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Reading: The Collapse of Carillion: Regulatory Failure in the Contract State

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The Collapse of Carillion: Regulatory Failure in the Contract State

Author:

Karen Wong

LSEGB
About Karen
LLB ’19.
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Abstract

The rise of the contract state in the UK heralded an era of harnessing the private sector for public purposes. However, the collapse of Carillion, one of the largest contractors with the UK public sector, in 2018 epitomises its failure. Focusing on ex-ante regulatory failure, this essay analyses Carillion’s collapse from three perspectives: contract formation in tendering shows that inherent relationality in contracting may lead to an undesirable use of discretion, yet current hard and soft law are unable to structure and confine such discretion; Carillion as a Strategic Supplier shows that the Cabinet Office’s design of said programme may fail to monitor participating companies; the management of individual contracts shows both government and companies may be stuck within ‘deal-making’ and fail to manage risks beyond the contract. It is argued that these perspectives indicate medium to long-term regulatory and institutional failure in government policy-making and enforcement, as well as concerning flaws in Carillion’s self-regulation. The sufficiency of ex-post accountability from the executive and legislature is then considered, with Parliament more likely to bring Carillion to account despite the executive often acting as the contractual party. Recommendations are offered, including a public law framework for contracts and common ethical standards.

How to Cite: Wong, K., 2019. The Collapse of Carillion: Regulatory Failure in the Contract State. LSE Law Review, 4, pp.104–121.
Published on 01 Jun 2019.
Peer Reviewed

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