Government moves to stop suppliers disclosing contract details

Cabinet officials are engaged in a row with outsourcing companies over attempts to prevent them from disclosing information on key government contracts such as prisons or housing for asylum seekers.

Bill Crothers, chief commercial officer at the Cabinet Office, sent a letter to some of the biggest government suppliers during the sensitive pre-election purdah period outlining new measures for disclosure on public sector contracts.

Among other measures, the publicly available document states that the "government will be a single point of contact for public enquiries relating to the performance of privately delivered services they oversee".

This in effect means that private sector suppliers could be barred from talking about controversial public sector contracts, such as managing probation services or assessing claimants for welfare benefits.

The CBI employers' organisation, which has been involved in heated discussions with the Cabinet Office over the issue, declined to comment directly but said it believed "both the government and its suppliers should share more information with the public".

The move comes in the wake of a series of botched contracts that have put the government's ability to manage complex, sensitive outsourcing deals under the spotlight.

Troubled contracts from the West Coast railway franchise to the referral of G4S and Serco to the Serious Fraud Office for alleged overcharging on electronic monitoring contracts has put the relationship between suppliers and the government under scrutiny.

G4S, which is in the process of rebuilding its reputation, said: "We would not support moves to restrict or impede the scrutiny of any supplier, whether they are public, private or voluntary."

As part of contract negotiations, the government would agree at the outset any information that can be withheld on the grounds of commercial confidentiality. This could include the profit margin, the way the supplier calculated the price they are charging and the business plan, the document says.

The Cabinet Office said the intention was to increase transparency by providing a convenient single point of contact from which information can be obtained. But Asheem Singh, director of public policy at Acevo, which represents 1,500 charities and social enterprises across the UK, said: "You do not further the cause of transparency by allowing businesses to hide their commercial arrangements."

He said the restrictions were of particular concern on large deals such as the work programme, where hundreds of smaller charities are subcontracted by providers such as Serco, G4S, Staffline and Interserve to help unemployed people find a job.

Mr Singh said that so-called prime providers often set their prices by pressuring charities or subcontractors into lowering theirs. The move would prevent a charitable organisation working for a private sector provider to whistleblow over poor conditions, he said.

"We are concerned that government would have licence to wash their hands of the serious problems faced by third sector subcontractors who work with the private sector," he added.

Business groups including the CBI have long said that opposition to transparency often comes from the government, rather than the contractors themselves. Last month the Department for Work and Pensions sold Remploy, the 70-year-old agency for the disabled, to US-listed company Maximus but refused to disclose the price.

Although G4S has invited both the Howard League for Penal Reform and the Financial Times to visit Oakwood prison, which G4S runs, the Home Office has refused permission. Companies say that the government is already demanding increased scrutiny, such as by screening statements to journalists.

The new rules also stop significantly short of the industry's own proposals. The government's four biggest suppliers - Atos, Capita, Serco and G4S - all told a committee of MPs last year that they would agree to "open book" accounting, where profit margins on government contracts are disclosed.

Sodexo, a French multinational that runs prison and probation services in the UK, has also called for an independent watchdog to monitor the scandal-hit industry, with an inspector of ethics and delivery.

A change of government could alter the rules on public sector outsourcing significantly. The opposition Labour party has said it would impose a 5 per cent cap on the amount private companies can make on providing NHS services.

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