NAO inspects private company.

Comptroller and auditor general Sir John Bourn is being given unprecedented access to the books of a private company involved in a ground-breaking partnership deal with the government, writes our parliamentary staff.

The £51m seven-year deal between the Radiocommunications Agency and IT services provider CMG sets up a subsidiary, 30% owned by RA and 70% owned by CMG, to supply IT services to RA and ‘sell’ RA expertise abroad. The deal is the subject of a National Audit Office report.

Treasury officials have blocked attempts in the Commons to amend legislation switching the government to resource-based accounting systems to ensure the NAO has access to all bodies in receipt of public funds. One of the claimed reasons was that the NAO is not qualified to deal with Companies Act accounts.

But the deal flies in the face of that objection.

The report states: ‘The contract provides the C&AG with the right to access the books of the joint venture company.

‘This access extends to CMG so far as is relevant for the purpose of examining and certifying the agency’s accounts and examinations to determine the economy, efficiency and effectiveness with which the agency have used their resources.’

The report spotlights the disagreements setting up the arrangement, and warns the £10.7m expected savings may be overstated, but it gives the approach a stamp of approval.