COMPASS: provision of asylum accommodation poorly managed
24 Apr 2014 12:41 PM
The Public Accounts
Committee publishes its 54th report, COMPASS: provision of asylum
accommodation.
The Rt Hon Margaret Hodge MP,
Chair of the Committee of Public Accounts, today said:
"The Home Office decided to
replace 22 separate contracts to provide accommodation for destitute asylum
seekers with six regional contracts in order to save £140 million over 7
years. The change was poorly planned and badly managed and is unlikely to yield
the savings intended.
Three contractors secured the
new big contracts. Two, G4S and Serco, had no previous experience of
accommodating asylum seekers. Instead of brokering a smooth transition between
outgoing and incoming contractors and with local authorities, the Home Office
short-sightedly decided to take a hands-off approach and only allowed three
months to get the new contracts up and running.
G4S and Serco failed to inspect
and check the properties before taking them over. This lack of information
contributed to delays, extra cost, and disruption and confusion for a very
vulnerable group of service users.
The Home Office’s decision
to rely on fewer and larger contractors was risky and lies at odds with the
Government’s stated commitment to encourage SMEs to deliver public
services. The knowledge of experienced specialist providers has been lost and
there are fewer alternative options available to the Department if the
contractor fails.
The standard of the
accommodation provided has often been unacceptably poor for a very fragile
group of individuals and families. The companies failed to improve quality in a
timely manner. None of this was helped by the Department’s failure to
impose penalties on contractors in the transition period. It is disturbing that
over a year into the contract the accommodation is still not of the required
standard and the Department has only chalked up £8 million in
savings.
Progress was also hampered by
the failure of the Home Office and its contractors to establish a proper
working partnership and to share necessary information, such as forecasts of
demand for asylum accommodation.
Looking beyond the COMPASS
contracts, the Home Office must insist adequate plans are in place for how it
will manage the introduction of any new contracts in the future, including an
understanding of what will be inherited from previous contractors, and clear
arrangements for exiting previous arrangements."
Margaret Hodge was speaking as
the Committee published its 54th Report of this Session which, on the basis of
evidence from the Home Office and its three contractors, G4S, Serco and
Clearel, examined the provision of asylum accommodation, following the
introduction of the new COMPASS contracts in March 2012.
Conclusions and
recommendations
At any one time the Department
provides accommodation for around 23,000 destitute asylum seekers awaiting the
outcome of their application to remain in the UK, although this number
fluctuates as world events impact on the numbers seeking asylum. The cost of
providing this accommodation in 2011-12 was £150 million. In March 2012
the Department decided to introduce a new delivery model involving fewer and
bigger housing providers than under previous contracts. There are now six
regional contracts (known collectively as COMPASS), delivered by three prime
contractors (G4S, Serco and Clearel, each of which has two contracts).
Only Clearel had previous experience running asylum accommodation. The
Department, through the introduction of these new contractual arrangements,
aims to save around £140 million over seven years. The Department has
reported savings of £8 million from the new contracts in the first year
of their operation.
The Department’s decision
to rely on fewer, larger contractors was risky and has so far led to delays in
providing suitable accommodation. The six new COMPASS contracts, won by three
private providers, replaced 22 separate contracts with 13 different suppliers
from across the private and voluntary sectors and local authorities. The
Department expected this to result in economies of scale. However, it is
inconsistent with the Government’s wider approach of encouraging more
small and medium size enterprises (SMEs) to supply services to government. The
Department no longer has the diversity of provision it once had, nor the
specialist providers, and has fewer alternative options available if a
contractor fails. Any failures by a single contractor under COMPASS would
impact on a greater number of asylum seekers.
Recommendation:&
nbsp;The Department should not change its contracting model without a clear
business case justifying that change. The Department should develop a
well-informed understanding of the risk appetite associated with such
changes.
The transition to the new
contracts was poorly managed by the Department and contractors did not inspect
the properties they inherited. The three month mobilisation period for such
complex contracts was very challenging for the new contractors to be
operationally ready in time, particularly as two of the three – G4S and
Serco – had no prior experience in the asylum accommodation sector. It
was vital, therefore, that the Department did all it could to broker the smooth
transition between outgoing and incoming contractors and with local
authorities. The Department’s decision to adopt a hands-off approach,
while rushing through transition activities due to the previous contacts
expiring, was short-sighted. The Department did not facilitate an exchange of
information between outgoing providers and the new contractors, for example, on
the condition of housing. The incoming contractors should have carried out
their own inspection and checks as part of the due diligence process. This lack
of information contributed to delays, additional cost, and disruption and
confusion for a very vulnerable group of service users.
Recommendation:&
nbsp;The Department must insist adequate plans are in place for how it will
manage the introduction of new contracts, including an understanding of what
will be inherited from previous contractors, and clear arrangements for exiting
previous arrangements.
The Department has incurred
additional costs and so is less likely to achieve the expected savings. The
Department intended that the COMPASS contracts would make cost savings of
£140 million over the seven year lifetime of the contracts. The
Department had saved £8 million from these in 2012-13, which appears to
us to be below where the Department needs to be. However, it did report that it
expects to secure a saving of about £27 million over the first 18 months
of COMPASS. The savings have been affected by the additional costs incurred
because of the Department’s need to extend existing contracts during the
transition period, and the Department’s higher than anticipated level of
involvement in the contracts, such as its decision to inspect accommodation
itself.
Recommendation:&
nbsp;The Department must re-examine its savings forecasts in the light of the
additional costs to make sure these are still realistic and achievable, and
make any adjustments that are necessary.
Throughout the contracts –
tendering, transition and delivery – the quality of data shared by the
Department has been poor. Contractors considered that data the Department had
shared with them at the outset of the tendering process was inadequate, most
notably in terms of the quality of the housing stock they would inherit. Poor
data contributed to flaws in some of the contractors’ key assumptions
which underpinned their bids, such as the ease with which new properties would
be approved by local authorities. The lack of experience of Serco and G4S meant
that the companies failed to challenge the Department’s assumptions on
how quickly new accommodation could be brought on stream and the quality of the
housing provided. Clearel with its previous experience managed the transition
better. During the early days of the contracts, the Department also failed to
share data on the estimated flow of asylum seekers into the UK –
information that could have helped contractors better plan the amount of
accommodation needed. This hindered the development of the working relationship
and trust required between the Department and providers, and led to
difficulties once the contracts were operational.
Recommendation:&
nbsp;The Department must clearly understand what data is needed to effectively
let and manage contracts such as these, and ensure that such data is available
and accurate.