularly in the construction sector.It paid its suppliers extremely late, offering standard payment terms of four months*and demanding a price cut for earlier payment – an arrangement it used to shore up itsbalance sheet without care for its suppliers.19 It failed to make adequate contributionsto pension schemes and disguised all of its problems with aggressive accountingpractices.20 Rather than challenging such behaviour, Carillion’s board continued toaward generous bonuses even as performance declined.*** A maximum of 60 days is considered best practice.** For instance, in June 2017, weeks before it issued a profit warning and seven months before it collapsed, it awardedlarge performance bonuses to executives. See House of Commons Business, Energy and Industrial Strategy and Workand Pensions Committees, Carillion: Second joint report from the Business, Energy and Industrial Strategy and Work andPensions Committees, Session 2017–19 HC 769, The Stationery Office, 2018.6 CARILLION: TWO YEARS ONBut while Carillion became a corporate monster, government also bears someresponsibility for its creation. Checks and balances intended to prevent just suchbehaviour failed (and will be discussed in detail below). But also, through its contractingof both construction and services, government supported the creation of increasinglylow-margin, high-risk markets.People we interviewed while researching this report agreed that while in the 2000ssuppliers may have “made off like bandits” – making excessive profits due togovernment’s commercial naivety – since 2010, the pendulum had swung too far backthe other way, with many contracts becoming loss-making and contractors strugglingto break even. At the same time, government often tried to transfer all contract risks tosuppliers, including those they could not control or reasonably manage (this has alsobeen a problem on large infrastructure projects, including HS2).*,21Companies were reckless in taking on such contracts. But government encouragedthis recklessness through its own behaviour, and often failed to conduct sufficient duediligence to understand whether Carillion and others were financially or operationallyable to deliver the contracts they were signing.The hospitals Carillion was redeveloping in Liverpool and Birmingham, for whichconstruction work began in 2014 and 2016 respectively, were a classic example of this.A National Audit Office (NAO) investigation published in 2020 found that in both casesthe contracting organisations selected bids submitted by Carillion that were pricedtoo low to meet the required specification.22 When large risks materialised – includingthe presence of asbestos and cracks in structural beams – Carillion proved unable tomanage them.* It is important to note that construction, in particular, is an inherently risky business for both clients and suppliers.Large contractors will bid on hundreds of contracts a day. Ground conditions, logistical constraints, subcontractrequirements and structural requirements all create scope for overspend and delay. Nevertheless, government’sapproach to managing risk in these areas has deteriorated in recent years (we discuss this more on pages 21–23).Stevenson J, ‘Why auditors cannot build a reputation on construction’, Financial World, June/July 2018.7 CARILLION: TWO YEARS ONCarillion’s collapse highlighted wider weaknesses in the sectorCarillion was an extreme example of risk-taking, but it was not an outlier. In fact, most ofgovernment’s largest suppliers had similarly grown very large in a short amount of time(see Figure 2), often by pursuing revenue growth at the expense of operational control.Figure 2 UK revenue growth of selected major outsourcing companies, 1987–2019£0bn£1bn£2bn£3bn£4bn£5bn£6bn1987 1992 1997 2002 2007 2012 2017Capita Serco Amey Carillion G4SSource: Institute for Government analysis of annual reports and accounts for selected companies. Figures shown inJune 2019 prices.When Carillion collapsed, several other companies also had weak balance sheetsand declining margins (see Figure 3). In 2016/17, none of government’s three largestsuppliers – Capita, Carillion and Amey – made a profit, despite all winning moregovernment work.* Another told us it had not made a profit on UK central governmentwork for five years.Serco and G4S hit their respective crises slightly earlier, in 2013/14, following a majordispute over failed prisoner tagging contracts. This poor performance led some to callgo

vernment contracting a ‘winner’s curse’ market.*** This is according to published spend, which is necessarily an incomplete picture. See: Davies N, Chan O, CheungA, Freeguard G and Norris E, Government Procurement: The scale and nature of contracting in the UK, Institute forGovernment, 2018, www.instituteforgovernment.org.uk/publications/government-procurement** This means a market in which there is “a tendency for the winning bid in an auction to exceed the intrinsicvalue or true worth of an item” Investopedia, ‘Winner’s curse’, Investopedia, no date, retrieved 24 May 2019,www.investopedia.com/terms/w/winnerscurse.asp8 CARILLION: TWO YEARS ONFigure 3 Profit margins for selected large UK outsourcing companies-15%-10%-5%0%5%10%15%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Amey Capita Serco Interserve G4S CarillionSerco’s marginin 2014 was-35%Source: Orbis analysis of annual reports and accounts for selected companies. The profit margin given is pre-taxprofit after expenses (including interest, depreciation and amortisation) as a percentage of sales. There areconsiderable fluctuations due to exceptional charges such as penalties and impairments to goodwill. Carilliondid not file accounts after 2016.Many of these companies had, like Carillion, taken on high-risk, low-margin contracts.*In March 2019, Interserve – Britain’s largest provider of probation services, whichalso cleaned and maintained schools, hospitals and train stations – entered ‘pre-packadministration’. This means it arranged to sell its assets to a buyer before appointing anadministrator to facilitate a sale, allowing it to continue to operate under the ownershipof its banks.Interserve’s problems were largely the result of its decision to take on contracts in theUK energy sector – an area in which it had insufficient expertise, according to DebbieWhite, who was appointed as its CEO in September 2017.23 It also held loss-makingcontracts in probation, where it also had little prior experience, facilities managementand construction.24The collapse prompted an examination of government’s approach tooutsourcing and its system of checks and balancesJohn Manzoni, chief executive of the civil service, said Carillion’s collapse had putgovernment “firmly under the microscope”.25 In its wake, no fewer than 13 inquirieshave been launched by a range of bodies, looking variously into the company’s collapse,the government’s wider approach to outsourcing, and the role of audit and corporategovernance regulations (see Figure 4). Four are still ongoing.* We discuss these contracts in Sasse T, Guerin B, Davies N, Nickson S, O’Brien M and Pope T, Government Outsourcing:What has worked and what needs reform?, Institute for Government, 2019 www.instituteforgovernment.org.uk/publications/government-outsourcing-reform9 CARILLION: TWO YEARS ONFigure 4 Inquiries launched since the collapse of CarillionBrydon reviewCMACabinet Office outsourcing reviewKingman reviewPACAC After CarillionFinancial Reporting Council Further InvestigationsFinancial Reporting CouncilBEIS Select Committee Future of AuditBEIS and DWP Select Committees joint inquiryInsolvency ServiceN AO Carillion HospitalsN AO CarillionFinancial Conduct AuthorityJan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020CompletedOngoingSource: Institute for Government analysis. A list of abbreviations is found on page 31.The Cabinet Office’s review, carried out in partnership with suppliers, acknowledgedthe problems described above. In January 2019, it published the Outsourcing Playbook,a guidance document for officials that aims to set out principles of best practice.The Playbook includes proposals on how to make the right decision on whether tooutsource, strengthen early market engagement, improve risk allocation, and get theright balance of cost and quality in selecting a bid.In our September 2019 report Government Outsourcing: What has worked and what needsreform, we argued that if the Playbook was fully implemented, it would address most ofthe problems in government outsourcing.26 However, we noted that implementation andculture change would be difficult. Many of its proposals were already government policy– and had been frequently ignored.Other reviews focused on the wider system. A joint parliamentary inquiry found thatchecks and balances had failed, which allowed Carillion to disguise its problems for toolong. It argued that the Crown Representative system* was ineffective and gave littlewarning of risks; Carillion’s auditor, KPMG, was “complacent” and “failed to exerciseprofessional scepticism” towards Carillion’s accounting judgements, meaning it wascomplicit in them; and the Financial Reporting Council (FRC), responsible for regulating* Since 2011, government has appointed ‘Crown Representatives’ to improve government’s relationship with itslargest suppliers, small- and medium-sized employers (SMEs), charities and specific sectors, such as consultancy.There was a Crown Representative responsible for Carillion. The post was vacant between August and November2017, but a parliamentary inquiry found the role was ineffective prior to this. See Commons Select Committee,‘Crown Reps “more Johnny English than James Bond”’, parliament.uk, September 2018, www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/news-parliament-2017/carillion-government-response-17-19/10 CARILLION: TWO YEARS ONaudit, and the Pensions Regulator were “united in their feebleness and timidity”.27The inquiry also found that the Prompt Payment Code, overseen by the Departmentfor Business, Energy and Industrial Strategy (BEIS), had been wholly ineffective.28Three further reviews have returned detailed recommendations for strengtheningcorporate governance. The Competition and Markets Authority (CMA) recommended anoperational split of audit from consulting services, beginning with the ‘big four’ auditfirms in the UK.29 This ‘firewall’ – similar to the separation of retail and investment bankingfollowing the 2007/08 financial crash – would entail the separation of management (bothCEO and board), accounts and remuneration and an end to profit-sharing. The CMA alsoproposed measures for increasing competition in audit.The Kingman review – commissioned by the then business secretary, Greg Clark,and led by Sir John Kingman, former second permanent secretary of the Treasury –recommended replacing the FRC with an independent statutory regulator. (The FRC hadbegun as a private membership body and, unlike almost any other major regulator, hadno statutory powers, relied on voluntary action and self-regulation, and was funded viaa voluntary industry levy.) The Audit Reporting and Governance Authority (ARGA) wasestablished by the government in 2019 and is accountable to parliament.30Kingman also recommended in a separate letter that government should create anindependent body responsible for appointing auditors, rather than auditors beingchosen by a company’s board and shareholders.31The Brydon review focussed on the audit profession, recommending a redefinition ofthe purpose of audit based on new principles, and new practices to strengthen the auditprocess, including looking beyond financial statements.32The FRC’s own investigation into KPMG, opened in January 2018, has still not reported.The FRC says it expects to complete the first stage by this summer and attributed thedelay to the sheer complexity and scale of the case.33 The official receiver’s investigationinto potential wrongdoing of company directors and the Financial Conduct Authority’sinvestigation into potential insider trading have also not concluded.11 CARILLION: TWO YEARS ONHas government implemented reforms?The Outsourcing Playbook has been widely accepted and it has led to someimprovements in government procurement practice, such as the publication ofcommercial pipelines. Commercial skills are also improving. But implementation acrossgovernment has been inconsistent, and there is little evidence yet of improvementin areas such as risk allocation and bid selection. Proposed reforms to corporategovernance have also not yet been fully implemented.The Outsourcing Playbook has gathered wide support in Whitehall andindustry – and the initial rollout to departments has been successfulThe Playbook has passed the first hurdle of any attempt to reform government process:it has been widely accepted as sensible and helpful. This was not a given.While many of its policies were not new and had been included in other governmentprocurement policies, training or spending guidance, the Playbook brought a wide rangeof guidance together into one structured process, to which departments could thenbe held accountable. Commercial directors and other senior officials we spoke to allstrongly supported this change, as did suppliers. None of our interviewees disagreedwith, or objected to, any of the Playbook’s policies, although some felt they could gofurther in certain areas.The Cabinet Office has also, since 2018, provided introductory training to departments,as well as more specialist training in areas such as producing ‘should cost models’ (atotal estimation of the cost of delivering a service) and conducting financial evaluation.All departments have participated in the training and take-up has been relatively high –8,000 officials have taken part – despite it coinciding with a period of high pressure formany civil servants due to Brexit. The Cabinet Office is also looking at producing onlinelearning materials to make training more widely accessible.This training has led senior officials in central government to use the Playbook. Onedirector responsible for a large, complex procurement said: “It’s not gathering dust;we talk about it regularly… everyone agrees with it and we keep referring back to it”.However, officials acknowledged that in terms of practical adoption of its reforms, theywere still “in the foothills” – that is, there is still a long way to go. Several supplierssuggested that dissemination at more junior levels had so far been less successful, andthat the “cascade process” had not happened.The Playbook’s guidance applies to all outsourced services, however some aspects,such as the requirement to conduct ‘should cost models’, only applies to ‘complex’projects or those over the value of £10m.* Indeed, the training and support appears tohave focused on larger or more complex contracts – and it is unclear to what extent theprinciples are being applied to other contracts. Training so far has also focused mostlyon those in commercial roles, but the Cabinet Office plans to discuss the reforms morewidely, including with policy, legal and operational officials.* The Cabinet Office defines a complex contract as any of the following: “first generation outsourcing; significanttransformation of service delivery; obtaining services from markets with limited competition or where Governmentis the only customer; and/ or any service obtained by contract that is considered novel or contentious.”12 CARILLION: TWO YEARS ONThe Cabinet Office recognised that it currently has limited ability to roll out the reformsbeyond central government. The outsourcing team in the Cabinet Office is funded viaa levy on central government departments, and those departments expect value formoney. While the Cabinet Office has held meetings with local authorities, it is unable toprovide local government and public bodies with training and support on a larger scale.The reforms got strong ministerial support from the minister for the Cabinet Office,Oliver Dowden (who was also involved in their development), but he was promotedin the February 2020 reshuffle. At the time of publication, it is unclear which CabinetOffice minister will take on these responsibilities, but it is critical that they put theirweight behind these reforms.David Lidington, who oversaw the reforms, told us that he gained the support of otherministers across government when the Playbook was published, and as yet, there are nosigns of ministers of other departments opposing processes in the Playbook. However,one senior official suggested that not all officials and ministers and taking seriously.And it will likely face tests in future when decisions are needed quickly.Outsourcing reforms are helped by improvements in commercial skillsThe collapse of Carillion in 2018 was a catalyst for change. But government is alsostarting to reap the benefits of reforms to strengthen commercial expertise initiatedbefore 2018, whose impact has become clear in the last two years. This increasedexpertise is supporting efforts to raise standards set out in the Playbook. It is vitalthese efforts to build commercial expertise continue to receive support.Government’s commercial expertise has historically been identified as a weakness.In 2013, Institute for Government research found patchy capability in procurement,contract management and commissioning; in 2014, a review by the NAO found thatcontract management was often weak.34 The civil service itself acknowledged in 2016that commercial skills in government remained “scarce”; internal reviews at the timeidentified that “substantial value and money had been lost [due to] insufficient businessacumen and capability”.35In May 2016, the late Lord Heywood, then cabinet secretary, and John Manzoni, chiefexecutive of the civil service, said that “improving commercial skills and capability isone of the Civil Service Board’s top three priorities”.36 They hired Gareth Rhys Williamsas government chief commercial officer to lead the creation of a new commercialfunction, with the aim of raising standards across government. Manzoni and RhysWilliams both came to the civil service after careers in the private sector.In 2017, we reported on the initial progress of those reforms, which included effortsto improve recruitment, retention and training, and to develop common standards andassessments.37 We found they were focused on the right issues and had the potentialto succeed, if they were given consistent leadership and the Cabinet Office maintainedthe buy-in of departments. The only areas of weakness our report noted were a lack ofstable funding and limited engagement with non-specialists.3813 CARILLION: TWO YEARS ONFigure 5 Timeline of commercial reformsJuly 2010Government beginsrenegotiating over 40 existingcontracts with strategicsuppliers.April 2011Crown representative rolescreated, to lead governmentrelationships with strategicsuppliers and get better valuefor money.March 2016Government CommercialFunction – a network ofcommercial professionals –launches to co-ordinate acrossgovernment.March 2014Chief commercial officerrole established to lead thecommercial profession.September 2014NAO finds contractmanagement “weak” inareas including governance,payment, performance and riskin a majority of governmentcontracts.April 2015DWP introduces ‘categorymanagement’ approach tocommercial relationships. BEISand others begin to do the same.July 2016Civil Service Workforce Plan2016–20 highlights the needto develop and retain “scarce”commercial skills.February 2019Government publishesOutsourcing Playbook, newguidelines to improve qualityof government outsourcing.20102020February 2017Government CommercialOrganisation (GCO) launchedto employ senior specialists(grade 7 and higher) on acompetitive pay structure.February 2011Contracts Finder, a centralisedonline log of upcominggovernment contracts worthover £10,000, launches.April 2014Crown Commercial Serviceestablished to centrally manageprocurement of common goodsand services across government.December 2013After overbilling by G4Sand Serco on MoJ electronicmonitoring contracts,government launchescommercial capability review.Source: Institute for Government analysis. A list of abbreviations is found on page 31.14 CARILLION: TWO YEARS ONIt is now clear that those commercial reforms are reaping benefits. Two reforms havemade a particularly big difference in raising standards: recruiting senior leaders withextensive private sector experience, and rolling out challenging examinations acrossthe wider profession.Ten commercial directors have been appointed from the private sector since 2016.Historically, these posts tended to be filled by people with experience only of managingcontracts in government, which led to a lack of b