The Privatisation of the Property Services Agency: Risk and Vulnerability in Contract-Related Fraud and Corruption
| Published date | 01 July 1997 |
| Author | Alan Doig |
| Date | 01 July 1997 |
| DOI | 10.1177/095207679701200302 |
| Subject Matter | Articles |
The
Privatisation
of
the
Property
Services
Agency:
Risk
and
Vulnerability
in
Contract-Related
Fraud
and
Corruption
Alan
Doig
Liverpool
Business
School
Abstract
The
Property
Services
Agency
was
a
'hived-off'
government
organisation
responsible
for
the
design,
building,
renting
and
maintenance
of
government
property
and
associated
facilities.
Its
expenditure,
and
delivery
of
its
functions,
were
criticised
for
fraud,
waste
and
inefficiency
while
it
was
involved
in
a
number
of
cases
of
contract-related
fraud
and
corruption.
As
the
Property
Services
Agency
began
to
deal
with
the
latter
concerns,
the
government
was
making
it
a
prime
candidate
for
a
purchaser-provider
split
in
relation
to
funding,
the
divestment
of
a
number
offunctions
to
other
agencies
and
to
its
client
departments,
and
the
introduction
of
competition
in
the
provision
of
its
services.
Finally
the
Property
Services
Agency
became
a
candidate
for
privati-
sation
as
its
contracting
functions
were
fully
transferred
to
government
depart-
ments.
The
responsibilities
for
combatting
corruption
and
fraud,
however,
have
also
been
dispersed,
leaving
HM
Treasury
to
report
its
concerns
over
the
threat
such
an
area
of
risk
area
poses
for
government
departments
who
have
wanted
the
responsibility
for
the
Agency's
functions
but,
without
the
awareness,
expertise
and
economies
of
scale
to
respond
effectively,
may
be
vulnerable
to
contract-related
fraud
and
corruption.
The
functions
of
the
Agency,
its
privatisation,
and
the
implications
for
dealing
with
contract-related
fraud
and
corruption
provide
a
case-study
in
the
relationship
between
different
forms
of
organisation
and
ownership
of
the
operational
and
purchasing
functions
of
government,
and
the
ability
of
governments
to
control
corruption
andfraud
in
public
contracting.
Introduction:
Contract
Corruption,
Common
Services
and
Common
Standards
The
Property
Services
Agency
(the
'Agency')
was
responsible
for
the
provision,
management,
maintenance
and
furnishing
of
armed
forces
and
civil
service
departments,
home
and
abroad,
through
the
design
and
supervision
of
Public
Policy
and
Administration
Volume
12
No.
3
Autumn
1997
6
construction
of
new
buildings,
the
maintenance
of
government
buildings,
renting
and
leasing
of
accommodation,
and
management
of
land
and
buildings.
It
was
an
outcome
of
the
Fulton
Committee's
study
into
how
the
civil
service
should
be
staffed
and
managed
in
order
to
respond
effectively
to
the
increases
in
the
activities
of
government
and
in
public
expenditure,
as
well
as
to
technological
progress.
Its
organisational
form
was
in
some
ways
a
prototype
of
that
proposed
by
the
1988
Next
Steps
report,
with
a
Chief
Executive
and
Board
as
well
as
a
degree
of
organisational
independence
within
its
parent
department
-
the
Department
of
Environment
-
and
levels
of
delegated
managerial
and
financial
responsibility
internally.
In
its
function
of
providing
a
common
service
to
government
departments,
it
was
able
to
offer
the
economies
of
scale,
bargaining
power
and
aggregation
of
expertise
both
for
its
work
and
for
dealing
with
the
private
sector,
for
whom
it
was
a
major
source
of
contracts.
On
the
other
hand
it
was
often
seen
as
the
epitome
of
a
bureaucratic
organisation
whose
activities
were
synonymous
with
inefficiency,
waste
and
corruption
and
whose
sell-off
twenty-one
years
later
attracted
little
regret.
While
the
Agency's
organisational
and
procedural
weaknesses
may
have
in
part
made
it
vulnerable
to
fraud
and
corruption,
the
risk
would
be
ever-present
if
it
was
assumed
that
fraud
and
corruption
was
ever-present
in
relation
to
contracts
and
in
the
construction
industry.
Certainly,
past
experience
in
relation
to
local
government
would
suggest,
as
the
Prime
Minister's
Committee
on
Local
Government
Rules
of
Conduct
(1974)
reported
in
1974,
that
corruption
arose
partly
from
different
standards
within
the
private
sector
and
from
"the
growth
in
the
value
of
contracts
placed
by
local
authorities
for
the
supply
of
goods
and
services
and
the
execution
of
works"
(1974
p.5).
More
generally,
the
Royal
Commission
on
Standards
of
Conduct
in
Public
Life
stated
two
years
later
that
"the
fortunes
of
companies
and
individuals
have
undoubtedly
been
increasingly
influenced
by
the
decisions
of
central
government
and
other
public
institutions"
and
that
"any
situation
in
which
public
authorities
exercise
controls
or
have
business
to
offer
is
potentially
vulnerable
to
corruption"
(1976
p.I
1).
Later,
the
Agency
itself
was
more
blunt
in
a
circular
on
works
contracts
circulated
by
HM
Treasury
in
1990:
'contractors,
consultants
and
suppliers
are
in
business
to
make
money.
It
is
a
common
practice
for
some
to
capitalise
on
customer
weaknesses
to
increase
their
profits'.
If
contracting,
and
contact
with
the
private
sector,
is
an
area
of
risk,
then
the
issue
may
be
less
that
of
organisation
than
of
activity.
Certainly
the
Agency
was
often
seen
as
the
source
of
its
problems
and
that
may
well
have
been
true
in
terms
of
the
mismatch
between
an
attempt
at
a
new
organisational
shape
and
working
within
a
traditional
civil
service
context.
On
the
other
hand,
if
the
activity
rather
than
the
organisation
is
the
source
of
the
risk
then
it
could
be
assumed
that
transferring
common
services
to
client
departments
would
also
involve
a
transfer
of
risk
while
the
lack
of
awareness,
appropriate
procedures
and
dedicated
resources
would
heighten
their
vulnerability.
The
period
following
the
election
of
a
Conservative
government
involved
three
distinct
features
which
had
a
bearing
on
the
transfer
of
risk
and
depart-
Public
Policy
and
Administration
Volume
12
No.
3
Autumn
1997
7
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