Contract Chapter

29/01/2023, 11:20 Contractual revolution
Law and Administration

ISBN 9781316576496
10 Contractual revolution
10
Contractual revolution
Contents
1. Classification, dynamic, challenge
(a) The commissioning state
(b) Big business
(c) Values and perspectives
2. Old and new
(a) Capacity and scope
(b) Ordinary law: Contract technology and specification
(c) Presentiation and relationality
(d) Policy levers: Wealth and law
3. Strategies and processes, problems and responses
(a) New frontier
(b) ‘Better’ outsourcing
(c) Pushing the boundaries
(d) Coming home to roost
(e) Going on
4. Contract-making: Europeanisation and Brexit
(a) The pathways model
(b) New vistas
5. Judicial connections
(a) Fettering
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(b) Judicial review in issue

(c) Service provision: Convention rights?
(d) Relational contracts: Good faith
6. Conclusion
Fifty years ago, contract was a low-lying feature in the administrative law landscape. This mirrored state
forms: the prevalence at the time of the classic welfarist model of direct service provision by integrated, hi‐
erarchical, public bodies. It also reflected the non-development of a distinctive ‘public law’ body of legisla‐
tion and jurisprudence.1 On the one hand, Dicey dominant, the basic premise was that government con‐
tracts should be subject to the ordinary private law;2 on the other, a history of Crown immunities and
privileges reinforced the sense of an internal, executive-owned activity devoid of formal legal regulation.3
Public procurement in its traditional format of purchasing works, goods and services was both important
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and largely hidden from view. Behind the scenes, a well-established ‘law of the contract’ was in operation,
a reservoir of standard terms and conditions on which officials could draw when specifying performance
and to anticipate disputes.4
Today, in contrast, contract sits with regulation as twin pillars of the architecture of governance. The devel‐
opment reflects and reinforces the idea of the state ‘steering not rowing’. Underpinning it is the capacity of
this great instrument of exchange for multitasking. Outsourcing in the form of ‘contracting out’, it is the ve‐
hicle for the delivery of many public services. Typically in the guise of informal or ‘pseudo-’ contract (see
p. 61 above), it is a way of modelling institutional relations. As a repository for rules, principles and stan‐
dards, it functions as an alternative source of regulation. Carrying echoes of the old authoritarian dimen‐
sion to administrative law (Chapter 1), it is a technique for social-control and/or ‘activation’ of citizens.
Reflecting ‘a contract culture’ (see p. 45 above), some effects are immediately apparent. Private sector no‐
tions of exchange infuse public administration: the seeming discipline of markets or market mimicking
the individualist ethos of freedom of choice. Increasingly entrenched policies of outsourcing stretch across,
and so blur, the ‘public/private divide’. Contractual ideas of mutual obligation permeate government poli‐
cies concerning the rights and responsibilities of the (dependent) citizen. Contract as an organisational
tool shows destructive, as well as constructive, properties. Through the contractual model, many of the bu‐
reaucratic hierarchies and organisational forms previously associated with ‘government’ have been chal‐
lenged or subverted and replaced.
The role of different conceptual understandings is important: contract in the strict, formal, sense of thing,
as classically expressed in the legally binding nature of public procurement; and, as the contemporary
workings of governance lead us to insist, ‘contract’ more broadly defined in terms of core notions of reci‐
procity and exchange, perhaps underwritten in practice by alternative forms of sanction.5 In view of the
pervasive reordering of the state and its modus operandi over several decades, we may speak today of the
contractual mindset in law and administration: a ‘revolution’ indeed.
The many parallels to UK regulatory reform will not be lost on the reader. Precepts of value for money
(VFM), injections of commercial acumen and experience, scope for creative business solutions: once
again, it all fits. So too the close interplay of contractual with regulatory forms of governance takes many
forms. Just as consensual elements are evident in the practices of traditional regulation, so the success of
regulation by contract will typically depend on the culture of regulation and compliance in which it is set.6
Then again, the tension between the political demand for authoritative action and promotion of a system
of distributed public governance pervades the administrative framework. Multiple uses of audit and hard
and soft law techniques with a view to enhancing the steering capacity may sound well, but the broader
‘hollowing out’ of government capabilities must also be factored into the equation. Matters are com‐
pounded by the fact that much in the so-called ‘contracting state’7 is impregnated with controversy, not
only in the broad ideological sense (the role of the state) but also in multiple infrastructure and service de‐
livery projects.
Contractual governance is no panacea. There are some sharp lessons to be learned about the functional
limitations of the private legal form against the backdrop of pursuit of profit. The contractual allocation of
risk to the private sector has obvious attractions, but with vital public services, it is easier said than done.
Practical difficulties arise with contract selection and management by hard-pressed public bodies, espe‐
cially at the expense of the taxpayer in market conditions of limited competition. Executive use of the pri‐
vate legal form raises question marks over the protective arrangements for the (third-party) recipients of
services. Alternatively, the expansion of contractual techniques in areas of individual legal entitlement and
control points up classic ‘red-light’ concerns about possible abuse of power – the more so when the indi‐
viduals concerned have little with which to bargain. Contract has the potential to enhance managerial and
administrative forms of accountability through specification, but equally discretions can go unchecked in a
jungle of terms and conditions and technical detail. And the propensity of contract to squeeze out political
accountability should never be forgotten. All the more reason for administrative lawyers to proclaim good
governance values.
1. Classification, dynamic, challenge
(a) The commissioning state
Reflecting the growing scale of the development, leading commentators were busy at the start of the cen‐
tury classifying contractual governance. Davies posited ‘at least six (albeit somewhat fluid) categories’ of
activity: as well as standard public procurement and contracted-out services, public–private partnerships
and the nascent ‘private finance initiative’ (see p. 467 below), agreements internal to government (like
framework documents) and agreements between the government and SROs (see pp. 47 and 314 above),
and, of course, contracts of employment with staff.8 Other usages of informal contract, whether institu‐
tionally oriented, as in UK intergovernmental relations (Chapter 3) and myriad inter-agency networks, or
citizen-focused, as with education and welfare to work (Chapter 11), could easily have been added. The
classification serves, however, to highlight the essential elements of continuity and change: government us‐
ing contracts since time immemorial, but doing so in recent times in notably voluminous fashion and in a
variety of innovative, as well as conventional, ways.
Posed in broad functional terms, a threefold classification by Vincent-Jones not only focused attention on
existing initiatives but also anticipated much in the official rationale for the subsequent development.9
Associated with attempts to separate the political and managerial aspects of government, and to clarify bu‐
reaucratic roles through performance-based management systems, soft law ‘administrative contracts’
trumpet the demand to promote transparency and effectiveness in the machinery of government.
Reflecting, or at least invoking, the VFM-type demand to achieve the better use and co-ordination of re‐
sources, the terminology of ‘economic contracts’ in turn points up the continued heavy reliance on con‐
tractual arrangements directed at improving public services through competition. Concerned, as the title
suggests, with influencing behaviours in the name of the individual and collective good, so-called ‘social
control contracts’ are not only functionally very different but also, as operationalised in benefits systems
via disciplinary sanctions, are apt to bite extra-hard in conditions of austerity.
Contract and contractual language are seen here spreading relentlessly beyond the sphere of economics
into public administration and social welfare policy as a distinctive mode of governance. Classically ideo‐
logical in the neoliberal sense, the development is highly instrumental in character, with contract norms
being harnessed in each situation – within government, in the economic organisation of public services
and in state–citizen relationships – for the attainment of determinate public policy purposes. And, reflect‐
ing the pervasive and ongoing character of this veritable ‘revolution’, no longer is this ‘new public contract‐
ing’ new.
This is the realm of what has come to be called ‘the commissioning state’.10 In sharp contrast to the model
of direct service provision earlier associated with ‘the extended state’, we may speak here of the ‘three Ss’ of
public service delivery:
specification – deciding what services are required and detailing them accordingly
selection – of contractors/suppliers
supervision – monitoring, etc. of contractual performance.
The conceptual shift from a bipartite to tripartite set of relations is also apparent: no longer the familiar ad‐
ministrative law visualisation of ‘the state and the individual’, but rather ‘the state, the individual and the
intermediary’.11 For which read the public customer, the contractual third party or subject, and the private
supplier or delivery merchant with their own organisational interests. ‘New public management’ (NPM)
ideas of economic interest as desirable and necessary for better public services may in turn be challenged
on the basis of principles of good governance being compromised by competing priorities and account‐
abilities or focus on pursuit of profit. Adopting a front-line perspective on administrative justice (see
Chapter 13), Benish notes the deeper implications in terms of public interest and commercial motive and
ethos, and the related – vexed – issue of alignment:
In contracting-out, the government is not only purchasing services but also

‘purchasing’ private sector logic and ethos in service delivery. In that
respect, contracting-out signifies a more radical shift away from
bureaucratic structure toward market ideas and policies … Outsourcing
intensifies the NPM implications for administrative justice, [marking] a
further elevation of economic values in the front-line decision-making
environment, especially when profit-maximizing organizations are involved
…
The private contractor’s interests may sometimes converge with public

interest; at other times, they pull in different directions. This structure puts
street-level decision makers in a complicated situation: they must pursue the
public policy goals laid out in the contract, and sometimes even in law
while, at the same time, satisfying the interests of their owners. In these
circumstances … decision makers may be more committed to the private
interests of the contractors (their employers), at the expense of public
interests.12
Further issues of complexity and accountability raise their head. Paradoxical it may seem, but at the heart
of state-inspired contractual governance are mutual dependencies not only of ‘public + private’ but also of
‘private + private’. In many public services, no single supplier will have complete contractual responsibility
for every aspect of the provision for end-users. Contract begets contract, as through lines, even crowds, of
subcontractors and sub-subcontractors. Mixes of direct and outsourced provision abound in multiple and
multi-agency interventions with individuals or ‘clients’.
(b) Big business
The explosion in contractual governance will always be associated with the Conservative governments of
Margaret Thatcher – the proverbial ‘blue rinse’. Sitting comfortably, however, with notions of ‘the third
way’, the basic dynamic would be embraced by New Labour and, subsequently accompanied by large in‐
creases in spending on public services, typically tweaked under a flexible rubric of ‘better’ outsourcing. As
described by the Institute for Government (IfG), ‘a broad political consensus that the application of market
mechanisms to the work of government and the greater involvement of external providers would unlock
savings and improve service performance’ had developed.13 By 2010, outsourced public services had
clearly become big business, with an annual government spend of some £65 billion. Not forgetting the
many expensive experiments in private finance initiative (PFI), a particular New Labour favourite for in‐
frastructure projects.
Over the last two decades, procurement of works, goods and services has accounted for roughly a third of
all public expenditure. The sums involved are little short of mind-boggling: in 2019, for example, a total
procurement spend of almost £300 billion (up from some £120 billion in 1989). Spending on defence and
health projects typically lead the way, together with transport. Meanwhile, the several departments spend‐
ing most of their budget with external suppliers notably include the Ministry of Justice. Giving tangible ex‐
pression to the proclaimed ‘digital transformation’ of government (Chapter 7), IT-type automation has
been a major driver of procurement spend across the board.14 We recall the famous instruction ‘follow the
money’. A lot of what government does today is procurement.
There are, of course, significant fluctuations. With the Coalition government and austerity, public procure‐
ment policy soon appeared twin-track: a period of reduced spending overall and a large-scale expansion of
outsourced public services in new or largely undeveloped markets as part of the wider quest for cost
savings.15 Then again, contractual technique has seemingly taken on a momentum of its own: from begin‐
nings under the Thatcher governments with relatively simple forms of contracting out (waste collection,
leisure services, etc.), through increasingly large and complex procurement initiatives under New Labour,
and, extending still further, substantial involvement in core state activities directly affecting citizens’ legal
rights and obligations. Illuminated by a doubling of the procurement spend on services under the
Coalition (some £120 billion in 2015), the list of outsourced front-line functions is seen ranging through
benefits assessment and employment programmes, asylum accommodation and immigration detention,
and prison and probation. To which may now be added much in the overall response to the coronavirus
pandemic (equipment, logistics, testing, etc.).
To emphasise, the commissioning state has grown to colonise subject areas familiarly of interest to admin‐
istrative lawyers. Classic issues of legal accountability and protection of the individual are in turn thrown
into sharp relief by a tripartite, intermediary model of multiple interests and structures and processes. Of
course, much depends on the particular context: statutory and regulatory framework, shading of profit
and charitable motive, leadership and staffing, degree of citizen dependency, etc. To mark this major quali‐
tative as well as quantitative dimension, leading commentator Robert Thomas has adopted the striking
phrase ‘outsourced government’.16
The logic of the contractual revolution is major effects not only in law and administration but also on the
supply side. Showing how the diversity of service provision leads to a diversity of suppliers, it was recently
estimated that some 200,000 companies and charities deliver services to or for the public sector across the
UK.17 But, an old phenomenon playing out in contemporary conditions, attention is also drawn to the co-
dependency of government and dedicated private interest, here in the shape of large, beefed-up, outsourc‐
ing companies.18 Sir Amyas Morse, the former Comptroller and Auditor-General, observes pithily, ‘the
government just doesn’t have either the skill or the financial capacity to take back much delivery in-
house’.19 Recent market analysis confirms government’s increased reliance on so-called ‘strategic suppliers’.
‘Competition’ under the contractual revolution can look more like oligopoly:
There are currently 28 strategic suppliers – including household names such

as BT, Capita, G4S, Microsoft, Serco and Vodafone – which provide services
such as facilities management, consultancy and audit, engineering, IT and
social care. Carillion was a strategic supplier until it went into liquidation in
January 2018 …
For both central and local government, the proportion of published

procurement spend going to these suppliers has grown over the past five
years (for central government 20% in 2016/17) … It may be that strategic
suppliers have been particularly aggressive when bidding for contracts,
lowering their prices to win business … It may also be that the structure of
contracts or bidding processes increasingly favours larger providers, for
example short submission deadlines.
The reliance of individual departments on the largest companies varies

significantly. Spending with strategic suppliers accounts for more than a
third of the published procurement spend of five departments –
Environment, Food and Rural Affairs (DEFRA), Work and Pensions

(DWP), Revenue & Customs (HMRC), Home Office and MoJ. The highest
proportionally is the DWP, where 67% of the spend with external suppliers
is with these major players.20
The UK development to date can also be viewed as part of a broader international convergence associated
with approaches to public management21 and globalising forces in public procurement.22 Huge it is, but
procurement spending of some 32 per cent of general government expenditure and 14 per cent of GDP is
not exceptionally high when compared with other Organisation for Economic Co-operation and
Development (OECD) countries.23 Nonetheless, this country can fairly claim to be a world leader in con‐
tractual forms of governance by reason of the substantial history as well as range of outsourcing. All the
more striking, then, when the processes are not so sophisticated as may at first appear.
Looking forward, government outsourcing will be another key test of law and administration in the wake
of Brexit. An important product of the EU Single Market has been the deep penetration of national rules
on the making of particular government contracts by EU law, such that the former are commonly the ex‐
pression of the latter. Once more illustrating the limitations of rules and the irrepressible character of dis‐
cretion (see Chapter 6), we note too how the supranational regime of public procurement has been the
subject of repeated bouts of reform.24 Today, new vistas are opening up in the domestic legal regulation of
public procurement in the shadow of both the EU/UK Trade and Cooperation Agreement (see Chapter 3)
and the World Trade Organization’s (WTO) general procurement regulation.25
Conditions are ripe for a further major expansion of public contracting. New Conservative government
policies of infrastructure development, with the declared aim of levelling up wealth and opportunity in re‐
gions outside London, and indeed strengthening the union state and promoting devolution in England
(see Chapter 3), point firmly in this direction. To this effect, transport and connectivity has been placed
high on the domestic agenda post-Brexit. The Party’s 2019 UK general election manifesto stated:
To underpin this national renewal, we will invest £100 billion in additional

infrastructure spending – on roads, rail and other responsible, productive
investment which will repair and refurbish the fabric of our country and
generate greater growth in the long run … We will use this historic
investment to level up and connect this country, so that everyone can get a
fair share of its future prosperity …
We will build Northern Powerhouse Rail between Leeds and Manchester

and then focus on Liverpool, Tees Valley, Hull, Sheffield and Newcastle. We
will invest in the Midlands Rail Hub, strengthening rail links including
those between Birmingham, Leicester, Nottingham, Coventry, Derby,
Hereford and Worcester … We will give city regions the funding to upgrade
their bus, tram and train services to make them as good as London’s … We
will make a £28.8 billion investment in strategic and local roads …26
Prime Minister Johnson’s subsequent approval of the largest infrastructure project in Europe, the highly
controversial HS2 railway linking London and Birmingham and then Manchester and Leeds, underwrites
this.27 Initially costed at some £56 billion and recently at up to £106 billion,28 it will be big business and
co-dependency in the commissioning state epitomised.
(c) Values and perspectives
Administrative law is commonly seen lagging behind the contractual revolution; a feature which demands
special emphasis in view of the seemingly permanent nature of the paradigm shift. The apparent disparity
in part reflects the narrow perspective which still dogs our discipline, with an overemphasis on judicial re‐
view at the expense of the vital functional or decision-making and regulatory aspects. But it is also bound
up with the historical development of administrative law in the modernist conditions of hierarchical gov‐
ernment and, conversely, the evident stresses and strains and issues of reach associated with the rise and
rise of contractual governance. Viewed in this perspective, it would have been strange indeed if adminis‐
trative lawyers had not been anxiously debating the ‘province of administrative law’ as familiar structures
and processes crumbled and the new dispensation of contracting out and privatisation, etc. took hold.29
Writing at the beginning of the century, influential American scholar Jody Freeman called on administra‐
tive lawyers to embrace the powerful new dynamic. A way forward lay through ‘publicisation’: the exten‐
sion of administrative law norms to public service delivery merchants, either by a strong use of contractual
terms and conditions and/or regulation and judicial review. Given the enormity of the development,
Freeman envisaged a targeted approach:
Because it will be costly and burdensome, not every case warrants this
treatment … The argument for publicization is strongest in instances where
services are highly contentious, value-laden and hard to specify, and when
providers enjoy significant discretion; when services affect vulnerable
populations with few exit options and little political clout; and/or when the
motivation for privatisation is explicitly ideological.30
How realistic was this, at least in the UK? It does not do to gloss over a range of countervailing factors as‐
sociated with the tripartite model of service delivery in the commissioning state. There is the internal and
ideological strength of the private law form to contend with, not so easily transformed in favour of collec‐
tive, public interest or the standard administrative law conception of promoting the public good.31 At an‐
other level, the bargaining strength, contractual expertise and regulatory commitment of public bodies
cannot be assumed. We touch here on the notion of public contracting as a continuous and often lengthy
and complex decision-making chain: multiple administrative processes for securing delivery which run
from decision to outsource and market engagement to design of tender and contract award, and on
through dialogue and management of the contract and perhaps enforcement action. Problems of adapta‐
tion and institutional learning, fragmentation and too little resource, and lack of understanding or com‐
placency and even commercial naivety, are then readily envisaged. At another level again are the major
question marks around the knowledge, acceptance and day-to-day application of administrative law values
among commercially driven suppliers.
We shall see that, amid the UK’s contractual revolution, ‘publicisation’ has been patchy at best. First, look‐
ing inside out,32 the development of soft law techniques often appears stunted, with recent attempts at im‐
provement being largely the product of business failure. Secondly, the familiar anchoring of judicial review
and Convention rights in a public function is not the most obvious recipe for vindicating good governance
principles through external forms of administrative law. Indeed, in the language of socio-legal studies, we
must, with the ‘public + private’ model, again ‘mind the gap’ in judicial control. Unless, that is, the evident
potential for importing public law concepts when reviewing discretions in outsourcing contracts is ever
realised, a point to which we return.
In contrast, the concerns originally expressed about diminished ‘publicness’,33 the erosion of public service
ethos and tenets of administrative law by managerialist and commercial values and priorities,34 often ap‐
pear vindicated in the light of experience. In highlighting the in-built conflict with Taggart’s familiar list of
public law values (see p. 55 above), leading Australian contract lawyer Nick Seddon had given a stark his‐
torical perspective on this:
Contract contradicts these values almost perfectly, with honesty being the
only value common to both contract and public law. Contract is
traditionally about secrecy, no duty to act fairly, participation of the
immediate parties but otherwise not concerned with third parties, no duty
to act impartially, accountability only to the extent required by the contract
and then only to the other party and no duty to act rationally. When
traditional contract values are combined with the public purpose, the mix
does not necessarily work very well.35
We are back then with the role of, and challenge to, TAP (transparency, accountability and participation)
values (see Chapter 2). Take the issue of accountability, where the potential with indirect forms of public
service delivery and infrastructure development for blame-shifting is immediately apparent amid the func‐
tional division of responsibilities and the push and pull of public and private interests. We will see the clas‐
sic problem of ‘many hands’ amply demonstrated, and predictably so in complex, technologically challeng‐
ing and long-dated types of project. Meanwhile, the existence of a large and heterogeneous population of
public bodies, as illustrated in England in the patchwork system of local government,36 itself highlights the
day-to-day challenge of accountability across the commissioning state. Different but related, multitudinous
contracting founded on budgets of different sizes and very different administrative capacities is hardly a
recipe for active citizen involvement.
Looking beyond the headline figures, leading think tank the IfG criticises the poor quality of data available
on procurement and outsourcing. Not only may elements of commercial interest and confidentiality cut
across freedom of information (FOI) (see Chapter 7), but also there is a pervasive sense of the contractual
revolution outgrowing Whitehall recording and reporting mechanisms. The chief finding is not rocket
science:
Given the importance that procurement will continue to have, it is critical

that the Government, public services and suppliers are reliably able to
answer questions about how much is being spent, what is being bought and
who the suppliers are. Currently, this is far harder than it should be.
Improving government data architecture has a cost, but the cost of inaction
will be even greater. Every day, public bodies procure hundreds of millions
of pounds’ worth of goods, works and services. With a clearer picture of
how much is spent, with which suppliers, what it is being bought, and how
contracts are structured, government could make better-informed spending
decisions, reduce waste and make significant savings.37
A special premium is here placed on audit technique. Fitting with earlier precepts of NPM, this major ex‐
ercise in bureaucratic regulation can today be seen as an essential quid pro quo for an all-embracing com‐
missioning state. Grounding further inquiries by the House of Commons Public Accounts Committee
(PAC), VFM-style reports from the Comptroller and Auditor-General are a mine of information about
particular instances of (failures of) contractual governance. Outsourcing also features prominently in the
burgeoning list of National Audit Office (NAO) studies, to the extent of digests of ‘cases’ and canonical
statements of good behaviour. From ‘transforming government’s contract management’ to ‘insights and
emerging best practice’, and on through ‘government’s commercial capability’ to highly charged investiga‐
tions such as periodic reports on the ballooning costs of HS2, audit papers are duly laid on audit papers.
‘Improvements … but much more to be done for government contracting to be effective, meet expected
public service standards and provide better value for money for the taxpayer’ is a common thread.38 As we
will see, many of the problems repeat themselves.
Predictably, VFM benefits are sometimes hard to pin down and often contested. Placing this in historical
perspective, it is important to keep in mind the multiple inefficiencies and cost overruns long associated
with complex forms of service delivery and infrastructure development whether performed in-house or by
commission.39 Just as public contract is no magic wand, so it may not be the sole cause of difficulty.
Drilling down, the IfG’s own studies suggest that outsourcing has ‘delivered the greatest cost savings in
support services’, whereas ‘in front-line public services the record is more mixed, with evidence that out‐
sourcing has improved services on some measures and worsened them on others’.40 With many of the IfG’s
lowest ratings appearing in outsourced activities directly relevant to individuals, there is a sense too of the
benefits becoming more difficult to achieve the further the contractual revolution has progressed. ‘Low-
hanging fruit’ and all that, this particular public policy debate will no doubt run and run:
Politicians and senior officials often cite 20%–30% savings when making the
case for outsourcing today. But while this was possible for some services
outsourced in the 1980s and 1990s, we found little evidence that such
savings are available today, whether for services outsourced for the first time
or on second- or third-generation contracts … Where there is more recent
evidence of savings, they are typically of around 5%–10% … Outsourcing
appears to still be able to deliver cost savings in some areas, but these are …
not always directly attributable to efficiencies rather than reductions in

labour costs or other factors. The evidence on quality tends to be even
weaker.41
All this serves to fuel calls for reform – and the more so, it will be seen, in view of a string of costly, high-
profile, contractual failures. Hardly a radical campaigning organisation, the IfG recently spoke of ‘the UK’s
approach to outsourcing facing intense scrutiny’, only some of which was party-political. Much easier said
than done, a major change of institutional culture was recommended: ‘a stronger sense of what has worked
well in delivering better services or better value for money, and what has not been successful and why, to
inform future decision making on contracting’.42 The NAO, meanwhile, has rebuked government for noth‐
ing less than ‘a crisis of confidence in its contracting of public services’.43 As we shall see, however, the offi‐
cial response has been tepid.
2. Old and new
(a) Capacity and scope
Any discussion of government contract is complicated by the legal fiction of ‘the Crown’ (see p. 23 above).
Since the Crown is said to have all the powers of a natural person, including the power to enter into con‐
tracts, the activity is afforded a broad and flexible framework. However, this operates to limit democratic
accountability. The focus naturally being on the general estimates of expenditure, the idea of Parliament
refusing funds to fulfil a contract has gone untested.44 Conversely, HM Treasury has the maximum possi‐
bility to drive forward policies of contractual governance.
In addition, the Crown enjoys certain immunities. Section 21 of the Crown Proceedings Act 1947 (CPA)45
provides that no injunction or order for specific performance lies against the Crown in civil proceedings,46
although in lieu a declaration can be made. Again, the payment of money by way of damages or otherwise
cannot be enforced against the Crown by the normal processes of execution or attachment (s. 25). A spe‐
cial defence of ‘executive necessity’ to an action for breach of contract against the Crown has been derived
from the old case The Amphitrite.47 An undertaking not to requisition a foreign ship in wartime was held
unenforceable. In so denying compensation, the judge carefully distinguished the situation of commercial
contracts and spoke generally of the need to preserve executive freedom of action in matters concerning
‘the welfare of the state’.
All this raises questions about the meaning of the term ‘Crown’48 and the legal position of ministers and
agencies.49 As Crown agents, ministers have general authority to make contracts on behalf of the Crown.
But do they in addition have an independent capacity to make contracts in their own name? Town
Investments is one well-known authority denying this.50 Similar questions arise in the context of devolu‐
tion since Scottish51 and Welsh ministers are ‘Ministers of the Crown’. Agencification further complicates
matters. Where statute is used, the realm of Crown proceedings is apt to be diminished. In British Medical
Association v. Greater Glasgow Health Board,52 the board was set up to perform functions on behalf of the
Crown but nonetheless was denied the protection of section 21. Then again, ‘the Crown’ represents fertile
territory for pseudo-contract in its internal administrative form. As executive agencies vividly illustrate, it
takes two to contract. In Freedland’s words, there is ‘a sort of double legal fiction, whereby a non-corpora‐
tion is deemed to enter into non-contracts’.53
Unlike the Crown, statutory bodies such as local authorities have no general capacity to contract. The ultra
vires principle applies to contract as to other activities and the scope of the power will be dependent upon
the construction of the relevant legislation. Historically, cases were few and far between, a reflection both
of broad and flexible legal frameworks,54 and of light-touch judicial scrutiny (a power to contract easily
implied55). Providing that ‘a local authority shall have power to do anything … which is calculated to facil‐
itate, or is conducive or incidental to, the discharge of any of its functions’, section 111 of the Local
Government Act 1972 embodied this approach. Expanding in turn on a general statutory power to pro‐
56
mote ‘well-being’, there exists today the general power of competence in section 2 of the Localism Act
2011, whereby local councils can do anything that an individual can do that is not specifically prohibited
or subject to pre-commencement limitations.
Contrariwise, the undermining of traditional relationships by the assertion of a strong central will, and
more particularly the heavy regulation of local contracting in the cause of radical reform, became a famil‐
iar theme during the long years of Conservative government.57 Operationalised by audit in terms of ‘regu‐
larity’, more structured and restrictive legislation brought the ultra vires principle to the fore. Local author‐
ities meanwhile sought to protect expenditure programmes through creative accounting and innovative fi‐
nancing techniques. The scene was set for a stream of litigation on the power to contract, in part around
some very special kinds of arrangement: speculative, multi-million-pound, ‘interest swaps’. In the leading
case of Hazell v. Hammersmith and Fulham LBC,58 the local auditor successfully argued ultra vires.
Roundly rejecting the characterisation of the contracts as an appropriate means of debt management on
the part of local government, the House of Lords held that the council had no power to enter into them.
Any incidental powers to enter into swap transactions were effectively ruled out by a very detailed set of
provisions on borrowing contained in a Schedule to the 1972 Act. With the banks facing a large loss of
profits, there was much talk of the adverse impact on the financial markets, both in terms of the cost of fu‐
ture credit to local government and damage to the City of London’s international reputation, as well as
some creative lawyering in terms of unjust enrichment.59 Raising doubts over legal protection for counter‐
parties in public–private partnerships, matters were compounded by similar decisions of null and void in
respect of local authority contractual guarantees intended to avoid strict borrowing limits: ‘improper pur‐
pose’ judicially established via a defensive use of ultra vires, so protecting local taxpayers.60
The predictable outcome was a dose of legislative pragmatism to mitigate the rigour of the common law.
As well as clarifying that statutory provision conferring or imposing a local government function confers
power to contract for the provision of assets or services for the purposes of discharging that function, the
Local Government (Contracts) Act 1997 is designed to provide contracting parties with a safe harbour
while preserving the public protection of ultra vires. It thus allows local authorities to certify their contrac‐
tual power, so blocking private law claims of unenforceability, while also preserving auditor challenges and
judicial review and empowering the court to permit an otherwise void contract to continue and to award
the private contractor compensation. This is a neat little code which assuages concerns by prioritising ad‐
ministrative procedure and its consequences.
Contracting out prompts the question: ‘what is sacrosanct?’ An answer was given in section 71 of the
Deregulation and Contracting Out Act 1994, in light of the general provision of order-making power to
authorise the exercise of ministerial functions by private bodies.61 Judicial activity; functions interfering
with individual liberty; power of entry, search or seizure into or of any property; power or duty to make
subordinate legislation: we here find an important set of excepted or non-delegable core public functions.
A sharp reminder of the innate flexibility of the domestic administrative law system in the absence of a
written constitution, the list is also notably minimalist. As for specific legislative frameworks, the example
of private prisons, originally provided for in the Criminal Justice Act 1991, also pointed up the further
possibilities.62
Effectively presaging the expansive scope of the commissioning state is another way of describing these
early provisions. Two decades on, the Coalition government’s chief policy document Open Public Services
would provide confirmation. Few holds barred, outsourcing should increasingly appear first choice across
the piece:
Many services will need to be provided or commissioned by government –

either central or local. This is either because they are natural monopolies,
such as tax and benefit administration; security-related, such as the courts
system; quasi-judicial, such as planning; or because they are being provided
for people who are not able to make the appropriate choices themselves,
such as drug rehabilitation.
However, just because these services must be decided on by government

does not mean that the principles of choice, decentralisation, diversity,
fairness and accountability should not apply. In many cases, the principles
apply equally well if a commissioning approach is taken. In the services
amenable to commissioning, the principles of open public services will
switch the default from one where the state provides the service itself to one
where the state commissions the service …
Apart from those public services where the Government has a special reason
to operate a monopoly (e.g. the military) every public service should be
open so that, in line with people’s demands, services can be delivered by a
diverse range of providers.63
(b) Ordinary law: Contract technology and specification
Governing, as it does, such matters as capacity and formation, implied terms and performance and termi‐
nation, the general common law of contract still provides much of the formal legal framework of govern‐
ment contracting. Indeed, many of the technical challenges associated with contractual governance will be
familiar to the private commercial lawyer. Similarly, many contractual tools and techniques are read across
from the business to the public sphere, where certain key issues are accentuated in the light of collective
interest. Adjustment clearly will be required from time to time, typically framed by Dicey’s equality princi‐
ple, whereby the starting point is that government liability closely parallels private liability, and hitherto by
the EU public procurement regime.
If, for example, the government contractor defaults, the continuity of essential public services may be jeop‐
ardised. Statutory step-in powers may be required. Or take the twin doctrines of ‘consideration’ and ‘priv‐
ity of contract’, central to the English private legal concept. Questions about the rights of third parties are
brought sharply into focus with contracting out of public services. English law has moved cautiously in
freeing up the classical bipolar model of contract by the Contracts (Rights of Third Parties) Act 1999.64
Provided that the public purchaser can bargain successfully with the contractor to include terms that pro‐
tect the consumer interest, as also that ‘on a proper construction’ the contract does not exclude enforce‐
ment by the beneficiary, it may be possible for the citizen/service-user to obtain redress for poor
performance.
Some seventy years ago, Mitchell was pleading for a distinctive body of law that would be more sensitive to
the distinctive characteristics of government contract.65 A principle of governmental effectiveness should
be established, most obviously under the auspices of a ‘Government Contracts Act’, such that no contract
would be enforced in any case where some essential governmental activity would be thereby rendered im‐
possible or seriously impeded. On the other hand, a principle of compensation should be developed in sit‐
uations where the administration reneged on its own contractual obligations. We recall the criticism that
Dicey, by refusing to accept the reality of state power and so disguising the inequality between the state
and its citizens, had disabled effective legal control of the state machine (see Chapter 1). For Mitchell, the
collective interest and the private sector interest needed rebalancing, with compensation as a check, the
existence of which would provide a safeguard for individual rights.
Extrapolated from the French system of administrative law, the project failed, of course, run aground in
the shoals of Diceyan ‘background theory’. We can, however, detect echoes of it in the continued debate
around ‘publicisation’. As Davies noted in arguing for a set of public law doctrines to supplement or mod‐
ify the ordinary law of contract, ‘English law does not cope well with the wider public interests which
might be at stake in government contracting.’66 So whereas, for example, service recipients may have some
legal protection under the 1999 Act, their representation in the contractual decision-making is in no way
guaranteed. Creative mixes of private law and public law technique duly present themselves as a way for‐
ward. Judicial review, after all, is not the courts’ only way of improving legal accountability in this broad
context. Attempts to transcend the artificiality of the public/private distinction, as by a stress on underly‐
ing common law values,67 might usefully intensify in the post-EU era.
Different but related, the ‘law of the contract’ offers much by way of a flexible contract technology able, in
Mitchell’s terms, to be more sensitive to the special demands of government contract. As Colin Turpin ex‐
plained in a famous study in the 1980s, model or standard terms and conditions also provide a vehicle for
internal hierarchical control:
The ‘law’ created by the agreement of the parties is ‘subordinate’ law, in that
the conditions for its creation are regulated by the general law of the land;
and it is ‘particular’ law, applicable only to the parties who have by their
contract brought it into existence. It is in operation as law only during the
continuance of the contract. In government contracting, however, there are
many basic terms that are not freshly devised for each contract, but are
supplied from sets of standard conditions adopted by government
departments for regular use. In this case, the ‘rules’ applicable to each
contract have a continuing existence in the Government’s standard
conditions. It is only by their incorporation in each individual contract that
they take effect as law for the parties, but the standard conditions have a
quasi-obligatory character with respect to all relevant contracts in so far as
government contracts staff are directed to incorporate them.68
Obvious possibilities include a variation clause-making provision for compensation and/or a so-called
‘break clause’ permitting the authority to terminate the contract at any time.69 Exactly the kind of public
interest considerations and remedies historically associated with the French contrat administratif70 may
thereby be factored in, while the role of the general law in relation to liability and dispute resolution is
suppressed.71 Equally, however, we see the importance for hard-pressed public authorities of first-class
professional commercial expertise when navigating the life cycle of frequently complex and technically
challenging outsourcing contracts. Nor, at the risk of repetition, may the powerful bargaining position of
government implicit in Turpin’s earlier account simply be assumed today in the light of the contractual
revolution and often limited competition. As some notable contractual failures will serve to illustrate, well-
formed contract technology for the protection of the public sometimes appears the more notable by its
absence.
The more tailored forms of terms and conditions apt to appear in complex projects present their own chal‐
lenges. On occasion, the specification has seemingly reached the height of absurdity, as with the moderni‐
sation of the London Underground, initially calculated as a £17 billion programme lasting thirty years. The
original contractual documentation ran to 28,000 pages and more than 2 million words. This public–pri‐
vate partnership (PPP) also demonstrates in exaggerated form another key feature of contemporary out‐
sourcing: the heavy use of detailed mathematical formulae, including in-service delivery contracts with a
view to payment by results. Here is a set of calculations for determining payments to the infrastructure
companies tasked with maintenance, replacement and upgrade of London Underground assets. It suffices
just to pose the question: transparent to whom?
Service Consistency for a Line Grouping (Y *) shall be calculated in the

relevant Capability Model by the following formula:
Whereas:
wis, wmn, wdb, wtm, wcd, wms, wfyr, wfyt, wfa, wfb, wfta, and wftb are Fixed
Parameters
defined in the relevant Capability Model Data;
and
vis, vmn, vdb, vtm, vcd, vms, vfyr, vfyt, vfa, vfb, vfta, & vftb are Infraco Measures
set out in the relevant Capability Model Data and the relevant Capability Model
where applicable.72
Outsourcing in the digital era will no doubt take innovative contract technology to new heights. Bearing
the promise of low transaction costs, much is already heard of blockchain-based smart contracts designed
to facilitate, execute and enforce agreements.73 Rapid expansion of the ‘AI toolkit’ across government
brings the role of outsourcing in supplementing agencies’ technical expertise and capacity into sharp fo‐
cus. A recent study for the US Administrative Conference suggests a cautious approach:
Usability may militate in favor of internal capacity building. Privately

produced, procurement-generated tools may boast the most cutting-edge
analytics, but may also be less tailored to the task at hand, be less attuned to
legal requirements and an agency’s bureaucratic realities, and do not
necessarily come with ongoing and regular engagement between
technologists and agency enforcement staff. In contrast, in-house
production may strain agency budgets, but will yield governance tools that
are, on average, better tailored to subtle governance tasks, more law- and
policy-compliant, more attuned to complex organizational dynamics, and
less subject to information leakage and conflicts of interest that can reduce a
tool’s efficacy and raise significant distributive concerns.74
The UK, however, has taken on the role of world leader. In 2019, it became the first state to pilot guidelines
for AI procurement developed by the World Economic Forum, which are intended to help officials keep
up with the pace of technological change and mitigate risks. Legitimacy is also of the essence of this inter‐
national enterprise: ‘Common-sense frameworks can help governments overcome reluctance to procure
complex new technologies and actually open new markets for companies.’ Perhaps hopefully, ‘as industry
debates setting its own standards on these technologies, the government’s moral authority and credibility
can help set a baseline’.75 As the UK’s ‘living’ or interactive text duly demonstrates, this brings a new di‐
mension to ‘regulation by contract’, with the guidelines covering not only internal administrative issues
which officials should address but also questions that prospective suppliers should answer about their AI
development and how the data is used and processed:
Though available, legal to use, and proportionate to need, there may be

limitations to data (for example, data bias) that make an AI system
unreliable or misleading and therefore unfit for purpose. Highlight known
limitations of the data in your invitation to tender and require tenders to
describe their strategies on how to address these shortcomings, as well as to
have a plan for addressing relevant limitations you may have missed …
Consider when deciding if a source of data is suitable:
Representativeness (whether the data accurately represents the segment of the

population in scope for the AI solution)
Provenance (for example, how and why the data was collected)
Gaps in data quality (for example, many values missing from a data element)
Errors in the data
Bias present in the data (data is not representative of the population the
algorithm will be applied to)
Lack of clarity in metadata (for example, confusing or vague data element

names)
Be aware of the importance of data quality for AI and, when possible, check
completeness, diversity, and accuracy of the data before starting the
procurement process. Articulating your data quality observations and the
apparent limitations of the data potentially used are crucial. The supplier of
the AI system must be aware of these considerations, if not during the
procurement, then at the latest after the contract has been awarded and
design of the system has begun.76
How much is actually achieved by this soft law form of AI control remains to be seen.
(c) Presentiation and relationality
Contract theorists have done much to enrich our understanding of the limitations of the private legal
form. At the root of this is insistence on the need to understand the social matrix of norms, understand‐
ings and expectations in which a contract is embedded.77 The long-term interests of both parties may bind
them together regardless of any potential legal sanction, a feature currently highlighted in the UK by the
strong element of co-dependency in central government outsourcing. In any case, it would be most odd if,
in the case of essential public services, the relationship were never given priority over the deal.78 Of
course, the argument should not be pressed too far. As Hugh Collins reminds us:
The contractual framework does not disappear when the injured party
prefers to ignore the breach of contract and to emphasise instead the norms
derived from the business relation or economic interest. The contractual
framework may be invoked at any time. It will be resuscitated if the parties
perceive that the long-term relationship is about to terminate or the
considerations of economic self-interest now point in the direction of strict
contractual enforcement. In the absence of these conditions, however, which
will normally represent the situation in successful trading relations, we
should expect the contractual framework to be temporarily occluded.79
In analysing contract as a social institution, leading writers have stressed the concept of ‘presentiation’.80
Contract terms and conditions abound through the self-conscious attempt, by planning, ‘to bring the fu‐
ture into the present’. Complex PFI agreements provide ample illustration. Still with us, some of these ar‐
rangements for the supply of public services and infrastructures are very long-term – a shaping of the fu‐
ture landscape that distinguishes the UK experiment in contractual governance (Chapter 11). Public law
values of flexibility and (democratic) responsiveness are put in issue; there is even, as discussed below, a
sense of the classic ‘no fettering’ rule being flattened.
There is, however, a pervasive sense of contractual incompleteness, engendered in part by the evident diffi‐
culty of specifying in advance contract terms that deal with shifting processes of adaptation, let alone un‐
81
foreseen contingencies. ‘Presentiating’ many years of infrastructure modernisation and workings is not
so easy. Take the agreement in the important PFI case Amey Birmingham Highways Ltd v. Birmingham City
Council,82 which provided for the rehabilitation, maintenance, management and operation by the com‐
pany of the area’s sprawling road network. Intended to run for twenty-five years, it ran to over more than
5,000 pages, excluding disks, plans and documents incorporated by reference. The definitions alone
spanned more than 500 pages; two sets of software, including a project network model, were required to
help organise the work. Yet it was not merely a case of ‘convoluted contract’.83 There was, as we shall see,
ample scope for dispute about the meaning and substance of the agreement as time went by. A traditional
formalist reading of the written text, and expectations that the contract would evolve and be refined as the
venture progressed, pointed in different directions.
We touch here on Macneil’s famous contrast84 between ‘discrete contracts’, with the ideal-type of simulta‐
neous exchange, and ‘relational contracts’, which involve ‘not merely an exchange’ but also, broadly defined
in terms of trust and co-operation, ‘a relationship between the contracting parties’.85 In the case of public
procurement and its legal regulation, this has had a particular, supranational, relevance. Signalled by the
demand for repeated bouts of competitive bidding, EU policies have tended to press national practice in
the direction of the discrete or individuated model. How else could entrenched local preferences associ‐
ated with relational factors of stability and co-operation be overpowered? Yet this has also fuelled com‐
plaints of high transaction costs, leading as we will see to some rebalancing, with more space for contrac‐
tual dialogue and mutual learning.
Many contracts are relational to some degree. The modern focus in contract theory on this quality of so‐
cial exchange duly highlights the importance to smooth and effective workings, and ultimately the success
of a joint venture, of core elements of fairness and reciprocity, and good faith and loyalty.86 On the one
hand, this suggests a potential difficulty with highly instrumental or coercive policies aimed at promoting,
or securing delivery through, contractual technique. On the other hand, it conjures the idea of legal – judi‐
cial – action to elaborate these values, especially in long-term developmental contracts, technology out‐
sourcing for example, perhaps characterised from the outset by issues of indeterminate performance.
Offering a new variation on techniques of legal control in the commissioning state, we will see this starting
to happen.
(d) Policy levers: Wealth and law

Herbert Hart once referred to making a contract ‘as the exercise of limited legislative powers by
individuals’.87 For ‘individuals’, read ‘executive’ or ‘agency’, and the place of public contract as a policy lever
and, more particularly, as a repository for rules, principles and standards and hence as a source of regula‐
tion becomes apparent. It may then be an alternative to, or go in tandem with, exercise of imperium or the
command of law (Chapter 5). The dominium power of the state underpins this: the deployment of wealth
in aid of policy objectives fuelled by the great public power of taxation.88 In a classic paper published in
1979, Daintith identified ‘regulation by contract’ as ‘the new prerogative’:
Government contracting … incorporates, into standard terms and

allocation procedures, clauses and public requirements which by their
breadth and importance pass far beyond the mutual objectives of the
contracting parties and which, therefore, might normally be promoted by
statutory regulation … Government has discovered a means of using its
increasing economic strength vis-à-vis private industry so as to promote
certain policies in a style, and with results, which for a long time we have
assumed must be the hallmark of Parliamentary legislation: [i.e.], officially
promulgated rules backed by effective general compulsion. This means the
power to rule without parliamentary consent, which is the hallmark of
prerogative.89
The immediate context was the then Labour government’s non-statutory tactic of blacklisting government
contractors who refused to abide by its general incomes policy. Such swingeing economic policies of ‘con‐
tract compliance’ appear a thing of the past, a point firmly underwritten in the EU epoch by the Single
Market public procurement framework. But more subtle use of contract-style leverage is a familiar theme
in the ‘commissioning state’: a further variation on the idea of government ‘steering’. Public service fran‐
chising, whereby, via auction, market rules are laid out as licence conditions and then made the subject of
monitoring, supervision and enforcement, is but one method providing multiple opportunities (Chapter
11).
Much turns on how the appropriate reach of, and links to, the subject matter of the public contract is visu‐
alised. A considerable history of dispute at the domestic and EU levels is unsurprising, in light on the one
hand of strong forms of market ideology, even a purist conception of VFM and business autonomy, and on
the other hand the evident potential of public procurement to promote political and social objectives.
Equally predictably the disputation has been wide-ranging, from classic EU targets of national preference
or market discrimination to local growth and employment strategies, and on through a diverse mix of so‐
cial, ethical and cultural concerns.90 Furthermore, the use of contract as a policy lever includes elements
such as qualitative selection criteria: suitability of suppliers broadly defined not only in terms of financial
and technical capacities but also, say, environmental management standards. From the standpoint of ad‐
ministrative law, the use of imperium to ground, structure and/or restrict the exercise through public con‐
tract of dominium power commands particular attention. After all, the more the contractual revolution
progresses, the more the possibilities of contractual leverage and hence issues of control and accountability
are magnified.
As a tool of governance, contract compliance may be a viable alternative to criminal sanctions or individ‐
ual complaint and adjudication as a way of regulating operator behaviour, or else a useful supplement. The
proactive, or fire-watching, qualities are valuable, as is also the scope for flexibility or negotiated compli‐
ance. Familiar in the United States as a distinctive technique of administrative action, especially in relation
to race and sex discrimination,91 contract compliance eventually came to be sanctioned by statute for
Northern Ireland.92 Today, the core idea of ‘buying social justice’ clearly has significant traction in equali‐
ties and human rights protection at UK level, connecting in turn to UN guiding principles.93 We also see
the regulatory pendulum swinging on contract compliance more in favour of environmental and/or sus‐
tainable development objectives. A further example, it may be said, of the ‘greening’ of administrative law
linked but not confined to concern about climate change. Taking the development to new heights, public
procurement policy in Wales is explicitly framed in terms of that country’s distinctive legal and adminis‐
trative decision-making framework for well-being and future generations (see Chapter 3).94
A pioneering study by McCrudden provides a basic template for determining ‘how best to introduce social
policies, and which such policies should be integrated into the process of public procurement’. As with the
modelling of regulatory legitimacy, however, major value judgements cannot be avoided.
First, linkages should be chosen that are effective in achieving the aim of the
procurement and delivering the social policy. This is likely to mean
concentrating procurement resources on delivering only the most important
policy goals so as not to overload the system. This is a crucial point. Not
every public policy can, or should, be taken into account in procurement.
Second, potential suppliers should understand clearly from the outset what
categories of information and service standards may be expected … Third,
choosing which government policies should be integrated into procurement
will need to be carefully considered and justified, with the criteria clearly
specified … Integration does not mean that all such polices should be
integrated, or in the same way, or to the same depth. Fourth, linkages should
be chosen that are as consistent as possible with the other aspects and values
of the procurement process. Fifth, linkages should be chosen that are
justifiable. Departments are accountable for their expenditure and,
therefore, will need to determine whether any extra costs that may result …
are justified.95
Experience teaches that there are other difficulties to overcome. The risks of inconsistency, associated on
the one hand with a diverse range of public contracting bodies and on the other with highly variegated lo‐
cal markets, may be considerable. While potentials for public deliberation exist – a more ‘responsive’ form
of contractual governance – the practical difficulties of promoting genuinely participative modes of rule-
making with the private legal form cannot be gainsaid. There is also the problem of enforceability by ser‐
vice users with the Contracts (Rights of Third Parties) Act 1999 providing only a partial solution. But
while it lacks the glamour of high-level adjudicative technique, public lawyers should not lose sight of the
valuable spaces for dialogue inherent in the contractual process, as also the sense of shared ‘ownership’ fa‐
miliarly associated with the private legal form. Contract compliance is useful equipment for the hard slog
of mainstreaming good governance values where it really matters – beyond the courtroom.96
3. Strategies and processes, problems and responses
(a) New frontier
For Conservative ministers in the 1980s seeking (together with privatisation) to subject the public sector
to contractual forces, a strong blend of hard and soft law techniques was of the essence of the enterprise.
How were the frontiers of the state to be rolled back other than by firm state action? More particularly, the
discipline of NPM and audit could be unleashed, supplemented from time to time by judicial regulation.
In Whitehall, the Central Unit on Procurement was established to advise departments on their increas‐
ingly important – and varied – procurement strategies.97 This was part of a process, anchored in the
Treasury, of ‘steering’ in the service of the so-called ‘contracting state’, and indeed of a ‘pyramid of contract’
down through internal forms of ‘pseudo-contract’ such as framework documents, detailed output specifi‐
cation and standard-setting.98 The guidance on contract technology, with titles like ‘model forms of con‐
tract’, ‘specification writing’, ‘quality assurance’ and ‘disputes resolution’, quickly multiplied. Amid greater
emphasis on VFM, elaborate processes of market testing, whereby in-house teams had to compete against
external bidders, were developed.99 Underlining the close linkage with NPM, a 1995 White Paper spoke of
integrated processes ‘covering the whole cycle of acquisition and use from start to finish, to ensure quality
and economy’.100 One has to say, especially in view of the later history, some hope.
Consistent with the Conservatives’ general programme, compulsory competitive tendering (CCT) was
also a way in local government of reducing the size of the public sector and the power of trade unions.
Since this tier had traditionally been very reliant on in-house provision, a policy of forcing the market on
councils was seen to have great potential.101 As well as complying with EU procurement rules (below), an
authority would have to solicit bids both from its own service unit and from private sector providers and
act in making the award so as not to restrict, distort or prevent competition. The regulatory design102 be‐
came ever more elaborate as CCT was progressively applied across local government services. Whitehall
became increasingly ‘involved in policing the “rules of the game” and plugging loopholes’.103 Legal paper
proliferated in a rising spiral of command and recalcitrance.104 Yet, despite the fierce element of compul‐
sion, CCT had not delivered a thriving market in local services by the time the Conservatives left office;
in-house teams continued to win the great majority of tendering processes.105 In the long view, the greater
impact stemmed from the requirement to operate on a trading basis and the resultant spread of commer‐
cialism, a cultural shift in local government from a public service base to a business organisation base.106
It is likewise in this period that the use of imperium to curb dominium power comes to the fore. In going
to the marketplace, local authorities were required to disregard ‘matters which are non-commercial mat‐
ters’. The statutory list included contractors’ terms and conditions of employment, as well as conduct in in‐
dustrial disputes, involvement with defence or foreign policy or location in any country and any political,
industrial or sectarian affiliation. Techniques of contract compliance, which typically in the hands of
Labour councils had been spreading through equal opportunities to bans on contractors that had business
dealings in (apartheid) South Africa107 or connections with the nuclear industry, were duly squashed by
this administrative law exercise in relevancy control backed by judicial review.108 The legislation still
stands, but with designated exceptions for equalities and well-being duties.109
(b) ‘Better’ outsourcing
For New Labour ministers proceeding under the self-justificatory banner of better outsourcing, it was es‐
sentially a matter of improving structures and processes, developing novel contractual vehicles for major
public investments and smoothing away the practical excesses of market ideology. In so harnessing the
contractual revolution, how else to proceed than through another bout of juridification? For which, read
more administrative procedure piled on more administrative procedure, attempts at contractual specifica‐
tion and presentiation taken to new heights, and legislative reworking particularly of the local outsourcing
framework.
‘Pragmatic not dogmatic’ was the predictable catchphrase in the new administrative guidance on market
testing and contracting out. In delivering on ministers’ commitment to a modern, responsive and cus‐
tomer-focused range of services, senior Whitehall managers should bear in mind that competition was
only one option and that, as against lowest price, VFM meant ‘better quality services at optimal cost’.110
Demonstrating New Labour’s embrace of the Thatcherite paradigm shift, market-type disciplines would,
however, remain a central element in public sector reform at UK level.111 Tweaking through national stan‐
dards, with targets for the police and local government, for example, and doses of consumer choice on
forms of public service delivery, fitted this general pattern.112
A major review113 in 1999 highlighted a lack of consistency and common process among Whitehall de‐
partments, as well as ‘a very wide spectrum’ between best and worst practice. Agencification was itself a
reason for greater NPM style-discipline in procurement practice and procedure. So was born the Office of
Government Commerce, a separate entity inside the Treasury with its own chief executive, responsible for
improving VFM by driving up standards and capability in procurement. Many strategies were wrought,
from promoting effective competition for government business to support for the wider public sector in
procurement matters, and on up to the management of large, complex and novel projects. This was all the
more important in view of renewed disciplines of government accounting and the step change beyond so-
called ‘conventional procurement’ marked by the New Labour flagship policies of PPP and PFI.114 Further
elements included custodianship of ‘the gateway process’, a system of independent review at critical stages
of major development projects, and a designated trading arm to access supplies and services for public
bodies.115
The economic significance of procurement is a recurring theme. But so too is the implementation chal‐
lenge of securing efficient and effective government processes. A further round of New Labour reform
promised to ‘transform procurement’,116 partly through greater professionalism and partly by tighter man‐
agerial control and inter-departmental collaboration; building on the gateway process, a ‘major projects re‐
view group’ was also conjured. The framing list of ‘good’ procurement principles is significant, first, be‐
cause it is little more than common sense and, secondly, because throughout the contractual revolution in
governance there is much recycling of such basic precepts and repeated instances of non-compliance:
A procuring authority should:
be clear on the objectives of the procurement from the outset
be aware of external factors that will impact such as policy environment or

planning issues
communicate those objectives to potential suppliers at an early stage
consider using an output- or outcome-based specification

follow a competitive, efficient, fair and transparent procurement process
be clear about affordability – the resources available to spend
establish effective contractual management processes and resources in good

time.117
Though a pale imitation in today’s eyes, the qualitative development included a focus on ‘sustainable’ pro‐
curement, where a growing emphasis on whole-life costs and benefits fitted with developments at EU
level.118 The swing of the pendulum on contract compliance extended to equalities and mixes of social and
economic imperatives such as access to skills and training,119 as well as some human rights protection for
service users, where ministers issued multi-sectoral guidance. The specification-based approach to ‘presen‐
tiation’ sat uncomfortably, however, with the idea of an all-embracing ‘living law’. The guidance did not
recommend generic compliance clauses on grounds of higher bid costs and likely market resistance; so far,
but no so far.120
The replacement of CCT with the regime of ‘best value’ in local services was another flagship policy of the
incoming Blair government. Competitive tendering would now be a strictly voluntary activity, so drawing
the sting of complaints of excessive legalism or domination by Whitehall and neglect of service quality.121
Typically, however, the Conservative blueprint for public service delivery was being modified, not jetti‐
soned; there would be no rolling back of local contractual governance. Amid the plethora of performance
indicators, market testing and contracting out were ways of showing compliance with a best value
authority’s duty of making arrangements ‘to secure continuous improvement’ in service functions.122 The
policy approach latterly evolved into a national procurement strategy for England,123 replete with rolling
targets, supported by a revised statutory framework.124 Shades of regulation, the talk was of ‘smart’ pro‐
curement, further emphasis on specifying outcomes not functions and, illustrated by local buying consor‐
tia, greater co-operation and co-ordination in this fragmented tier of governance. While the advent of the
global financial crisis saw cost savings reprioritised, this was very modest by later standards.125
(c) Pushing the boundaries
For the new Coalition government of David Cameron, a rapid, entrepreneurial-style review of commodity
procurement and major contracts helped to set the tone.126 Whitehall should seek in suitably dynamic
fashion to leverage the vast dominium power of the state in the never-ending fight against waste and ineffi‐
ciency, especially through common pricing. Reading across from the private retail sector, better informa‐
tion flows and firmer control at the centre were vital: RIP the Office of Government Commerce. ‘When
purchasing on behalf of Government, civil servants must focus on cash, applying the same principles as if
the money were their own’; there is ‘no reason why the thinking in the public sector needs to be different
from the private sector’.127 The twin drivers of austerity and re-enhanced market ideology shine through.
Going in tandem was the hunt for new or additional forms of marketisation, as clearly signalled by the
generous rubric of ‘Open Public Services’ (see p. 414 above) and later continued under the Conservatives.
By now, much in the contractual technique was very familiar, but again we see it taken to new heights.
In central government, the wide-ranging Civil Service Reform Plan would provide the basic statement of
principle: ‘Departments will commission services from others where this achieves a better service to the
public or better value to the taxpayer.’128 In terms of soft law technique and in accordance with the stan‐
dard processes for managing public money, it was then a matter of Treasury guidance on evaluation and
project appraisal in the so-called ‘Green Book’. One significant development was the greater use of pay‐
ment by results. At one with the policy that delivery merchants extracting profits from the state should
bear more risk, this, it was said, would properly incentivise contractors and add accountability.129 In simi‐
lar vein, a Treasury review in 2012 of PPPs aimed at greater protection of the taxpayers’ interest in long-
term investment programmes.130 At the same time, the colonisation by Whitehall’s favourite suppliers of
outsourcing in sensitive fields of policy delivery became ever more apparent.131 Co-dependency indeed,
these key actors in the ongoing contractual revolution were not necessarily great specialists in the relevant
service area; rather, they were specialists in (winning) outsourcing (contracts), with fingers in many
pies.132
Organisationally speaking, the period to 2017 is marked in UK Government procurement by much churn.
New creations include: ‘Crown representative’ roles to lead relationships with strategic suppliers (2011);
‘Crown Commercial Service’ for central management of procurement of common goods and services
(2014); ‘Infrastructure and Project Authority’, a joint Cabinet Office/Treasury agency to oversee the most
complex and largest projects (2016); ‘Government Commercial Function’, a network of professionals
aimed at co-ordination (2016); and ‘Government Commercial Organisation’, a band of senior practitioners
(2017). This was the product in part of ongoing ‘dialogue’ with the Comptroller and Auditor-General, not
much impressed with Whitehall’s internal administrative practice and external contract technology. For
example, the model of payment by results was shown to be difficult to design and manage, and even to
prompt undesirable behaviours, in challenging areas of public provision such as immigration control ser‐
vices or offender rehabilitation (see p. 434 below).133 Some serious examples of over-billing underwrote
long-standing concerns about the poor quality of government contract management, judged by the NAO
in 2014 as ‘weak’ in such matters as governance, payment, performance and risk.134 Drawing together var‐
ious threads, no fewer than five main areas for improvement were identified by the Commons Public
Accounts Committee. Ministers could not say but that they had been warned:
Transparency: There needs to be far greater visibility to government,

parliament and the public about suppliers’ performance, costs, revenues and
profits. …
Contract management and delivery: Central government’s management of

private sector contracts has too often been very weak. …
Competition: There is not enough competition in the market for government

businesses. …
Capability: Government does not currently have the expertise to extract the
greatest value from contracting to private providers. …
Public service standards: Contractors have not consistently demonstrated the

high ethical standards expected in the conduct of business. …135
The pressure to outsource in local government was ratcheted up under the ‘Open Public Services’ agenda,
with a particular emphasis on neighbourhood initiatives within the framework of the Localism Act 2011.
Yet this hardly compares with the extraordinary financial pressures on local government in this period. Set
in terms of sharp reductions in central government grant funding, successive national procurement strate‐
gies for England would rehearse the dominant theme of ‘making savings’, while also cataloguing and pro‐
moting various innovative responses, digital technology in contract management for example.136 The
practical significance is again underscored not only by the sheer scale of local procurement (some £55 bil‐
lion in 2018) but also by the vital and sensitive nature of some council services, not least special needs,
children’s services and adult social care. In the words of the Local Government and Social Care
Ombudsman, ‘there are few areas now where we do not see some sort of externalisation through
contracts’.137 Many authorities would also become more entrepreneurial in this period, developing models
for income generation and revenue-sharing partnerships, though inevitably at the price of some local ac‐
countability. As well as increased use of shared services based on outsourcing, this notably includes the
growth of ‘insourcing’ through profit-making local authority trading companies,138 perhaps in response to
poor performance by a private contractor, perhaps as a way of expanding a council’s capacity as part of a
wider service restructuring.139 High-profile procurement failures have also led in this direction, headed by
the notorious affair of Carillion plc.
(d) Coming home to roost
At the time of its collapse in January 2018, Carillion was the UK’s second largest construction and services
business, with revenues from home and abroad of more than £5 billion. It held more than 400 outsourcing
contracts in the domestic public sector, ranging from construction of hospitals and transport infrastruc‐
ture to cleaning contracts for schools and prisons. Rightly concerned about the messaging around risk and
corporate responsibility, ministers had refused to bail out the company. Some 2,000 employees lost their
jobs. Around £2 billion was owed to some 30,000 suppliers and subcontractors. Severe delays to major
hospital projects resulted. A joint select committee report concluded that ‘Carillion’s rise and spectacular
fall was a story of recklessness, hubris and greed’. Low-margin, high-risk contracts had left the company
very vulnerable to project disputes and losses and cash-flow problems. Debts piled up, suppliers were paid
extremely late, inadequate contributions were made to pension schemes, executives were given big
bonuses even as performance declined and so on: ‘Carillion was unsustainable. The mystery is not that it
collapsed, but that it lasted so long.’140
One very particular consequence was a spike in inquiry technique. No fewer than thirteen separate re‐
views were launched, looking variously into the demise of Carillion, the UK government’s broader ap‐
proach to outsourcing, and the role of audit and corporate governance regulation.141 Two related themes
are much in evidence. The first one is the thoroughgoing failure of the institutional system of ‘checks and
balances’ intended to prevent just such behaviour. So much, it may be said, for the envisioned ‘dense net‐
work of accountability’. The second theme is the disjointed, even contradictory, nature of the UK
government’s contractual policy and practice. Narrowly focused deal-making, coupled with the pervasive
sense of complacency and often commercial naivety among government departments, is all part of this.
Enough has also been said to suggest ‘closed ears’. Previous scrutiny reports were replete with warnings;
too many in Whitehall had ploughed on regardless. Forty years on, the consequences of the contractual
revolution had come home to roost.
Robustly of the view that ‘government ineffectiveness’ contributed to the problems faced by beefed-up
companies like Carillion, the Public Administration and Constitutional Affairs Committee (PACAC) em‐
barked on a litany of official failings:
lack of transparency about the how and why of decisions to outsource
lack of compliance with the Green Book evaluative and project assessment
process
procurement driven by price and deadline with failure to appreciate quality
differences
frequent attempts to transfer risks that government has not analysed or
understood
repeated and costly renegotiation of contracts (in consequence)
pressure on commercial partners encouraging reckless acquisitions and

unsustainable growth
lack of encouragement of competition in relevant markets
over-reliance on companies for information about costs and performance
lack of compliance with own due diligence procedures

lack of integration of contractual commercial skills with other skills such as
costing, IT capability and financial planning
lack of understanding of markets and particularly of commercial partners’

governance and supply chains
lack of clarity on expectations of behaviour and poor monitoring.142
Ministers had to concede that things had not gone well:
Carillion’s liquidation has exposed issues that have at times informed a

breakdown of trust between government, suppliers and the public. The

Government accepts that it is incumbent on it and industry to rebuild that
trust and greater transparency will help …
Across the board, what Government needs to do is ensure that it has healthy
markets and robust procurement strategies … We recognise that it is
important to be able to provide confidence that Government suppliers are
delivering value on their contracts … Government departments already
undertake lessons learned exercises to identify issues and to plan against
them in the future.143
Away from the limelight, evidence has mounted on problems at the sharp end of outsourced government.
Going in tandem with poor staffing levels, high turnover and loss of experienced professionals, some of
the concerns around institutional culture echo and indeed feed into the kinds of criticism of an unhelpful,
even hostile, decision-making environment associated particularly with the Home Office (Chapter 6).
Equally, however, we observe how the rickety structures and practices exposed in the Carillion affair are
apt to influence service delivery at the ground-floor level. The organisational concerns around outsourcing
are powerfully illustrated, with multiple investigation reports pointing up problems of integration of ser‐
vices, decline of public service ethos and seeming accountability gaps, even the outsourcing of blame and
responsibility.
Take, for example, benefit medical assessments. Under the Coalition government’s welfare reform pro‐
gramme, these were outsourced to several companies in contracts worth over £1.5 billion. It hardly exag‐
gerates to say that poor quality is a resulting norm. The Commons Work and Pensions Committee reports:
‘The Department’s existing standards set a low bar for what is considered acceptable. Despite this, all three
contractors have failed to meet key targets on levels of unacceptable reports in any single period.’ Since the
contractors employed non-specialist assessors, this was perhaps to be expected. The wider ripple effects,
which include a massive increase in complaints, large numbers of claimants forced into the mandatory re‐
consideration process and high success rates in tribunals appeals, are touched on in Chapter 14. The
Committee noted gloomily: ‘Large sums of money have been paid to contractors despite quality targets
having been universally missed. The Government has also spent hundreds of millions of pounds more
checking and defending the Department’s decisions.’144
Or take immigration detention, where the removal centres are mostly contracted out. They are a subject of
multiple complaints of poor and discriminatory treatment, serious allegations of abuse and their own
stock of critical scrutiny reports.145 Successful judicial review litigation has also produced a public inquiry
into particular allegations of inhumane and degrading treatment (Art. 3 of the European Convention on
Human Rights, or ECHR).146 According to the Home Affairs Committee, the Department has ‘utterly
failed in its responsibilities to oversee the safe and humane detention of individuals in the UK’. ‘Monitor
more closely the policies, procedures and practices of … immigration detention contractors in order to
more effectively expose inappropriate behaviour’ was an obvious but important recommendation to
make.147
Ministers can fairly argue that huge numbers of public contracts operate in a suitably sensible, routine and
responsive manner. Local government services in particular would have broken down by now if this were
not the case. Contractual governance being ultimately a human endeavour, mistakes are made, certain er‐
rors are rectified, some lessons are learned and so on. Looking at the matter through the lens of individual
rights and obligations, however, the adverse effects of outsourcing at ground-floor level cannot simply be
wished away. Nor are the illustrations given isolated examples. In a careful study, Thomas draws our atten‐
tion to other substantial breakdowns in outsourced government, in matters as diverse as tax credits and
asylum accommodation.148
Perhaps, however, the nadir is probation. Under central government’s ‘Transforming Rehabilitation’ strat‐
egy launched in 2013, the delivery of probation services in England and Wales was split between the statu‐
tory National Probation Service (NPS), responsible for supervising high-risk offenders, and, for the bulk of
the work, some twenty community rehabilitation companies (CRCS). Private and/or third-sector organisa‐
tions, their contracts linked payment to the proportions of offenders reoffending and the numbers of fur‐
ther offences. In pressing the case that opening up the market would stimulate innovation and drive im‐
proved efficiency and performance, Justice Secretary Chris Grayling was bullish. According to the impact
assessment, the reforms would deliver reductions in reoffending corresponding to £10.4 billion net eco‐
nomic benefits to society over the seven-year period of the contracts. The Department later acknowledged
not only ‘optimism bias’ but also that implementation was rushed in order to procure contracts before the
2015 UK general election. The Treasury-led system of evaluation and review of major projects ‘gave the
programme the green light and failed to provide effective challenge’.149
Problems did not take long to materialise. In 2017, the Department was forced to amend the contracts
with the CRCs in order to increase their income and stabilise failing services. The following year, the
Department announced early termination of the contracts with a view to simpler second-generation ones.
Meanwhile, criticism had become widespread across the criminal justice system around inadequate sup‐
port and supervision by the CRCs – hardly a recipe for reducing crime and promoting rehabilitation.150
The PAC reported in 2019:
In its haste to rush through its reforms at breakneck speed the Ministry of
Justice … left probation services underfunded, fragile, and lacking the
confidence of the courts. Inexcusably, probation services have been left in a
worse position than [previously]. The Ministry accepts that many aspects of
its reforms have not worked, and that services have suffered as a result. Its
design of the reforms left CRCs too dependent on volumes of work which
did not materialise and their exposure to payment by results worsened the
subsequent financial pressure. CRCs had insufficient income to cover the
cost of basic, good quality probation services, leaving them unable to deliver
the innovation promised and vulnerable to outright failure. The Ministry’s
attempt to stabilise the contracts, and its decision to terminate them early,
will cost the taxpayer an additional £467 million. Mismanagement, risk
taking and the lack of properly considered planning has badly let down
offenders … These reforms have failed to reduce reoffending by as much as
expected, with the average number of reoffences committed by each

reoffender actually increasing.
The Ministry’s decision to split the probation service has let down offenders
and those working in the justice system. [It] introduced many new points of
contact between different parts of the probation system and with the wider
justice system, which create friction and require effort and resource to
manage. [As regards] payments by results, the Ministry explained that it
now believes that reoffending is not a true measure of the performance of
CRCs because it is affected by so many different factors.151
It is, however, old-form administrative law machinery that effectively demolished the new-fangled exercise
in contractual governance. Giving full vent to concerns about diminished ‘publicness’, HM Chief Inspector
of Probation Dame Glenys Stacey adopted a series of basic design principles which served both to illumi‐
nate the existing defects and help chart a way forward. Probation services should be evidence-based.
Probation should meet the needs of individuals (including victims). It should give confidence in public
protection and rehabilitation, with an operating model to support effective delivery and VFM. And, cru‐
cially, probation should be an integrated and professional service. The Chief Inspector was even prepared
to face down attempts at re-contracting. Not only was the existing reform a botched job; the Secretary of
State also had to understand the functional limitations – corrosive effects – of contractual governance:
To implement government policy, capable probation leaders were required

to deliver change they did not believe in, against the very ethos of the
profession. On inspection, we now find probation supervision provided
under contract to be substandard, and much of it demonstrably poor.
Judicial confidence in community sentencing is now at serious risk.
Probation is a complex social service, with professional judgement at its

heart, but probation contracts treat it largely as a transactional business.
Consequently, there has been a deplorable diminution of the probation
profession and a widespread move away from good probation practice. This
is chiefly due to the impact of commerce. Professional ethics can buckle
under such pressures, and the evidence we have is that this has happened to
some extent.
You have taken the bold decision to terminate contracts early, with the
intention of re-contracting on better terms, and aligning provider
boundaries. While this would help, it would leave serious design flaws
unaddressed. The probation model delivered by Transforming
Rehabilitation is irredeemably flawed. Above all, it has proved well-nigh
impossible to reduce probation services to a set of contractual requirements.
Professional probation work … when treated in that way … is distorted and
diminished.152
Exceptionally in the contractual revolution, the (new) minister was for shifting. The NPS would take over
responsibility for the sentence management of all offenders, with commissioned inputs from ‘probation
delivery partners’ on particular aspects such as accredited skills programmes.153 Perhaps hopefully, the
central importance of the offender management function to the effectiveness of the criminal justice system
in rehabilitating offenders is now better understood by all concerned.
(e) Going on
A recent IfG study attempted to distil the reasons why different outsourcing contracts succeed or fail. On
the positive side, decision-makers should chiefly factor in the existence of a competitive market of high-
quality suppliers, the ease of measuring the value added by the provider and, a precept eminently con‐
testable in practice but clearly aimed at dogma, the service not being so integral to the nature of govern‐
ment as to make outsourcing inappropriate. Conversely, from among the list of failing factors, public pur‐
chasers should particularly avoid weak market engagement and lack of qualitative assessment, unrealistic
approaches to risk and lax contract management.154 This fits with the broad thrust of the oddly titled
Outsourcing Playbook, a UK Cabinet Office guide for departments, written in consultation with industry
and clearly intended to draw a line under Carillion. Great swathes of outsourcing are here to stay; substan‐
tial benefits can still be wrought; Whitehall must up its game to do so: such is the repeated messaging.155
The Playbook, it claims, ‘heralds a new ethos’.156 Perhaps the most significant feature is consolidation; the
Playbook brings together a wide range of best practice guidance into a model of structured process under
the easy titles of preparation and planning, publication and selection of suppliers, evaluation and award,
and contract implementation. It is a typical mix of soft law nostrums and, especially with the legacy of the
EU public procurement regime, hard law requirements. The most significant new sets of requirements are
upstream in the contractual process: a panoply of market health and capability assessments; project valida‐
tion reviews; piloting for ‘first generation’ outsourcing; and, constitutionally significant, a model of ‘make
or buy’ assessment before deciding to outsource a service. In public law parlance, the Playbook is very
much about ‘getting it right’. The guidance does assume, however, that ‘decision making is policy neutral
and based on achieving optimal service delivery and value for money’.157
The early signs on implementation are mixed at best. While there has been much by way of warm words
and training courses, the IfG reports patchy take-up among departments and continuing complaints of
poor practice from suppliers. Lower-value contracts have not been monitored and, understandably with all
the demands of Brexit, the UK Cabinet Office has lacked the capacity to roll out the reforms beyond
Whitehall. Indeed, the IfG also reports little awareness of the reforms in local government and the NHS.158
The policy salience in the wake of the coronavirus pandemic remains to be seen.
Expanding the theme, the Playbook goes together with Whitehall’s Supplier Code of Conduct, first
launched in 2017 and stiffened very considerably in the wake of Carillion. Correctly, the Code proceeds on
the basis that public procurement and outsourced government is a mainstream aspect of law and
administration:
Government relies on its suppliers for the delivery of many important public
services, for assistance in delivering policy and for the construction of
public assets … While underpinned by a contractual relationship, this
reliance needs to be based on a bond of trust between government, suppliers
and the public … The public expects that government and its suppliers will
look after their interests and deliver on the promises that they make. They
expect that suppliers will behave ethically and treat the end users of their
service, employees and subcontractors fairly and with respect. Suppliers also
expect that government will be fair and transparent in its dealings with
them.
It is important to publicly state these expectations in a code of conduct and

recognise the joint nature of public service delivery. Suppliers are an
extension of government’s business, and employees of suppliers interact with
citizens and businesses on our behalf every day. This updated Supplier Code
of Conduct strengthens the principles of working together … We expect our
suppliers, in delivering goods and services to, or on behalf of government,
wherever they operate, to act in a manner that is compatible with public
service values.159
Like the Playbook, the Supplier Code pushes beyond the direct legal process of procurement to ‘the life of
the contract’. Indeed, in suitably relational terms, ‘delivery should be in accordance with the spirit of the
contract, as well as its letter’. Not before time, there is a stronger focus on ethical behaviour, building on
previous work in this field by the Committee on Standards in Public Life, and on public transparency in
contractual dealings, both as a driver of performance and instrument of accountability. Reference is rightly
made to the recently revamped UK Corporate Governance Code, linking in turn to general commercial
and employment legislation.160 The Supplier Code is also noteworthy for seeking to promote a more col‐
laborative culture in complex chains of delivery to end-users, so recognising the mutual dependencies in
the contracting state of both ‘public + private’ and ‘private + private’.161
The further question is raised: does the Supplier Code represent an adequate response by government?
One which, while preserving the attributes of flexibility and scale in public contracting, promotes proper
understanding and respect for the collective public interest? As a significant example of publicisation, so
grounding good governance values, first in the dominium power of central government and secondly via
the soft regulatory-style technique of standard-setting, the Code clearly has much to commend it. But,
given the huge importance of the public contractual enterprise to society and the economy, the rightful
taxpayer demand for VFM and the egregious failings hitherto, there is a ready-made case for wider and
deeper intervention.
A much more assertive publicisation agenda could conceivably extend to a new independent regulator.
Splendidly envisioned, this might focus not only on effective market shaping and general good practice in
public outsourcing but also on vindicating accountability and, most obviously with reference to the
stunted developments in FOI,162 on promoting greater transparency in relations between government and
industry.163 A tall order, it must be said, not least in view of the sheer multiplicity and diversity of policy
contexts involved in public outsourcing. Again, one might think in terms of high-level precepts to govern
the role of administrative law in outsourced government, for example that the same internal and external
standards should apply to public services whether outsourced or not, that the process of expansion should
be selectively driven by reference to the nature of the public function, and that, at one with the general
themes of ‘fire-fighting’ and ‘fire-watching’, external redress should be recognised as important and neces‐
sary, though not by itself sufficient.164 Carrying strong echoes of Freeman’s original agenda-setting ap‐
proach, this would effectively denote multiple contributions from multiple actors, with government lead‐
ing the way through a more creative use of contractual terms and doses of legislation on pressure points
like FOI. Systems and processes to ensure institutional learning across the board, underwritten by detailed
guidance and training, would also fit the bill. The Supplier Code of Conduct points in this general direc‐
tion, but only that.165
4. Contract-making: Europeanisation and Brexit
In effect constituting a special ‘Administrative Procedures Act’, nowhere has the blending of domestic ad‐
ministrative law with EU law been better illustrated than in the dedicated public procurement regime
around tendering, bids and bid selection.166 Typically, EU legislation, in the form here of directives, has
not only driven but also been driven by national developments in law and administration. In the UK, a
convoluted legal development has involved repeated use of the European Communities Act (ECA) 1972 to
make delegated legislation drawing down into administrative practice and procedure the overarching legal
requirements of the EU Single Market, the chief instruments latterly being the Public Contracts
Regulations 2015 and the Utilities Contracts Regulations 2016.167 Reflecting classic debates about rules
and discretion (see Chapter 6), the regime itself raises general questions about the efficacy and scale of reg‐
ulation of public contract-making. And with Brexit new vistas open up of reregulation in the form of a less
prescriptive, more tailored legal framework.
The European Commission has over the years been very active in this field, targeting a mass exercise in
dominium power estimated to account for some 14 per cent of Member States’ total GDP.168 A legal
framework centred on public contracts being awarded in an open, fair and transparent manner has had an
expanding set of policy rationales: from the elimination of discrimination on national grounds and eco‐
nomic efficiency to European competitiveness in the global market, and on through VFM for awarding au‐
thorities and anti-corruption to promoting technological innovation. The paradox is immediately appar‐
ent: burgeoning regulation in the cause of a level playing field and open markets and competition. While
the procurement framework is not intended to force public authorities to the commercial marketplace, the
fashion in many national systems for government outsourcing has naturally given it much greater promi‐
nence. At the same time, in only regulating certain aspects of public procurement, the EU codification
leaves large areas to be regulated (or not) by national legislation. The uneven nature of formal legal inter‐
vention across the contractual cycle is once again highlighted.
As well as the constitutional push and pull around Member State autonomy, the evolving regulatory
regime is characterised by swings in the pendulum between market ideology and social objectives and sus‐
tainable development, by clashes of view over the virtues of relationality and possibilities of presentiation,
and by competing demands for tight legal control and for administrative flexibility and responsiveness in
changed conditions and across multiple policy domains. Successive waves of legislation have resulted, go‐
ing back some fifty years.169
Early efforts at breaking the stranglehold of domestic preference in public purchasing achieved very little.
Relevant directives lacked an effective enforcement mechanism and in practice were largely ignored; appli‐
cation of basic Treaty Articles by the European Court of Justice (ECJ) remained sporadic and peripheral. A
second wave of legislative reform initiated in the mid-1980s as part of the then vibrant Single Market
Programme involved widening the regulatory framework by bringing in the utilities and deepening it by
strengthened procedural requirements. Different activities (works, supplies, services) were each made the
subject of a specific directive; ‘contracting authorities’ were broadly defined to include central government,
local government and public agencies; thresholds were used to exempt minor contracts; a compliance di‐
rective on remedies and domestic review procedures provided general underpinning. Reviewing the
scheme in the late 1990s, the Commission initially suggested little change: although the economic impact
had been relatively limited, with public purchasing continuing to operate overwhelmingly along national
lines, the existing framework should be given more time to bite. But it was then confronted by multiple
complaints about the over-rigidity and the unreadability of a fragmented and often highly technical legal
framework. Rather than improving the efficiency of purchasing, too much emphasis on individuated con‐
tracting risked undermining the important relational values of collaboration and co-ordination; consider‐
able compliance costs were being imposed, hard to justify. Conversely, for those purchasers determined to
discriminate and/or avoid legal sanction, there was, in the language of Anglo-American administrative
law, ample scope for cynical ‘games with rules’ and for impenetrable ‘boiler plate’ reasons. The ITC revolu‐
tion was also gathering pace, opening up new horizons for pan-European public purchasing.
A third wave of legislation eventually resulted, boasting a consolidated (‘classic’) public sector directive, a
revised directive on utilities, a later directive on defence procurement (previously the chief subject matter
exclusion) and a significantly strengthened compliance directive.170 But while the Commission pro‐
claimed the virtues of simplification, modernisation and flexibility, the recodification itself sent out mixed
messages. Better to accommodate more collaborative forms of government contracting, the regulatory
framework was loosened to allow more dialogue at the preliminary stages. Yet in other ways the regulatory
screw was tightened against administrative discretion, for example through detailed provisions on frame‐
work agreements and e-auctions. And when this version of the regime came to be reviewed, many of the
old complaints resurfaced. Evidence of low import penetration rates persisted; criticism abounded on the
front line of excessive formalisation and level of detail, and more generally of heavy administrative bur‐
dens and lack of proportionality. In the trademark terms of cost–benefit analysis, the Commission’s evalu‐
ation report concluded that there was ‘scope for efforts to strike a better balance’.171
Dating from 2014 and faithfully implemented in the UK regulations, the most recent wave of EU legisla‐
tion is embodied in revised public sector and utilities directives, and also, effectively playing ‘catch-up’
with the rise of public–private partnerships, a directive on works and service concessions.172 The Coalition
government claimed a successful lobbying effort with EU partners to negotiate a simpler, more flexible and
proportionate framework, with some potential for tweaking at Member State level. The legislation cer‐
tainly tackled some major pressure points. As well as more capacious procedural pathways, there are en‐
hanced opportunities for strategic use of the dominium power, more particularly under the banner of sus‐
tainable procurement. Further illuminating the continued quest for the ‘optimum’, particular features are a
lighter, principles-based regime for ‘services to the person’, as well as lesser procedural demands on ‘sub-
central’ government purchasers and more ability to factor in the past performance of suppliers. As another
example of the mainstreaming of the IT revolution in administrative law, a firm push in favour of e-pro‐
curement on grounds of economy, simplification and better access is also noteworthy.173
The essential fact remains, however, of a heavy dose of law at important but selective stages of the contrac‐
tual cycle. Rules have been piled on rules, with much by way of ‘spill-over’ in the form of Europeanised
public administration. Amid multiplying policy rationales, and with never-ending attempts at fine-tuning
and gap-filling, the internal wiring of the regulatory system is complicated. The Public Contracts
Regulations themselves run to five parts, nine chapters and six schedules.
Especially with an eye to possible developments in the UK post-Brexit, three further features deserve a
special mention. Effectively elaborating the basic Treaty principles such as non-discrimination and trans‐
parency, and directly engaged through interpretation in the never-ending ‘juridification’ cycle of judicial
and legislative interaction, the Court of Justice of the European Union (CJEU) has over time made a par‐
ticularly strong contribution in this field,174 backed up on a day-to-day basis by the direct involvement of
the national courts. Secondly, the regime involves a substantial mix of public and private legal enforce‐
ment: the Commission through the classic EU infringement procedure;175 competitors via a specially de‐
veloped scheme of remedies that notably involves standstill provisions and contract ineffectiveness.176
Thirdly, the regime is fleshed out, as is the way in EU governance, via a mass of soft law documentation.
Online links abound.
(a) The pathways model
Looking more closely, we see how the legislative framework reflects the central role of administrative pro‐
cedure in governance and demonstrates the use of some classic administrative law techniques. At the heart
of the development is a pathways model, wherein decision-makers are given a number of possible proce‐
dural routes and are prescribed a whole series of steps to follow for procurement above set financial
thresholds.177 This represents the formal, legal notion of structured administrative process (Chapter 3).
Involving stress on the transparency of decision-making and the use of objective criteria specified in ad‐
vance, the design reflects the familiar assumption that whenever there is broad administrative discretion,
arbitrariness or discrimination follows automatically.
Conceptually speaking, the model can be visualised in terms of five main stages: (1) initiation and choice
of procedural route; (2) preparation and publication of tender documents; (3) selection and exclusion of
bidders; (4) tender evaluation and award; and (5) post-decisional procedures (ranging from reason-giving
and notification to statistical obligations).178 In recognition of demands for competition and manageabil‐
ity in routine transactions, and for dialogue and tailored solutions in complex (large-scale) contracts, the
menu of procedural routes has expanded over time. Today, five main possibilities are provided for in the
public contracts legislation. The first two routes handle the great bulk of smaller to medium-sized transac‐
tions. Designed in terms of increasing challenge and specialisation, the other procedures should still in‐
volve several would-be suppliers:
open procedure – all interested firms allowed to tender
restricted procedure – prequalification and shortlisting (only preselected suppliers may submit tenders)
competitive procedure with negotiation – revised bids allowed once the dialogue with potential suppliers
is formally ended
competitive dialogue – discussions with potential suppliers to develop suitable solutions for very com‐
plex purchases, followed by invitation to tender
innovation partnership – prequalification and negotiation in highly specialist transactions, with pur‐
chase both of research and development (R&D) services and resulting innovative product.179
Depending on the procedure adopted and the value and size of the contract, a standard procurement can
take anything from a few months to over a year to conclude; intensely demanding, an approach like com‐
petitive dialogue is apt to be even more time-consuming. A dash of legislative foresight, there is, however,
a tightly defined short-cut: negotiated procedure without prior publication.180 Available for reasons of ex‐
treme urgency in unforeseeable circumstances, it allows immediate and direct dealings with an economic
operator. The coronavirus pandemic has sadly highlighted the need for this hitherto very exceptional
procedure.
Legislative rule-making with a view – in the language of Davis (see Chapter 6 of this volume) – to struc‐
turing, confining and checking the exercise of administrative discretion at successive steps in the decision-
making process is part and parcel of the general design. The departure point is the ringing statement of
principle that ‘contracting authorities shall treat economic operators equally and without discrimination
and shall act in a transparent and proportionate manner’.181 Raising some familiar question marks around
the efficacy of rule-bound techniques for ‘controlling’ discretion, however, the great weight of the detailed
provision is typically at the (very) micro level.
The procurement regime is a leading example in administrative law of formal, legal ‘steering’.182 As such, it
illuminates the major instrumental dimension to administrative procedure. The requirements are often
dry and technical but also heavily policy-laden. The touchstone is repeated recourse to the classic adminis‐
trative law concept of relevancy, with different considerations being factored in or out or rendered permis‐
sible as our public purchaser proceeds step-by-step along a pathway. Other standard devices are bounded
choice as in minima and maxima and specification in advance of the weightings used in decision-making
criteria. At times, the procedures convey strong commands, especially in the cause of market transpar‐
ency; on other occasions, a light touch on the tiller.
The blend of technical and policy-laden criteria is clearly illustrated in the selection of tenderers. The legis‐
lation grounds a battery of tests for suitability on the basis of standing and competence, from evidence of a
firm’s economic and financial capacity to proof of technical and professional ability, and on through certifi‐
cation of quality assurance and environmental management standards.183 While this sounds good, there
exists the restrictive potential of ‘red tape’ on competition, more especially for small and medium-sized
enterprises (SMEs) notwithstanding provision for self-declarations. As regards the exclusion of would-be
bidders, the current legislation stiffened the regulatory framework in the never-ending fight against crimi‐
nality in lucrative government contracts.184 Under the broad rubric of ‘sound procedures’, the legislation
declares that firms ‘shall’ be excluded in the light of fraud or corruption and ‘may’ be excluded for other
misdeeds (grave professional misconduct perhaps), subject to some corporate incentive in the form of
‘self-cleansing’.185 Notably, however, the likes of Carillion would not be caught.
‘Steering’ techniques are much to the fore at the crucial award stage:
Contract award criteria
(1) Contracting authorities shall base the award of public contracts on the most
economically advantageous tender assessed from the point of view of the
contracting authority.
(2) That tender shall be identified on the basis of the price or cost, using a cost-
effectiveness approach, such as life-cycle costing …, and may include the best
price-quality ratio, which shall be assessed on the basis of criteria, such as
qualitative, environmental and/or social aspects, linked to the subject-matter of
the public contract in question.
(3) Such criteria may comprise, for example
(c) after-sales service and technical assistance, delivery conditions such as

delivery date, delivery process and delivery period or period of completion.
(4) Award criteria shall not have the effect of conferring an unrestricted freedom
of choice on the contracting authority.
(5) Award criteria shall

(b) be accompanied by specifications that allow the information provided by
the tenderers to be effectively verified in order to assess how well the tenders
meet the award criteria.
(9) The contracting authority shall specify, in the procurement documents, the
relative weighting which it gives to each of the criteria chosen to determine the
most economically advantageous tender, except where this is identified on the
basis of price alone.
(10) Those weightings may be expressed by providing for a range with an

appropriate maximum spread.
(11) Where weighting is not possible for objective reasons, the contracting
authority shall indicate the criteria in decreasing order of importance.186
The ‘most economically advantageous’ test is then a decisive steer and also a capacious concept. Elements
(2) and (3) represent typical examples of structuring or guiding the exercise of discretion by reference both
to the choice of methodology, which via life cycle costing can import ideas of sustainable procurement,
and an open checklist of suitable factors, which itself denotes the development of a more rounded ap‐
proach to procurement over time. The legal practitioner would immediately recognise the footprint of the
CJEU, especially with the broader criteria carefully restricted in terms of the subject matter of the
contract.187 Elements (6) and (7) duly confirm that the process is not a free-for-all and that (internal)
checking or reviewing is an essential part of it. Meanwhile, elements (9)–(11) illuminate the important role
in the framework of pre-announcement, here grounding the twin techniques of structuring and confining
or circumscribing discretion and, particularly, weighting.
In the light of experience, the Outsourcing Playbook specifically warns against ‘a bias towards low cost bids’
rather than the best VFM in terms of cost and quality.188 Suppose, then, that the methodology adopted is
best price–quality ratio. According to the chief practice guide:
Formula to rank tenders
Once the award criteria have been evaluated and scored, a specific formula
should be used to rank tenders and to establish which tender should win the
competition. To calculate which tender offers the best price-quality ratio,
contracting authorities should take into account the quality score and the
price, both expressed in the form of indices. The method used must be
indicated in the procurement documents and must remain unchanged
during the entire procedure. There is no one required way to define the best
price-quality ratio but two formulas are commonly used:
(a) a basic method with no particular weighting between price and quality:
(b) a method applying a weighting for quality and price expressed as a percentage
(e.g. 60%/40%):
+
total quality score (out of 100) for tender X x quality criteria weighting (in
%)
The weighting determines how much extra money the contracting authority
is prepared to spend in order to award the contract to an economic operator
whose tender provides a higher technical value.
Both formulae give a final mark out of 100 points. The tender with the
highest mark must be awarded the contract.189
The possible distorting effects of treating public purchasing less as an exercise of continuous and skilful
judgement and more as a mechanical exercise of advanced calculations and spreadsheets are readily appar‐
ent. Administrative cost must also be factored in, a feature heavily underlined by the case law requirement
to disclose ‘all the elements’.190 Err on the side of caution and specify in advance the weighting of any sub-
and sub-sub-factors is the not-so-subliminal message.
(b) New vistas
Embedded in the domestic statutory framework as it is, the detailed procurement regime continues to ap‐
ply until made subject to a substantive bout of reregulation. Predictably labelled a ‘transforming public
procurement’, this is what the Johnson government says it intends. The Coalition government’s reformist
effort is no longer deemed sufficient:
Leaving the EU presents an opportunity to design a radically new regulatory

framework for public procurement which better meets UK needs, drives
improved commercial outcomes, delivers greater simplification and
flexibility, reduces burdens on the public sector and business, and is more
transparent.191
As against tight alignment of domestic procurement rules with the EU directives, this effectively means
drawing on the much looser framework of the WTO Government Procurement Agreement (GPA), as
then supplemented by ‘level playing field’ provisions in the EU/UK Trade and Cooperation Agreement
and, to a greater or lesser extent, by bilateral trade agreements with other (leading) market economies.
Reciprocity or mutual rights of market access, as well as VFM for the UK public sector in a globalised
economy, is of the essence of the enterprise: what ministers cannot expect to achieve is a wholehearted or
general policy of ‘buy British’.
Whereas the UK was previously part of the GPA only through EU membership, the state will now repre‐
sent itself as an independent member. A plurilateral agreement between the European Union and some
twenty countries, most notably including Japan, South Korea and the United States, the GPA is essentially
targeted on large-scale procurement in goods, services and construction, with important exceptions in the
defence sector and the utilities. From the standpoint of law and administration, it fits with a lighter, more
tailored approach to the formal procurement regime in the UK. Thus, the GPA is framed in terms of open,
fair and transparent conditions of competition, but without much of the prescriptive, even heavy-handed,
detail associated with the EU pathways model of administrative procedure.192 Framed at the international
level by the WTO dispute settlement mechanism, a ‘domestic review mechanism’ is required for the pro‐
tection of suppliers. In explaining the broad policy reorientation, UK ministers have typically emphasised
the ‘continuity of access for UK business to £1.3 trillion of global public procurement opportunities’.193
As incorporated by the European Union (Future Relationship) Act 2020, the provisions on public procure‐
ment serve to illustrate the role of the EU/UK Trade and Cooperation Agreement (TCA) (see Chapter 3)
in helping to frame domestic law and administration in key areas of market regulation.194 Reading across
the GPA principles, some familiar elements of institutional design and administrative process are in‐
cluded: most obviously, independent and impartial arrangements for review, as well as particular tech‐
niques of compliance and remedy (standstill procedure, corrective action, etc.). Highlighting the aspect of
‘GPA-plus’, the TCA also includes particular provisions on taking into account social and labour and envi‐
ronmental considerations, as well as the guaranteed use of electronic means of procurement to underwrite
market access. So too the Agreement extends the coverage of the reordered EU–UK public procurement
market beyond the GPA, notably in the energy and telecoms sectors.195
Ministers have naturally been keen to stress that the Agreement ensures the UK can ‘maintain a separate
and independent procurement regime and … enact reform’.196 A recent consultation paper ventures much
by way of new vistas. Classic issues of dominium power and market leverage, and of rules and discretion
and redress, are again brought to the fore, and the wider linkages in terms of the UK ‘regulatory labora‐
tory’ (Chapter 8) are also made evident:
The current regimes for awarding public contracts are too restrictive with
too much red tape for buyers and suppliers alike, which results in attention
being focused on the wrong activities rather than value and transparency.
We need a progressive, modern regime which can adapt to the fast moving
environment in which business operates. Markets and commercial practice
are constantly evolving and we must ensure that the new regulatory
framework drives a culture of continuous improvement to support more
resilient, diverse and innovative supply chains …
We propose enshrining in law the principles of public procurement: value

for money, the public good, transparency, integrity, efficiency, fair treatment
of suppliers and non-discrimination … We propose integrating the current
regulations into a single, uniform framework [including] a new flexible
procedure that gives buyers freedom to negotiate and innovate to get the
best from the private, charity and social enterprise sectors [and] a limited
tendering procedure that buyers can use in … in crisis or extreme urgency
…
We intend to legislate to require contracting authorities to have regard to the

Government’s strategic priorities for public procurement in a new National
Procurement Policy Statement.[197] We propose reforming the process for
challenging procurement decisions to speed up the review system and make
it more accessible, [and] refocusing redress onto pre-contractual
measures.198
Technical and procedural read-across and/or the continued gravitational pull of the EU Single Market;
creative legal forms of reregulation in a multipolar polity and the national judicial contribution; more or
less gradual changes in style, the product perhaps of comparative market size and/or a decreasingly
Europeanised legal and administrative culture; further reorientations in public procurement and interna‐
tional trade policy, played out in the UK Internal Market: the public procurement regime will in so many
ways be an acid test of the domestic administrative law development in the next period.
5. Judicial connections
The interaction of the conceptual framework of ordinary private law with, on the one side, the needs of
public policy and administration and, on the other, demands for individual protection infuses the case law.
Fuelled by the ever-increasing economic and social significance of the ‘contractual revolution’ – public
procurement as big business (disappointed tenderers), outsourced public service delivery as the new nor‐
mal (afflicted users) – a series of legal doctrinal pressure points is made evident. Somewhat confusingly,
the courts are frequently found holding fast to a private law model, in others edging towards a public law
one, and in others again, and more promisingly, blurring the so-called ‘public/private divide’ with mixes of
technique. Particularly striking from the standpoint of law and administration is the weakness of judicial
review in the commissioning state, a chief exception in terms of the broad public law development
(Chapter 4) but one familiarly connected with the consensual basis of contract and freedom of contract.199
Showing the failure to promote a strong, external ‘publicisation’ agenda, the marked judicial reluctance to
apply to the contract function doctrines that apply to other government activities extends, in the context
of contracted-out public services, to Convention rights. Conversely, and not before time, there is currently
a bout of judicial commercial regulation in relational contracts, a ‘good faith’ form of legal control that
reads across into government outsourcing. Let us look more closely, beginning with some legal doctrine
which can sit more or less comfortably with the commissioning state.
(a) Fettering
The common law principle that a public authority must retain the freedom to exercise its discretionary
power in the public interest is well established. But how far – overarching executive necessity aside –
should this ‘no fettering’ principle be pressed in the case of contract? With competing values in play of se‐
curity of contract and party autonomy, and of government effectiveness and political responsiveness, the
question admits of no easy answer. The very idea of the commissioning state suggests, however, a relaxed
judicial approach: policy delivery in a discretionary statutory framework effectively and efficiently secured
by outsourcing, which itself structures and confines the public body’s discretion to some extent. While the
primacy of statute must be maintained in terms of ultra vires, to deploy a judicial wrecking ball here would
be bizarre.
Two different approaches are found in the early authorities. One involves a very strict test whereby the
contract is void if it overlaps the subject matter of a statutory power.200 The other, ultimately favoured by
the House of Lords,201 entails the more benign test of incompatibility between the purpose of the statutory
power and the contractual purpose. That this allows the use of contract as a tool of statutory purpose is in
turn of great significance today. It sits easily too with recent developments in terms of the ‘law of policy’,
whereby the structuring of discretion by guidance, etc. is judicially encouraged, even mandated (Chapter
17).
The test of incompatibility operates to defeat blatant attempts to rewrite statutory obligations. A classic ex‐
ample is Stringer v. Minister of Housing and Local Government,202 where the local authority made a formal
agreement with Manchester University to discourage development in the vicinity of the Jodrell Bank tele‐
scope. The contract was held ultra vires since it bound the council to contravene the planning laws by a
failure to consider all specified matters. Again, in R (Kilby) v. Basildon DC,203 the Housing Act 1985 stipu‐
lated several ways to vary a council tenancy ‘and not otherwise’. A clause in K’s agreement purporting to
give the tenants’ committee a power of veto thus amounted to unlawful contractual fettering of the
authority’s management powers.
Difficulties arise when – typical of a multifunctional body like a local authority – two potentially discor‐
dant statutory powers are involved. Take R v. Hammersmith and Fulham London Borough Council, ex p.
Beddowes.204 Acting under a statutory power to dispose of land held for housing purposes, the ruling
Conservative group resolved to sell off part of an estate to property developers and to enter into covenants
over the remainder precluding the council from exercising a statutory power to provide housing via new
tenancies. The contract, bitterly opposed by the Labour opposition, was signed a few hours before control
of the council changed hands following local elections. A resident sought judicial review on the basis that
the covenants were an unlawful fetter on the council’s powers as a housing authority. Adopting a wide defi‐
nition of primary purpose – namely, the provision of housing accommodation in the district – a majority
in the Court of Appeal dismissed the challenge. The estate was ‘in bad repair’ and the council’s approach
was ‘aimed at providing accommodation in the borough of higher quality than at present by means of a
scheme of maintenance and refurbishment’. The dissenting judgment was understandably sceptical: de‐
signed to ‘fetter the political aspects of the future housing policy’, the decision to contract was ‘an unrea‐
sonable and impermissible exercise of the powers and functions of a housing authority in the Wednesbury
sense’.
(b) Judicial review in issue
The sheer size and reach of government outsourcing make the case for legal protection of the public inter‐
est compelling. First, we recall the argument about good governance principles being undercut by compet‐
ing priorities; hence a demand to reinforce the historic judicial review function of protection of the indi‐
vidual. Secondly, and finding substantial vindication in the hitherto EU regime of public procurement,
there is the ideal of fair access to the commercial benefits as expressed in principles of equal treatment and
open competition. Thirdly, and related, the reality of informal networks and co-dependency fuels the argu‐
ment for firm rules against bad faith and improper influence.
This is not, however, a convincing case for judicial review simply because of the public status of a body: an
institutional test. It is not immediately obvious either that, in ordinary commercial contracts like leases,
corporate interests dealing with public bodies should have greater protection than any other contracting
parties or that, when operating in competition with private enterprise, public bodies should be subject to
additional constraints. Were judicial review to be released from the shackles currently deployed in this vi‐
tal field of society and economy, one would expect to see properly tailored approaches.205
The issue of whether the service delivery merchant is amenable to judicial review naturally commands at‐
tention in the commissioning state.206 Fitting with commercial imperative and private law notions of party
autonomy, and more particularly with the limitations on the so-called ‘Datafin project’ made evident in
the regulatory context in Aga Khan (see p. 390 above), the judicial strategy here has essentially been one of
opting out. The key authority, from the turn of the century, is Servite Houses.207 A common type of ar‐
rangement, Wandsworth council had placed a contract with a housing association, Servite, to run a care
home for the elderly. The home not being profitable, Servite wanted to close it, but were challenged in judi‐
cial review proceedings on the basis of a legitimate expectation of a ‘home for life’.208 Moses J held that,
notwithstanding the legislation empowering the contracting out and, further, the regulatory regime gov‐
erning the provision of care, there was insufficient ‘statutory penetration’ to ground judicial review.
Accordingly, he said, ‘not only is the relationship between Servite and Wandsworth governed solely by the
terms of the contract between them, but the relationship between Servite and the [residents] is solely a
matter of private law’.209
Servite Houses is straightforwardly criticisable for leaving an accountability ‘gap’; in the absence of con‐
tracts with the residents, there was no obvious private law redress.210 As regards the availability of judicial
review, however, the recent case of Holmcroft Properties211 serves to reinforce the general message. The
proceedings arose out of a mis-selling of financial products and the consumer redress arrangements set up
by the Financial Services Authority (FSA), which saw the leading accountancy firm KPMG contracted to
review compensation offers for appropriateness, fairness and reasonableness. Holmcroft unsuccessfully
sought judicial review of KPMG’s decision to approve the bank’s offer to the company. Notwithstanding
that the role of the independent reviewer was ‘woven into the fabric’ of the agency’s regulatory function,
the Divisional Court concluded that it did not have sufficient ‘public law flavour’ to attract the judicial re‐
view jurisdiction. More particularly, with implications for outsourcing across the board, ‘the fact that pri‐
vate arrangements are used to secure public law objectives does not bring those arrangements into the
public domain sufficient to attract public law principles’.212 In reasoning to the same conclusion, the Court
of Appeal was only a tad more flexible:
The fact that the decision emanates from contractual arrangements does not
mean that public law principles are inapplicable. The question is whether the
body is carrying out a public law function: see Datafin … However the
nature of the scheme is essentially for the pursuit of private rights … The
reality is that Holmcroft’s bringing of a complaint against KPMG was
ancillary to pursuing a private law claim. The requirements of the FSA
merely overlaid, or sat alongside, a private dispute. They did not change the
character of that dispute, which was fundamentally a private law matter.213
Different but related, the courts have shown no great enthusiasm for targeting public bodies through judi‐
cial review in the context of outsourcing. The dominant test of ‘public law element’ can be ratcheted up
accordingly,214 so ensuring only a short list of interventions under such rubrics as special public dimen‐
sions and thoroughgoing abuse of power.215 The leading authority, Hibbit and Saunders,216 has stood four-
square against treating contractual powers in the same way as other governmental powers for the purpose
of judicial review. The dispute involved the proper ambit of post-tender negotiations, a major issue in the
design of procurement procedures pitting administrative pressures for flexibility and VFM against con‐
cerns of a level playing field and equal treatment. One of the unsuccessful bidders for a contract to supply
court reporting services managed to persuade the court of a breach of legitimate expectation that was ‘un‐
fair’ and caused ‘prejudice’. But the challenge was dismissed for lack of jurisdiction. Rose LJ commented: ‘It
is not appropriate to equate tendering conditions attendant on a common law right to contract with a
statement of policy or practice or policy decisions in the spheres of Inland Revenue, immigration and the
like, control of which is the especial province of the State.’
Relating to the contract management stage of outsourcing, Supportways217 is another significant case. A
service review by the council had left the incumbent firm facing the loss of its franchise to supply housing-
related support services to vulnerable people. Complaining of a flawed analysis of cost-effectiveness, but
with no contractual entitlement to a fresh review and not much interested in damages as a remedy, the
company sought to have the assessment quashed and redone properly. The Court was firm: there was no
sufficient nexus between the conduct of the service review and the public law powers of the council to
ground the supervisory jurisdiction. As Neuberger LJ made clear, the Diceyan equality principle is not to
be lightly discarded:
It is one thing to say that, because a contracting party is a public body, its
actions are, in principle, susceptible to judicial review. It is quite another to
say that, because a contracting party is a public body, the types of relief
which may be available against it under a contract should include public law
remedies, even where the basis of the claim is purely contractual in
nature.218
The conceptual difficulty when a ‘public law’ oriented jurisdiction is faced by a system of governance and
service delivery premised to a large extent on private law techniques is manifest. Administrative lawyers
must again think in terms of transcending a binary public/private law divide which fails to reflect, one is
tempted to add to an ever increasing degree, the contemporary realities of mixes of power in the commis‐
sioning state.219 As a way to ground matching mixes of values, the standard technique of implied
contract220 can in turn be built upon under the powerful legal banner of ‘good faith’ (see p. 461 below). An
alternative is explicit forms of ‘export/import’, as where principles of judicial review are read directly into
the private legal form, so helping to blur a supposed dichotomy and promote shared values. An obvious
reference point today is the Supreme Court case of Braganza v. BP Shipping Ltd,221 which concerned the
company’s discretion to determine whether B’s widow was entitled to death benefits under his contract of
employment. Implied contract was used to structure and confine the employer’s decision-making power,
with specific reference to the Wednesbury catalogue of the grounds of judicial review. Lady Hale in the
leading judgment highlighted both the practical importance and a sense of convergence:
The party who is charged with making decisions which affect the rights of
both parties to the contract has a clear conflict of interest. That conflict is
heightened where there is a significant imbalance of power between the
contracting parties as there often will be in an employment contract. The
courts have therefore sought to ensure that such contractual powers are not
abused. They have done so by implying a term as to the manner in which
such powers may be exercised, a term which may vary according to the
terms of the contract and the context in which the decision-making power is
given …
There is an obvious parallel between cases where a contract assigns a

decision-making function to one of the parties and cases where a statute (or
the royal prerogative) assigns a decision-making function to a public
authority. In neither case is the court the primary decision-maker … The
decided cases reveal an understandable reluctance to adopt the fully
developed rigour of the principles of judicial review of administrative action
in a contractual context. But at the same time they have struggled to
articulate precisely what the difference might be … There are signs … that
the contractual implied term is drawing closer and closer to the principles
applicable in judicial review.222
From the standpoint of law and administration, this could serve as a partial pressure release: alternative
contractual remedies rather than demands to rework the conceptual – contractual – limitation on judicial
review. Express ouster of rationality might be possible but, as with good faith requirements, appears un‐
likely. Not that the reasoning in Braganza should be over-sold. In stressing the importance of context,
Lady Hale not only echoed much in the contemporary character of judicial review but also left open ‘the
precise extent’ of the alignment between this form of implied contract technique and the model of ratio‐
nality review of administrative action.223 And, of course, the approach is geared to protection of the
(weaker) contracting party, rather than, in terms of the commissioning state, third-party service recipients.
(c) Service provision: Convention rights?
Ministers, when promoting the Human Rights Act (HRA), clearly had in mind the changing basis of pub‐
lic service delivery; the classical international law rubric of ‘vertical’ effect, protection of citizens’ rights
against encroachment by the state, would be adapted in light of the more complex, less hierarchical, ar‐
rangements of contractual and regulatory governance.224 Going in tandem with the question of judicial re‐
view at common law, and brought into ever sharper focus by the expansive role of alternative providers in
sectors like social housing and residential care, the issue for the courts has been the scale of the adaptation:
generous, very generous, or not so generous, in terms of the reach of protection. Bereft of proper guidance
from the legislature, they are still struggling with this matter of law two decades on.
As is well known, section 6 HRA not only establishes a species of illegality – ‘it is unlawful for a public au‐
thority to act in a way which is incompatible with a Convention right’ – but also deals with amenability to
jurisdiction both explicitly and implicitly. ‘Public authority’, we learn, ‘includes (a) a court or tribunal, and
(b) any person certain of whose functions are functions of a public nature’; in relation, however, to a par‐
ticular act or failure to act, ‘a person is not a public authority by virtue only of … (b) if the nature of the act
is private’.
This leaves the courts to navigate inside a threefold conceptual framework.
‘Core’ public authorities are left undefined but an ‘instinctive classification’ has been read in of ‘bodies
whose nature is governmental’ that draws on such elements as special powers, democratic accountabil‐
ity, public funding, an obligation to act only in the public interest and a statutory constitution.225
Ranging through central government departments and the devolved administrations to the police and
local authorities, ‘core’ public authorities are thus akin to an elephant: difficult to describe but easily
recognised. And they must act compatibly with Convention rights in all they do; contractual activity is
no exception.
‘Hybrid’ public authorities are required to comply with Convention rights when exercising a function of
a public nature, but not when doing something where the nature of the act is private. The categorisation
expands on Datafin (see p. 389 above) in looking to the nature of the power, but where contracted-out
service delivery stands was and has remained questionable.
Courts and tribunals are under a continuing duty to develop the common law in the light of ECHR re‐
quirements in cases between individuals.226 But the proposition that this is limited to ‘indirect horizon‐
tal effect’ is now generally accepted, and properly so in view of the design of the statute.227 It is this lack
of full horizontal effect – no direct obligation on private parties to comply with Convention rights – that
places a premium on the meanings otherwise ascribed under section 6 to ‘a public authority’.
The field of judicial choice, when viewed in terms of myriad state activities, is worth underscoring.
Adopting a classical liberal position on the importance of private space in which actors can pursue their
own conception of the good, Oliver228 warned against using section 6 to ‘roll back the frontiers of civil so‐
ciety’, thus undermining values of pluralism and individual autonomy, as well as generating legal uncer‐
tainty and enervating litigation. Accordingly, only those activities involving specifically legally authorised
coercion, or authority over others which would normally be unlawful for a body to exercise, should be
caught by the hybrid category. In contrast, Parliament’s Joint Committee on Human Rights (JCHR) would
naturally champion a broad interpretation of ‘functions of a public nature’, so warning against ‘a serious
gap’ in human rights protection for the many vulnerable people dependent on outsourced public services:
‘A function is a public one when government has taken responsibility [for it] in the public interest … A
State programme or policy … may delegate its powers or duties through contractual arrangements without
changing the public nature of those powers or duties … It is the doing of [the] work as part of a govern‐
ment programme which denotes public function.’229
Outsourced-type services were immediately at the heart of the litigation. In Poplar Housing,230 the ques‐
tion was whether possession proceedings launched by a housing association, which was established by and
subject to guidance from the council and operated much of its former housing stock, might be combated
by Convention rights. Emphasising the institutional connections in terms of section 6, the Court of Appeal
said yes. In Leonard Cheshire,231 the question was whether a charity’s decision to close a care home, most
of whose residents were placed and funded by local government and the NHS, might be similarly con‐
tested. Clearly concerned about the burdens otherwise imposed on small to medium-sized service
providers and on the basis that the charity was not ‘enmeshed’ in the council’s activities, Lord Woolf, for
the Court of Appeal, said no.
In the subsequent case of Aston Cantlow, the House of Lords promoted a broader and flexible approach in
the key category of hybrid authorities. In Lord Hope’s words, ‘it is the function that the person is perform‐
ing that is determinative of the question whether … it is a “hybrid” public authority’. Further, the authori‐
ties on amenability to ordinary common law judicial review were ‘helpful but not determinative’.232 And,
in a much-cited judgment, Lord Nicholls not only spoke of a ‘generously wide’ interpretation of ‘functions
of a public nature’ but also, in Lord Mance’s words,233 adopted ‘a factor-based approach’:
Clearly there is no single test of universal application. There cannot be, given
the diverse nature of governmental functions and the variety of means by
which these functions are discharged today. Factors to be taken into account
include the extent to which in carrying out the relevant function the body is
publicly funded, or is exercising statutory powers, or is taking the place of
central government or local authorities, or is providing a public service.234
This sounds well, but it is a fine vehicle for different judicial value judgements. Take Aston Cantlow itself,
which involved a somewhat arcane dispute: whether the historic liability of a private landowner to pay for
local church repairs was overridden by the Convention right of peaceful enjoyment of possessions (ECHR
Protocol 1, Art. 1). The Court of Appeal thought it ‘inescapable’ that section 6 bit, the parochial church
council being part of ‘the church by law established’. Yet, despite the generous trumpeting, the House took
a narrow view in the particular case: section 6 was circumnavigated with the help of the private law anal‐
ogy of a restrictive covenant and property law trumped human rights. Then again, the speeches left unan‐
swered the authority of Leonard Cheshire, which had not been mentioned. The law relating to Convention
rights in the context of contractual governance was now very confused.
The scene was set for the difficult case of YL. An elderly lady suffering from Alzheimer’s disease lived in a
home owned and operated by Southern Cross Healthcare Ltd, a market leader in residential accommoda‐
tion and nursing services, as regulated under the Care Standards Act 2000. Tasked with the classic welfare
state duty to ‘make arrangements for providing’ accommodation and care for such vulnerable persons, the
council was funding most of the cost. As well as numerous provisions about service standards, a generic
compliance clause to ‘at all times act in a way which is compatible with the Convention rights’ was con‐
tained in both the company’s master contract (with the council) and a tripartite contract between council,
company and claimant. Southern Cross retained the contractual right to terminate the placement ‘for good
reason’, a right which it sought to exercise following a breakdown in relations with YL’s family. This right
the Official Solicitor’s lawyers aimed to trump with a direct application of the Article 8 right to respect for
a person’s home, raising the question whether Southern Cross was netted by section 6. Government
lawyers intervened to support a broad interpretation but, by a 3–2 majority, the House of Lords chose to
tread more cautiously.
Echoing the JCHR, the starting point for the minority (Lord Bingham and Lady Hale) was the modern
state’s acceptance of responsibility for social welfare. In Lord Bingham’s words, ‘the intention of Parliament
is that residential care should be provided, but the means of doing so is treated as, in itself,
unimportant’.235 A contextual and purposive approach was called for, which would infuse the ‘mixed
economy of care’ with legal accountability through Convention rights. Effectively elaborating on Lord
Nicholls’ speech in Aston Cantlow, a series of factors was identified, indicative of amenability to jurisdic‐
tion. Notably more functional than institutional in character, these included, in Lady Hale’s words:
whether the state has assumed responsibility for seeing that this task is
performed … the public interest in having that task undertaken … public
funding … whether the function involves or may involve the use of statutory
coercive powers … the close connection between this service and the core
values underlying the Convention rights and the undoubted risk that rights
will be violated unless adequate steps are taken to protect them.236
Viewing the case through a commercial law lens, the majority saw things very differently. Lord Scott was
robust: the ‘contractual revolution’ could not be reduced to a matter of means; in repressing direct service
provision, it had wrought substantive – capitalist – ends. ‘Private’ enterprise was exactly that:
Southern Cross is a company carrying on a socially useful business for

profit. It is neither a charity nor a philanthropist. It enters into private law
contracts with the residents in its care homes and with the local authorities
with whom it does business. It receives no public funding, enjoys no special
statutory powers, and is at liberty to accept or reject residents as it chooses
(subject, of course, to anti-discrimination legislation …) and to charge
whatever fees in its commercial judgment it thinks suitable. It is operating in
a commercial market with commercial competitors.237
The swing votes of Lords Mance and Neuberger highlighted the difficulty of differentiating between pri‐
vately and publicly funded residents, as well as the positive role for contract as a vehicle of human rights
protection.238 Engaging in a nicely ‘structured dialogue’ with the lawmaker over the nature and extent of
human rights protection, Lord Neuberger concluded by saying:
It may well be thought to be desirable that residents in privately owned care

homes should be given Convention rights against the proprietors. That is a
subject on which there are no doubt opposing views, and I am in no
position to express an opinion. However, if the legislature considers such a
course appropriate, then it would be right to spell it out in terms.239
In honouring a commitment to plug a gap in legal protection by reversing YL, ministers adopted the
strictly limited approach of statutory designation of private providers of adult social care and residential
care for the purpose of Convention rights.240 This leaves YL as good authority across the broad swathe of
contracted-out public service provision. Especially in view of criticisms of the service provision, there is
clearly a case for matching statutory designation of outsourced arrangements for other vulnerable people,
asylum seekers’ accommodation for example. Ministers remain unmoved.
Contract technique once again offers a partial solution. We must not forget that YL was tried on the pre‐
liminary issue of whether Southern Cross, in providing accommodation and care for the appellant, came
within section 6 HRA. No other outcome was necessary, as Southern Cross had withdrawn the request to
remove the appellant from the home before the House of Lords hearing. Had it been otherwise, the House
might well have explored other ways round the problem, turning first to matters of contract compliance
and referencing the distinctive web of private law relations between the state, the individual and the inter‐
mediary in YL. Had it been shown that ECHR standards were infringed, the contractual obligation con‐
cerning compatibility with Convention rights might have come into play. Or it might have been argued
that the contractual right to terminate ‘for good reason’ could not cover a breach of human rights
protection.
A decade apart, two later decisions frame the continuing challenges and uncertainties in the case law. R
(Weaver) v. London & Quadrant Housing Trust241 was a hard-fought test case concerning a registered so‐
cial landlord in part funded by block grant and providing low-cost accommodation. The Trust was held
subject to Convention rights when evicting a tenant in arrears. The reasoning of the Court of Appeal is sig‐
nificant in two related ways. First, it reinforces an essentially functional approach to the hybrid category
established by section 6, a step up from the jumbling with institutional factors in the early cases. As Elias
LJ put it, ‘the important point … is to consider the act of termination in the wider context of the housing
function being carried on by the Trust’; ‘the provision of subsidised housing, as opposed to the provision
of housing itself, is … a function which can properly be described as governmental’.242 This was a clever
manoeuvre round YL, with Elias LJ further referencing the Trust’s role as a not-for-profit organisation with
charitable objectives – one, however, which also underwrites YL-style protection for commercial service
providers. Secondly, and again building on Aston Cantlow, the Weaver case stands for a ‘multifactorial as‐
sessment’, which sees individual judges balance an increasing number of different considerations.243 ‘A
poor friend to the important legal values of certainty and predictability’ is a pithy way of describing this
dynamic.244
The Court of Session case of Serco245 concerned the eviction of failed asylum seekers from temporary ac‐
commodation. The accommodation was duly supplied by a delivery merchant under a contract with the
Home Secretary in pursuance of the minister’s statutory obligations; there was an accompanying occu‐
pancy agreement with the claimants. At the heart of the litigation was the ‘move on protocol’, a new policy
of changing locks and evicting people that was implemented not by court orders but by written notices
from the minister and then action by Serco. When the local law centre invoked Articles 3 and 8 ECHR,
Serco used YL to defeat the claim. In the Outer House, the Lord Ordinary had determined that, for the
purpose of section 6 HRA, the commercial agreement did not ‘outweigh’ the company’s role of substituting
for government in ‘carrying out what in essence is a humanitarian function’.246 In the Inner House, how‐
ever, the three judges led by the Lord Justice Clerk prioritised the distinction ‘between the entity charged
with the public law responsibility … and the private operator who contracts with that entity to provide the
service’.247 This jars with Weaver in terms of judicial attitude, not least in terms of the lack of functional
analysis in the use of analogy:
The fact that those services [of providing accommodation for asylum
seekers] are ultimately intended to fulfil a public law responsibility is
immaterial; they are still provided on a private law basis. Such services are
analogous to a wide range of functions that are regularly contracted out by
government to private providers, such as construction and maintenance
work for government departments and local authorities. Further examples

include the manufacture of vehicles, aircraft and munitions for government
departments such as the Ministry of Defence.248
Yet there is more to this than perhaps at first sight appears. Attention is refocused on the ‘core’ public au‐
thority, the minister, with whom, the Inner House was keen to stress, the responsibility properly belonged:
In the event that an asylum claim is determined against the claimant, the
scheme of the Act is that the Home Secretary should provide written notice
to quit … That occurred in the present case. If a failed asylum seeker
contends that the result of this is a breach of their Convention rights they
may challenge that notice to quit, or indeed the decision of the Home
Secretary which led to the issuing of that notice … The state cannot absolve
itself of responsibility for such public law duties as the provision of
accommodation to asylum seekers by delegating its responsibility to private
bodies. If arrangements are made with a private company to provide
accommodation, responsibility for the exercise of the public law duty is not
delegated, but remains with the Home Secretary [who is] answerable for the
discharge of the duty.249
Looking forward, much may depend on how vigorously the courts pursue this different routing. The facts
of Serco were clearly helpful by reason of the department’s central role in the particular decision-making
chain. Commonly, however, core authorities will not be so closely engaged. Viewed against this backdrop,
the slightly earlier case of Sodexo250 is noteworthy. Sodexo, the private operator of Peterborough prison,
conceded that the four claimants were illegally strip-searched and admitted to a systemic failure to imple‐
ment the relevant prison instruction. In issue, in claims for declaratory relief, was whether the Secretary of
State for Justice had failed to put in place adequate and effective safeguards to protect the claimants against
violations of their Convention rights. Following careful examination of the serious failings at the prison,
the judge found that the root cause was a lack of proper training and fixed the minister with responsibility.
To fulfil a positive obligation under the HRA, the minister could not merely rely on the company’s con‐
tractual obligation to train staff, or indeed on monitoring by monthly performance assessment. Indeed,
some firmer application of contractual technique was in order:
The Secretary of State’s monitoring and supervisory responsibility …

included having adequate and effective systems in place to ensure that
Sodexo was training its staff on the requirements of [the prison instruction].
It would have been reasonably possible for the Secretary of State to have had
such a system in place. He could, for example, have required Sodexo as part
of its tender application for HMP Peterborough to have provided details of
the training to be provided on searching in general, and strip searches of
women in particular. He could have required them to specify the methods
by which the training was going to be delivered and how the competency of
those undergoing the training was going to be assessed. Once the tender had
been awarded, he could have continued proactively and on an ongoing basis

to monitor the quality of the training.251
Time will tell how significant this line of reasoning is. The judge in Sodexo was clearly moved by ‘the acute
sensitivity’ of this aspect of prison management: ‘The Secretary of State is to be held to a heightened stan‐
dard of adequacy or reasonableness in relation to the steps he took.’252 Elsewhere, the argument might be
considered not so pressing. Then again, the dual process in Sodexo of looking at systemic failings and,
finding unlawfulness in the light of them, goes with the grain of contemporary developments in systemic
review at common law involving, but not limited to, constitutional rights (see Chapters 16 and 17).
(d) Relational contracts: Good faith
In a line of cases emerging in the last few years, the concept of ‘relational contract’ has been assigned legal
meaning in the commercial context. This sees an expanded idea of ‘good faith’ in contract developed as a
form of judicial regulation in certain types of agreement, so mediating the classically austere approach to
private autonomy at common law.253 Emerging first in business-to-business contracts,254 it has been
rapidly read across, with powerful effect, into public outsourcing and franchising situations.
The Amey case (see p. 420 above) illustrates this aspect through a contextual approach to contractual inter‐
pretation. For several years, the PFI contract ran smoothly. However, to quote Jackson LJ, the company
‘thought up an ingenious new interpretation of the contract’, which either reduced their workload or, if the
council issued change notices, increased their profit. Classifying the contract as a relational one by refer‐
ence to the length of term, the Court of Appeal was suitably encouraged to reject Amey’s detailed technical
argument:
The Project Network Model is not a static document, but requires regular
updating … In the light of that finding, [counsel for the company’s] careful
submissions … fall to the ground. Their obligations extend to the whole of
the road network, as it exists …
Any relational contract of this character is likely to be of massive length,

containing many infelicities and oddities. Both parties should adopt a
reasonable approach in accordance with what is obviously the long-term
purpose of the contract. They should not be latching onto the infelicities and
oddities, in order to disrupt the project and maximise their own gain.255
Part of a long-running and very expensive legal dispute, the recent High Court ruling in Bates v. Post
Office Ltd256 shows the wider possibilities. This was group litigation against the company, owned by the
UK government, in which some 500 sub-postmasters sought damages under contracts governing the oper‐
ation of local branches. Not surprisingly so, since, following introduction of a new computerised account‐
ing system, unexplained discrepancies and losses began to be reported by the claimants, whereupon the
Post Office pursued many of them for accounting deficits, in some cases involving criminal proceedings
for theft. The ‘Horizon’ software, the Post Office robustly maintained, did not have bugs or defects (it was
subsequently held to do so257). Emphasising that the concept of relational contracts is now ‘an established
one in English law’, Fraser J was not about to abandon this particular class of persons. First, the franchising
arrangements between the parties could be so categorised on the basis of a strikingly flexible approach:
‘The circumstances of the relationship, defined by the terms of the agreement, set in its commercial con‐
text, is what decides whether a contract is relational or not.’ A non-exhaustive list of criteria was duly pro‐
vided for the purpose of identification. These included:
no express term to prevent a duty of good faith being implied
a long-term arrangement
a high degree of communication and co-operation based on mutual trust and loyalty
a significant investment/financial commitment by one or both parties
problems associated with presentiation (‘the spirits and objectives of their venture may not be capable of
being expressed exhaustively in a written contract’).
Though described as ‘very specific characteristics’, such criteria could in fact apply in many major con‐
tracts. Nor is expressly excluding good faith the most obvious commercial strategy. In a reverse dynamic to
the ‘public to private’ of Braganza, the judge also invoked the public funding and public access aspects of
Post Office services to buttress the finding of relational contract, so introducing the dimension of collec‐
tive interest; ‘There was therefore an aspect to this relationship that was other than purely commercial.’258
Secondly, Fraser J confirmed that the obligation of good faith, as grounded and implied in a relational con‐
tract, does not solely mean honesty. A notably open-ended concept of ‘fair dealing’, which itself suggests
greater similarity with (Taggart’s list of) public law values, ‘the parties must refrain from conduct which in
the relevant context would be regarded as commercially unacceptable by reasonable and honest people’;
‘Transparency, cooperation, and trust and confidence are … implicit within the implied obligation of good
faith.’ In the face of Post Office intransigence, the judge proceeded to imply seventeen incidents of the duty
of good faith into the contracts, extending to issues of fairness and due process in investigating the alleged
shortfalls.259 Lending further weight to the ruling, Coulson LJ refused permission to appeal in withering
terms; ‘This application is founded on the premise that the nation’s “most trusted brand” was not obliged
to treat their sub-post masters in good faith, and instead entitled to treat them in capricious or arbitrary
ways which would not be unfamiliar to a mid-Victorian factory-owner.’260 The Post Office subsequently
agreed to settle the claims for £58 million; even this, however, is scarce recompense in what is a scandalous
affair.261
Looking forward, further elaboration of the scope and force of the novel doctrine will clearly be required,
not least from the standpoint of contractual governance. Pointing up the potency of private law technique
if boldly applied, it already stands in law and administration, however, as a useful check on abusive behav‐
iour in major contracting situations. To adapt some old legal language, the doctrine might be said partly to
supply the omission of judicial review.
6. Conclusion
The contractual revolution is thoroughgoing. Ranging across and (re-)blending public and private sources
of power, the development epitomises both the fact and the ongoing force of the tectonic shift in law and
administration over the last forty years. It sees the private legal model operating to define and reconstitute
the role and relations of government, in part through the rise of the tripartite public services model of the
state, the individual and the delivery merchant, and in part by the use of informal ‘contract’ with the citi‐
zen. Grounded in the idea of contract as an alternative source of rules, the state is here seen playing impor‐
tant constitutive, co-ordinating and activating roles. This echoes contemporary developments in regula‐
tion; with respect to policy levers, a recurring theme of these chapters is the read-across between regula‐
tory and contractual techniques of governance.
Now more than ever, contract is part of, in Jennings’ famous formulation, the law relating to public admin‐
istration. A powerful mix of market ideology and canonical views of VFM with technocratic or manageri‐
alist concepts of ‘steering’ and ‘modernisation’ has driven this, to which, as shown in the next chapter, is
added a significant dosage of behaviour management or social control. As reflected in the policy develop‐
ment and implementation under successive governments of different political hues, there is a strong sense
of continuity or consensus, laced with particular bouts of experimentation, across the period.
Official failings across the broad processes – life cycle – of public contract is a disturbingly repetitive fea‐
ture, not least from the standpoint of the taxpayer. Carillion is the textbook example, but only that. The
functional limitations of contractual technique provide one set of explanations, as with the evident diffi‐
culties in large and complex infrastructure projects of presentiation, and so do the fragmenting effects on
public services of the private legal form. The institutional culture in Whitehall has exhibited complacency
and limited commercial understanding, as well as significant examples of internal non-compliance with
administrative procedural norms in the light of budgetary and/or political pressures. Apt to produce risks
for the public purse, co-dependency in the guise of ‘sweetheart’ relationships with repeat suppliers is a no‐
table feature of the landscape, as is the ‘hollowing out’ of central government (civil service) capacities in
recent times. A particular history of failings in public contract management is in this sense par for the
course. Tempting it may be, but ‘contract and forget’ is a blueprint for trouble.
Not before time, Whitehall’s Outsourcing Playbook promises improvement in the internal administrative
processes and procedures. In the light of experience, particularly the evident lack of institutional learning
in the wake of external scrutiny, one is entitled to be sceptical. Nor, in view of the innately complicated ar‐
chitecture of, and different public and private interests in, today’s extended forms of outsourced govern‐
ment, should glossy policy documents be allowed to obscure the day-to-day challenges of quality assur‐
ance, legal protection and accountability at local, front-line level.
Administrative lawyers are presented with an immense challenge. Far from a ‘solution’, juridification in the
shape of detailed contractual provision is part of the problem. Matters are compounded by the intricate
nature of legal regulation at the specification and selection stages of the contractual process, the domestic
legacy of the EU public procurement regime. A prime candidate for reform in the context of the EU/UK
Trade and Cooperation Agreement, this framework is also apt, in the role of legitimating agent, to obscure
the vital role of (informal) administrative procedures across the piece. As the student of law and adminis‐
tration might reasonably enquire, ‘if the public contractual process is formally, legally, compliant, what can
go wrong?’ The answer, sadly, is rather a lot.
Predictably, the so-called ‘publicisation agenda’ of extending administrative law norms across outsourced
services has not blossomed. The common law courts have played a particularly limited role in this sphere;
human rights protection is notably confined. There are some green shoots, as with upstream systemic re‐
view, but little more than that. Contractual governance can in turn be seen as the great exception to the
major, contemporaneous, advances in judicial review. Alternatively, we might say that, as a form of exter‐
nal legal control, judicial review is effectively decentred in the commissioning state.
A closer engagement with the expanded forms of contract technology is required for good governance val‐
ues to be properly vindicated; likewise with the design and workings of administrative and regulatory
structures and processes through the life cycle of public contract. Case studies in the next chapter will
highlight the importance of embedding requirements of due process and accountability in contractual
schemes from the outset, together, to the extent it is possible, with proper transfer of risk. In a world of
mixed administrations, of heavy reliance on the creative interaction of public and private power in service
and infrastructure provision, mixtures of law are called for, transcending the so-called ‘public/private di‐
vide’. Administrative lawyers must not be intimidated. The contractual revolution is not so glorious.
1
H. Street, Governmental Liability (Cambridge University Press, 1953) ch. 3; J. Mitchell, The Contracts of Public
Authorities (Bell, 1954).
2
For accounts from elsewhere in the common law world, see P. Hogg, P. Monahan and W. Wright, The Liability of
the Crown (4th edn, Carswell, 2011); and N. Seddon, Government Contracts (6th edn, Federation Press, 2018).
3
T. Daintith, ‘Regulation by Contract: The New Prerogative’ (1979) 32 CLP 41.
4
C. Turpin, Government Procurement and Contracts (Longman, 1989).
5
I. Macneil, The New Social Contract (Yale University Press, 1980); and see R. Brownsword, Contract Law: Themes
for the 21st Century (2nd edn, Oxford University Press, 2006).
6
C. Donnelly, Delegation of Governmental Power to Private Parties: A Comparative Perspective (Oxford University
Press, 2007); R. Brownsword, R. A. J. Van Gestel and H.-W. Micklitz (eds.), Contract and Regulation: A Handbook
on New Methods of Law Making in Private Law (Edward Elgar, 2017).
7
I. Harden, The Contracting State (Open University Press, 1992); J. Freeman, ‘The Contracting State’ (2000) 28
Fla St. ULR 155.
8
A. Davies, Accountability: A Public Law Analysis of Government by Contract (Oxford University Press, 2001) 1.
See also A. Davies, The Public Law of Government Contracts (Oxford University Press, 2008).
9
P. Vincent-Jones, The New Public Contracting (Oxford University Press, 2006). And see R. De Hoog and L.
Salamon, ‘Purchase-of-Service Contracting’ in Salamon (ed.), The Tools of Government: A Guide to the New
Governance (Oxford University Press, 2002).
10
A. Davies, ‘Public Law and Privatisation’ in Elliott and Feldman (eds.), The Cambridge Companion to Public
Law (Cambridge University Press, 2015).
11
For a comparative perspective, see P. Posner, ‘Accountability Challenges of Third Party Governance’ in Salamon
(ed.), The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002) see also A. Benish
and D. Levi-Faur, ‘New Forms of Administrative Law in the Age of Third-Party Government’ (2012) 90 Pub.
Admin. 886.
12
A. Benish, ‘Outsourcing, Discretion, and Administrative Justice: Exploring the Acceptability of Privatized
Decision Making’ (2014) 36 Law & Pol’y 113, 117.
13
N. Davies et al., Government Procurement: The Scale and Nature of Contracting in the UK (IfG, 2018) 2.
14
For detail, see ibid., chs. 2 and 3.
15
HM Government, Open Public Services White Paper, Cm. 8145 (2011) ch. 5.
16
R. Thomas, ‘Does Outsourcing Improve or Weaken Administrative Justice? A Review of the Evidence’ (forth‐
coming) [2021] PL.
17
PACAC, After Carillion: Public Sector Outsourcing and Contracting, HC 748 (2017/19) [10].
18
A. Bowman et al., What a Waste: Outsourcing and How It Goes Wrong (Manchester University Press, 2015). For
the long view, see W. Dalrymple, The Anarchy: The Relentless Rise of the East India Company (Bloomsbury, 2019).
19
Sir Amyas Morse, Risks, Resources and Government–Supplier Relationships (NAO, 2018) 3.
20
Davies et al., Government Procurement, 15–17. See further NAO, Investigation into Government Procurement
during the COVID-19 Pandemic, HC 959 (2019/21).
21
J.-B. Auby, ‘Comparative Approaches to the Rise of Contract in the Public Sphere’ [2007] PL 40.
22
S. Arrowsmith, The Law of Public and Utilities Procurement (3rd edn, Sweet and Maxwell, vol. 1, 2014; vol. 2,
2018).
23
OECD, Government at a Glance (6th edn, OECD, 2019) ch. 8.
24
C. Harlow and R. Rawlings, Process and Procedure in EU Administration (Hart Publishing, 2014) ch. 6.
25
UK Cabinet Office, Transforming Public Procurement, CP 353 (2020); Brexit: Public Procurement, HC Library,
Briefing Paper; and see further below.
26
Conservative and Unionist Party Election Manifesto 2019, 27.
27
HC Deb., vol. 671, cols. 711–14.
28
See the independent Oakervee Review of HS2 (2020).
29
M. Taggart, The Province of Administrative Law (Hart Publishing, 1997); and see p. 55 above.
30
J. Freeman, ‘Extending Public Law Norms through Privatisation’ (2003) 116 Harv. LR 1285, 1290–1. See also D.
Rosenbloom and S. Piotrowski. ‘Outsourcing the Constitution and Administrative Law Norms’ (2005) 35 Am.
Rev. Pub. Admin. 103.
31
See further J. B. Auby, ‘Contracting Out and “Public Values”: A Theoretical and Comparative Approach’ in
Rose-Ackerman, Lindseth and Emerson, Comparative Administrative Law (2nd edn, Edward Elgar, 2017).
32
For a comparative view, see N. Mendelson, ‘Supervising Outsourcing’ in Parillo (ed.), Administrative Law from
the Inside Out (Cambridge University Press, 2017); G. Metzger and K. Stack, ‘Internal Administrative Law’ (2017)
115 Mich. LR 1239.
33
U. Pesch, ‘The Publicness of Public Administration’ (2008) 40 Admin. & Soc. 170; R. Andrews, G. Boyne and R.
Walker, ‘Dimensions of Publicness and Organizational Performance’ (2011) 21 J. Pub. Admin. Res. & Th. 1301.
34
M. Aronson, ‘A Public Lawyer’s Response to Privatisation and Outsourcing’ in Taggart (ed.), The Province of
Administrative Law (Hart Publishing, 1997); A. Aman, Politics, Policy and Outsourcing in the United States: The
Role of Administrative Law in a Changing State (Hart Publishing, 2008).
35
N. Seddon, ‘The Interaction of Contract and Executive Power’ (2003) 31 Fed. LR 541, 548. For less trenchant
views, see J. Beatson and D. Friedmann (eds.), Good Faith and Fault in Contract Law (Clarendon Press, 1997).
36
J. Alonso, R. Andrews and I. Hodgkinson, ‘Institutional, Ideological and Political Influences on Local
Government Contracting: Evidence from England’ (2016) 94 Pub. Admin. 244.
37
Davies et al., Government Procurement, 36.
38
NAO, Government Commercial and Contracting: An Overview of the NAO’s Work (2016) 3. See further M.
Hodge, Called to Account (Little Brown, 2016).
39
For illustration, see A. King and I. Crewe, The Blunders of Our Governments (Oneworld, 2013).
40
T. Sasse et al., Government Outsourcing: What Has Worked and What Needs Reform? (IfG, 2019) 23. There is a
voluminous literature, suitably referenced in annexes to the IfG report.
41
Ibid., 7, 37.
42
Davies et al., Government Procurement, 35; Sasse et al., Government Outsourcing, 16.
43
NAO, Government Commercial and Contracting, 5.
44
The best-known common law authority is New South Wales v. Bardolph [1934] 52 CLR 455.
45
Prior to the CPA, there was no legal right to sue the Crown. In contract, as distinct from tort, petition of right
procedure could be used to mount a claim for damages (as in The Amphitrite, see p. 412 below).
46
The restriction that Lord Woolf circumnavigated for the purpose of judicial review in M v. Home Office (see
p. 23 above).
47
[1921] 3 KB 500.
48
See especially here J. McLean, ‘The Crown in Contract and Administrative Law’ (2004) 24 OJLS 129.
49
As also, historically, of civil servants. Moving on from arcane understandings of the prerogative, it was eventu‐
ally accepted in R v. Lord Chancellor’s Department, ex p. Nangle [1992] 1 All ER 897 that civil service employment
was based on formal contract.
50
Town Investments v. Department of the Environment [1978] AC 359. See C. Harlow, ‘The Crown: Wrong Once
Again?’ (1977) 40 MLR 728.
51
See A. Tomkins, ‘The Crown in Scots Law’ in McHarg and Mullen (eds.), Public Law in Scotland (Avizandum,
2006).
52
[1989] AC 1211.
53
M. Freedland, ‘Government by Contract and Public Law’ [1994] PL 86.
54
J. A. G. Griffith, Central Departments and Local Authorities (Allen and Unwin, 1966); M. Loughlin, Local
Government in the Modern State (Sweet and Maxwell, 1986).
55
AG v. Great Eastern Railway (1880) 5 App Cas 473 is the standard authority.
56
Local Government Act 2000, s. 2; R (Risk Management Partners Ltd) v. Brent LBC [2008] EWHC 692 (Admin).
57
M. Loughlin, Legality and Locality: The Role of Law in Central–Local Government Relations (Clarendon Press,
1996); I. Leigh, Law, Politics and Local Democracy (Oxford University Press, 2000).
58
[1992] 2 AC 1.
59
See especially Kleinwort Benson Ltd v. Lincoln City Council [1999] 2 AC 349, building on Woolwich Equitable
Building Society v. Commissioners of Inland Revenue [1993] AC 70. See further E. McKendrick, ‘Local Authorities
and Swaps: Undermining the Market?’ in Goode and Cranston (eds.), Making Commercial Law (Oxford
University Press, 1997).
60
Crédit Suisse v. Allerdale BC [1997] QB 306 and Crédit Suisse v. Waltham Forest London Borough Council [1997]
QB 362.
61
By analogy with the famous Carltona principle: see p. 48 above.
62
See W. Tanner, The Case for Private Prisons (Reform, 2013).
63
HM Government, Open Public Services White Paper, Cm. 8145 (2011) [5.1], [5.2], [6.1].
64
For recent discussion in the commercial context, see Chudley v. Clydesdale Bank plc [2019] EWCA Civ 344.
65
Mitchell, The Contracts of Public Authorities, n. 1 above.
66
A. Davies, ‘English Law’s Treatment of Government Contracts: The Problem of Wider Public Interests’ in
Freedland and Auby (eds.), The Public–Private Divide: Une Entente Assez Cordiale? (Hart Publishing, 2006) 113.
67
See further, for the idea of revivifying old common law obligations for essential public services, M. Taggart,
‘Common Law Price Control, State-Owned Enterprises and the Level Playing Field’ in Harlow, Pearson and
Taggart (eds.), Administrative Law in a Changing State (Hart Publishing, 2008).
68
Turpin, Government Procurement and Contracts, 105–6.
69
For chapter and verse, see UK Government Legal Department, Model Services Contract (2019 version).
70
L. Richer and F. Lichere, Droit des contrats administratifs (11th edn, LGDJ, 2019).
71
As over many years with the seemingly draconian authority of The Amphitrite. For the limited case law devel‐
opment, see Robertson v. Minister of Pensions [1948] 1 KB 227 and Crown Lands Comrs v. Page [1960] 2 QB 274.
72
See further R. Rawlings, ‘Poetic Justice: Public Contracting and the Case of the London Tube’ in Pearson,
Harlow and Taggart (eds.), Administrative Law in a Changing State (Hart Publishing, 2008).
73
For an accessible introduction, see M. Alharby and A. van Moorsel, ‘Blockchain-Based Smart Contracts: A
Systematic Mapping Study’, Fourth International Conference on Computer Science and Information Technology
(2017). See further, in the domestic context, K. Yeung, ‘Regulation by Blockchain’ (2019) 82 MLR 207.
74
Government by Algorithm: Artificial Intelligence in Federal Administrative Agencies, Report to Administrative
Conference of the United States (2020) 89.
75
World Economic Forum, Guidelines for AI Procurement (2019) 4.
76
Office for Artificial Intelligence, Draft Guidelines for AI Procurement (2019). See also DCMS, Data Ethics
Framework (2018); and UK Office for Artificial Intelligence, Guide to Using Artificial Intelligence in the Public
Sector (2020).
77
P. S. Atiyah, The Rise and Fall of Freedom of Contract (Clarendon Press, 1990); and see D. Campbell, H. Collins
and J. Wightman (eds.), Implicit Dimensions of Contract: Discrete, Relational and Network Contracts (Hart
Publishing, 2003).
78
As in business contracts: see S. Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study (1963)
28 Am. Soc. Rev. 55; and H. Beale and T. Dugdale, ‘Contracts between Businessmen: Planning and the Use of
Contractual Remedies’ (1975) BJLS 45.
79
H. Collins, Regulating Contracts (Oxford University Press, 1999) 137–8. See further C. Mitchell, Contract Law
and Contract Practice (Hart Publishing, 2013).
80
Macneil, The New Social Contract, 60.
81
O. Hart, Firms, Contracts and Financial Structure (Oxford University Press, 1995).
82
[2018] EWCA Civ 264.
83
Ibid., 38 (Jackson LJ).
84
I. Macneil, ‘Contracts: Adjustment of Long-Term Economic Relations under Classical, Neoclassical and
Relational Contract Law’ (1978) 72 Nw. ULR 877; for Macneil’s evolving views, see D. Campbell (ed.), The
Relational Theory of Contract (Sweet & Maxwell, 2001).
85
M. Eisenberg, ‘Relational Contracts’ in Beatson and Friedmann (eds.), Good Faith and Fault in Contract Law
(Oxford University Press, 1995).
86
D. Brodie, ‘Relational Contracts’ in Freedland et al. (eds.), The Contract of Employment (Oxford University
Press, 2016).
87
H. L. A. Hart, The Concept of Law (2nd edn, Clarendon Press, 1994) 96.
88
As famously illustrated in earlier times by the Fair Wages Resolutions 1891, 1909 and 1946: O. Kahn-Freund,
‘Legislation through Adjudication: The Legal Aspect of Fair Wages Clauses and Recognised Conditions’ (1948) 11
MLR 269 and 429.
89
Daintith, ‘Regulation by Contract’, 41–2.
90
Harlow and Rawlings, Process and Procedure in EU Administration, ch. 6.
91
For useful comparative studies, see successively R. Dhami et al., Developing Positive Action Policies: Learning
from the Experiences of Europe and North America (DWP, 2006); and C. O’Brien et al., Public Procurement and
Human Rights: A Survey of Twenty Jurisdictions (International Learning Lab, 2016).
92
See C. McCrudden, R. Ford and A. Heath, ‘Legal Regulation of Affirmative Action in Northern Ireland: An
Empirical Assessment’ (2004) 24 OJLS 363.
93
UNHRC, Guiding Principles on Business and Human Rights (2011); JCHR, Business and Human Rights 2017:
Promoting Responsibility and Ensuring Accountability, HL 153 (2016/17).
94
Welsh Government, Wales Procurement Policy Statement (2015). See also Scottish Government Procurement
Strategy 2017–19.
95
C. McCrudden, Buying Social Justice: Equality, Government Procurement, and Legal Change (Oxford University
Press, 2007) 578.
96
See further D. Barrett, ‘The Importance of Regulators and Inspectors to the Realisation of Equality and Human
Rights’ [2020] PL 56.
97
UK Cabinet Office, Government Purchasing (HMSO, 1984).
98
M. Freedland and D. King, ‘Contractual Governance and Illiberal Contracts’ (2003) 27 Cam. J. Econ. 465.
99
Office of Public Service and Science, The Government’s Guide to Market Testing (HMSO, 1993).
100
Setting New Standards: A Strategy for Government Procurement, Cm. 2840 (1995) 6.
101
Department of the Environment, Competing for Quality: Competition in the Provision of Local Services (1991).
102
Local Government Planning and Land Act 1980, Part III; Local Government Act 1988; Local Government Act
1992.
103
A. Cochrane, ‘Local Government’ in Maidment and Thompson (eds.), Managing the United Kingdom (Sage,
1993) 224.
104
See C. Harlow and R. Rawlings, Law and Administration (2nd edn, Butterworths, 1997) ch. 9.
105
K. Walsh and H. Davis, Competition and Service: The Impact of the Local Government Act 1988 (HMSO, 1993).
Competitive pressures were partly blunted by employee protection under EC law: M. Radford and A. Kerr,
‘Acquiring Rights: Losing Power’ (1997) 60 MLR 23.
106
D. Wilson and C. Game, Local Government in the United Kingdom (5th edn, Macmillan, 2011).
107
Successfully challenged for ‘improper purpose’ in R v. Lewisham LBC, ex p. Shell UK Ltd [1988] 1 All ER 938.
108
R v. Islington LBC, ex p. Building Employers’ Confederation [1989] IRLR 382. See further Institute of Personnel
Management, Contract Compliance: The United Kingdom Experience (IPM, 1987).
109
Local Government Act 1988, s. 17, as amended.
110
UK Cabinet Office, Better Quality Services Handbook (HMSO, 1998) 1.
111
NAO, Benchmarking and Market Testing the Ongoing Services Component of PFI Projects, HC 453 (2006/7).
112
Office of Public Services Reform, Reforming Our Public Services: Principles into Practice (2002).
113
HM Treasury, Review of Civil Procurement in Central Government (the Gershon Review) (1999).
114
OCG, Procurement Policy Guidelines (2001) and Procurement Strategies (2007); and see Ch. 11 of this volume.
115
OGC, Gateway Review for Programmes and Projects (2007) and Policy and Standards (2007).
116
HM Treasury, Transforming Government Procurement (2007). See also CBI, Innovation and Public
Procurement (2007).
117
Ibid., 4–5, drawing on NAO, Improving Procurement, HC 361 (2003/4).
118
Sustainable Development Task Force, Procuring the Future (2006).
119
OGC, Buy and Make a Difference: How to Address Social Issues in Public Procurement (2008).
120
ODPM, Guidance on Contracting for Services in the Light of the Human Rights Act (2005); and see British
Institute of Human Rights, The Human Rights Act: Changing Lives (2007).
121
DETR, Modernising Local Government: Improving Local Services through Best Value (1998).
122
Local Government Act 1999, s. 3. See DCLG, The Long-Term Evaluation of the Best Value Regime (2006).
123
Procurement being an aspect of devolved government: see e.g. Audit Scotland, Improving Public Sector
Purchasing (2009); and latterly Scottish Government, The Public Procurement Reform Programme 2006–2016
(2016).
124
Local Government and Public Involvement in Health Act 2007.
125
DCLG, The National Procurement Strategy for Local Government: Final Report (2008).
126
UK Cabinet Office, Efficiency Review by Sir Philip Green (2010).
127
Ibid., 20.
128
HM Government, Civil Service Reform Plan (2012) 8.
129
HM Government, Open Public Services, [5.4], [5.16].
130
HM Treasury, A New Approach to Public–Private Partnerships (2012).
131
S. Johal, M. Moran and K. Williams, ‘Breaking the Constitutional Silence: The Public Services Industry and
the Government’ (2016) 87 Pol. Q. 389.
132
See further NAO, The Role of Major Contractors in the Delivery of Public Services, HC 810 (2013/14); PAC,
Strategic Suppliers, HC 1031 (2017/19).
133
NAO, Outcome-Based Payment Schemes, HC 86 (2015/16).
134
NAO, Transforming Government’s Contract Management, HC 269 (2014/15).
135
PAC, Contracting Out Public Services to the Private Sector, HC 777 (2013/14) 5–10.
136
Local Government Association, National Procurement Strategy 2014 and National Procurement Strategy for
Local Government in England 2018. For the complex regulatory regime, see H. Randall and L. Baldwin, Local
Government Contracts and Procurement (3rd edn, Bloomsbury, 2020).
137
PACAC, After Carillion, [11] (Michael King).
138
Localism Act 2011, ss, 1 and 4; Local Government Association, Enterprising Councils (2017).
139
Grant Thornton, In Good Company: Latest Trends in Local Authority Trading Companies (2018); Local
Government: Alternative Models of Service Delivery, HC Library, BP 05950 (2019).
140
House of Commons Business, Energy and Industrial Strategy and Work and Pensions Committees, Carillion,
HC 768 (2017/19) 3. See also NAO, Investigation into the Government’s Handling of the Collapse of Carillion, HC
1002 (2017/19).
141
For an overview, see T. Sasse, C. Britchfield and N. Davies, Carillion: Two Years On (IfG, 2020).
142
PACAC, After Carillion.
143
PACAC, Government Response, HC 1685 (2017/19) [2.1], [10.3], [11.1].
144
Work and Pensions Committee, PIP and ESA Assessments, HC 829 (2017/19) 3–4.
145
See e.g. HM Chief Inspector of Prisons, Yarl’s Wood Immigration Removal Centre (HMIP, 2015); S. Shaw (for‐
mer Prisons and Probation Ombudsman), Assessment of Government Progress in Implementing the Report on the
Welfare in Detention of Vulnerable Persons, Cm. 9661 (2018); NAO, The Home Office’s Management of Its Contract
with G4S to Run Brook House Immigration Removal Centre (2019).
146
R (MA and BB) v. Secretary of State for the Home Department [2019] EWHC 1523 (Admin).
147
HAC, Immigration Detention, HC 913 (2017/19) 4, 99.
148
R. Thomas, ‘Does Outsourcing Improve or Weaken Administrative Justice? A Review of the Evidence’.
149
PAC, Transforming Rehabilitation: Progress Review, HC 1747 (2017/19) 5, 8–9. See also Justice Committee,
Transforming Rehabilitation, HC 482 (2017/19).
150
A point emphasised by the Commission on Justice in Wales in calling for devolution: Justice in Wales for the
People of Wales (2019) ch. 4.
151
PAC, Transforming Rehabilitation: Progress Review, 3, 6, 11.
152
HM Chief Inspector of Probation, Annual Report 2018–19, 3. HM Inspectorate of Probation was established in
1936.
153
HMPPS, Draft Target Operating Model for the Future of Probation Services in England and Wales (2020).
154
Sasse et al., Government Outsourcing. See also Reform, Please Procure Responsibly: The State of Public Services
Commissioning (2019).
155
Government Commercial Function, The Outsourcing Playbook (2019), with accompanying guidance notes. A
revised version was published in 2020.
156
Ibid., 4.
157
Government Commercial Function, Make or Buy Decision, Outsourcing Guidance Note (2019) 3.
158
Sasse, Britchfield and Davies, Carillion: Two Years On.
159
Government Commercial Function, Supplier Code of Conduct (version 2, 2019) 3–4.
160
Financial Reporting Council, UK Corporate Governance Code (2018 version).
161
Government Commercial Function, Supplier Code of Conduct, 4, 7 10–11. There is a very careful exclusion of
formal legal effect: ibid., 5.
162
See further ICO, Outsourcing Oversight? (2019).
163
‘Please procure responsibly.’ See further L. Butler, ‘Responsible Public Procurement: Towards a Public Service
Contract Regulator?’ (2019) PPLR 198.
164
See generally in this regard Thomas, ‘Does Outsourcing Improve or Weaken Administrative Justice? A Review
of the Evidence’.
165
Thomas, ‘Government by Contract’.
166
167
SI No. 102/2015; SI No. 274/2016. See also the Concession Contracts Regulations, SI No. 273/2016.
168
In the period prior to the coronavirus pandemic.
169
Arrowsmith, The Law of Public and Utilities Procurement, vol. 2.
170
Directive 2007/66/EC (still extant).
171
European Commission, Impact and Effectiveness of EU Public Procurement Legislation, SEC(2011) 853 final,
156.
172
Respectively, Directives 2014/24/EU, 2014/25/EU and 2014/23/EU. See G. Piga and T. Tatrai (eds.), Law and
Economics of Public Procurement Reforms (Routledge, 2017).
173
See Directive 2014/55/EU and Public Procurement (Electronic Invoices etc.) Regulations, SI No. 624/2019.
174
For classic illustrations, see Case C-324/98 Telaustria [2000] ECR I-10745 (transparency) and Case C-513/99
Concordia Bus Finland v. Helsinki [2002] ECR I-7213 (environment).
175
176
So building on the famous decision in Case C-81/98 Alcatel [1999] ECR I-7671.
177
For central government in 2020: works, £4,733,000; supplies, £123,000; most services, £123,000.
178
Well described in European Commission, Public Procurement Guidance for Practitioners (2018).
179
Public Contracts Regulations, regs. 27–31.
180
Ibid., reg. 32.
181
Ibid., reg. 18.
182
E. Schmidt-Aßmann, ‘Structures and Functions of Administrative Procedures in German, European and
International Law’ in Barnes (ed.), Transforming Administrative Procedure (Global Law Press, 2008).
183
Public Contracts Regulations, reg. 60.
184
S. Williams-Elegbe, Fighting Corruption in Public Procurement (Hart Publishing, 2012).
185
Public Contracts Regulations, reg. 57.
186
Ibid., reg. 67.
187
See e.g. Case C-448/01, EVN & Weinstrom v. Austria [2003] ECR I-14527; Case C-368/10, Commission v.
Netherlands [2012] ECR I-284.
188
Government Commercial Function, The Outsourcing Playbook, 44.
189
European Commission, Public Procurement Guidance for Practitioners, 76.
190
See e.g. Case C-532/06, Lianakis AE v. Alexandroupolis [2008] ECR I-251.
191
HM Government, No-Deal Readiness Report, CP 179 (2019) 8.
192
See S. Arrowsmith, Consequences of Brexit in the Area of Public Procurement (European Parliament, 2017).
193
HM Government, No-Deal Readiness Report, 30.
194
See TCA, Part Two, Heading One, Title VI; also, Annex PPROC-1: Public Procurement.
195
Ibid., chs. 2 and 3. For the new UK e-notification service, see Cabinet Office, Introduction of Find a Tender,
PPN 08 (2020).
196
Prime Minister’s Office, UK/EU Trade and Cooperation Agreement: Summary (2020) [70].
197
With public procurement a devolved responsibility, the Consultation Paper is geared to contracting authorities
at UK level or in England.
198
‘Transforming Public Procurement’, [1]–[2], [4], [9], [11].
199
A. Davies, ‘The “Contracting State” and the Public/Private Divide’ in Varuhas and Stark (eds.), The Frontiers of
Public Law (Hart Publishing, 2019). The national courts have, of course, been actively engaged in applying the
(EU) public procurement regime, with the occasional reference to the CJEU. For illustration at the apex level, see
Nuclear Decommissioning Authority v. EnergySolutions EU Ltd [2017] UKSC 34 (damages).
200
Ayr Harbour Trustees v. Oswald (1883) 8 App Cas 623.
201
British Transport Commission v. Westmoreland County Council [1958] AC 126, drawing on Birkdale District
Electric Supply Co. Ltd v. Southport Corporation [1926] AC 355.
202
[1970] 1 WLR 1281.
203
[2006] EWHC 1892 (Admin).
204
[1987] 2 WLR 263. See also Dowty Boulton Paul Ltd v. Wolverhampton Corporation [1971] 1 WLR 204.
205
As earlier suggested by M. Hunt, ‘Constitutionalism and the Contractualisation of Government in the United
Kingdom’ in Taggart (ed.), The Province of Administrative Law (Hart Publishing, 1997).
206
C. Donnelly, ‘Privatization and Welfare: A Comparative Perspective’ (2011) 5 L. & Eth. HR 335; A. Williams,
‘Public Functions and Amenability: Recent Trends’ (2017) 22 JR 15.
207
R v. Servite Houses and Wandsworth LBC, ex p. Goldsmith and Chatting (2001) 33 HLR 369.
208
As in the well-known case of Coughlan: see p. 762 below.
209
See, by way of contrast, R (A) v. Partnerships in Care Ltd [2002] EWHC 529 (Admin) (failure to provide ade‐
quate care for a patient compulsorily detailed under the Mental Health Act 1983).
210
P. Craig, ‘Contracting-Out, the Human Rights Act and the Scope of Judicial Review’ (2002) 118 LQR 551; C.
Campbell, ‘The Nature of Power as Public in English Judicial Review’ (2009) 68 CLJ 90.
211
R (Holmcroft Properties Ltd) v. KPMG [2018] EWCA Civ 2093.
212
[2016] EWHC 323 (Admin), [38]–[39].
213
[2018] EWCA Civ 2093, [40], [52]–[53].
214
For earlier analysis of a difficult case law, see S. Bailey, ‘Judicial Review of Contracting Decisions’ [2007] PL
444.
215
R v. Legal Aid Board, ex p. Donn & Co. [1996] 3 All ER 1; R (Molinaro) v. Kensington LBC [2001] EWHC
Admin 896.
216
R v. Lord Chancellor’s Department, ex p. Hibbit and Saunders [1993] COD 326. For further illustration, see a
pair of Welsh cases: R (Menai Connect Ltd) v. Department for Constitutional Affairs [2006] EWHC 727 (Admin)
and R (Gamesa Energy UK Ltd) v. National Assembly for Wales [2006] EWHC 2167 (Admin).
217
Hampshire CC v. Supportways Community Services Ltd [2006] EWCA Civ 1035.
218
Ibid., [43].
219
Aronson, ‘A Public Lawyer’s Response to Privatisation and Outsourcing’.
220
For earlier usage in public procurement, see Blackpool and Fylde Aero Club Ltd v. Blackpool Borough Council
[1990] 3 All ER 25.
221
[2015] UKSC 17.
222
Ibid., [18]–[20], [28]. See also Lord Neuberger, [102]–[103].
223
Ibid., [32]. See further C. Himsworth, ‘Transplanting Irrationality from Public to Private Law’ (2019) 23 Edin.
LR 1.
224
See especially Rights Brought Home: The Human Rights Bill, Cm. 3782 (1997) [2]; see also HC Deb., col. 773
(16 Feb. 1998) (Home Secretary Jack Straw).
225
Aston Cantlow and Wilcote with Billesley Parochial Church Council v. Wallbank [2003] 3 WLR 283, [7] (Lord
Nicholls).
226
As illustrated from time to time in this volume, e.g. in respect of breach of confidence and privacy law in Ch.
7.
227
For the doomed attempt to import the value of universality into s. 6, see Sir W. Wade, ‘Horizons of
Horizontality’ (2000) 116 LQR 217.
228
D. Oliver, ‘Functions of a Public Nature under the Human Rights Act’ [2004] PL 329.
229
JCHR, The Meaning of Public Authority under the Human Rights Act, HC 382, HL 39 (2003/4) 26, 46–7; and
see The Meaning of Public Authority under the Human Rights Act, HC 410 (2006/7).
230
Poplar Housing and Regeneration Community Association Ltd v. Donoghue [2001] EWCA Civ 595.
231
R (Heather) v. Leonard Cheshire Foundation (2002) 2 All ER 936.
232
Aston Cantlow, [41], [52].
233
YL (by her litigation friend the Official Solicitor) v. Birmingham City Council [2007] UKHL 27, [91].
234
Aston Cantlow, [11]–[12].
235
YL, [16]
236
Ibid., [66]–[71]
237
Ibid., [26].
238
Ibid., [117], [149], [151].
239
Ibid., [171].
240
Health and Social Care Act 2008, s. 145; see now Care Act 2014, s. 73.
241
R (Weaver) v. London & Quadrant Housing Trust [2009] EWCA Civ 587.
242
Ibid., [57], [70]–[71].
243
Ibid., [119] (Rix LJ, dissenting). See, for subsequent illustration, Southward Housing Co-operative Ltd v. Walker
[2015] EWHC 1615 (Ch) and TH v. Chapter of Worcester Cathedral [2016] EWHC 1117 (Admin).
244
A. Williams, ‘Public Authorities and the HRA 1998: Recent Trends’ (2017) 22 JR 247, 261.
245
Ali (Iraq) v. Serco Ltd [2019] CSIH 54.
246
[2019] CSIH 34, [32].
247
So referencing Lord Scott in YL: [2019] CSIH 54, [54].
248
Ibid.
249
Ibid., [56]–[57].
250
R (LW) v. Sodexo Ltd and Secretary of State for Justice [2019] EWHC 367 (Admin).
251
Ibid., [101], [114].
252
Ibid., [106].
253
Not forgetting the (consumerist) protection against onerous and unusual terms provided by the Unfair
Contract Terms Act 1977.
254
The breakthrough case is Yam Seng Pte Ltd v. International Trade Corporation Ltd [2013] EWHC 111 (QB).
For discussion, see H. Collins, ‘Is Relational Contract a Legal Concept?’ in Degeling et al. (eds.), Contract in
Commercial Law (Thomson Reuters, 2016).
255
Amey Birmingham Highways Ltd v. Birmingham City Council [2018] EWCA Civ 264, [78], [93].
256
[2019] EWHC 606 (QB).
257
Bates v. Post Office Ltd (Judgment No. 6, ‘Horizon’) [2019] EWHC 3408 (QB).
258
[2019] EWHC 606 (QB) [705], [725]–[730].
259
Ibid., [738], [743]–[768].
260
See further, by way of contrast, Mid Essex Hospital Services NHS Trust v. Compass Group UK and Ireland Ltd
[2013] EWCA Civ 200 (cleaning services contract provided a complete and measurable set of requirements).
261
For further information, see the ‘Post Office Trial’ website. At the time of writing, the Criminal Cases Review
Commission has referred some 45 convictions to the Court of Appeal; a non-statutory inquiry has also been
announced.

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29/01/2023, 11:20 Contractual revolution

Law and Administration

(b) Judicial review in issue

1. Classification, dynamic, challenge

(a) The commissioning state

supervision – monitoring, etc. of contractual performance.

In contracting-out, the government is not only purchasing services but also

The private contractor’s interests may sometimes converge with public

(b) Big business

There are currently 28 strategic suppliers – including household names such

For both central and local government, the proportion of published

The reliance of individual departments on the largest companies varies

Environment, Food and Rural Affairs (DEFRA), Work and Pensions

To underpin this national renewal, we will invest £100 billion in additional

We will build Northern Powerhouse Rail between Leeds and Manchester

(c) Values and perspectives

Given the importance that procurement will continue to have, it is critical

not always directly attributable to efficiencies rather than reductions in

2. Old and new

(a) Capacity and scope

ministrative procedure and its consequences.

Many services will need to be provided or commissioned by government –

However, just because these services must be decided on by government

(b) Ordinary law: Contract technology and specification

Service Consistency for a Line Grouping (Y *) shall be calculated in the

defined in the relevant Capability Model Data;

Usability may militate in favor of internal capacity building. Privately

Though available, legal to use, and proportionate to need, there may be

Representativeness (whether the data accurately represents the segment of the

Errors in the data

Lack of clarity in metadata (for example, confusing or vague data element

(c) Presentiation and relationality

(d) Policy levers: Wealth and law

Government contracting … incorporates, into standard terms and

3. Strategies and processes, problems and responses

(a) New frontier

(b) ‘Better’ outsourcing

A procuring authority should:

be clear on the objectives of the procurement from the outset

be aware of external factors that will impact such as policy environment or

communicate those objectives to potential suppliers at an early stage

consider using an output- or outcome-based specification

be clear about affordability – the resources available to spend

establish effective contractual management processes and resources in good

(c) Pushing the boundaries

Transparency: There needs to be far greater visibility to government,

Contract management and delivery: Central government’s management of

private sector contracts has too often been very weak. …

Competition: There is not enough competition in the market for government

Public service standards: Contractors have not consistently demonstrated the

(d) Coming home to roost

collapsed, but that it lasted so long.’140

lack of transparency about the how and why of decisions to outsource

repeated and costly renegotiation of contracts (in consequence)

pressure on commercial partners encouraging reckless acquisitions and

over-reliance on companies for information about costs and performance

lack of compliance with own due diligence procedures

lack of understanding of markets and particularly of commercial partners’

lack of clarity on expectations of behaviour and poor monitoring.142

Ministers had to concede that things had not gone well:

Carillion’s liquidation has exposed issues that have at times informed a

breakdown of trust between government, suppliers and the public. The

expected, with the average number of reoffences committed by each

To implement government policy, capable probation leaders were required