Failed grant firm was given £4m

http://news.bbc.co.uk/1/hi/education/8163246.stm

A severance payment of £4m was made to the firm which failed to deliver educational maintenance allowances to thousands of 16-18 year olds last year.
The Learning and Skills Council (LSC) also waived its right to £3m in penalty payments from contractor Liberata, the LSC's annual report says.

Why?
What is it with the present system of always rewarding failure?I understand paying a bonus to a organisation for services above and beyond..but if they fail at the initial task they should get zilch.

It's a crazy way to run big business or local government let alone apply it in our education system..which needs all the funding it can get.Why waste it in this manner?

[Stuart]

It's the way the government deals with Private companies. The odds are stacked in favour of the private company.

Look at the failure of Metronet.. Admittedly they spent a lot of money fixing up the tube, but when they folded, TFL paid off the debt. The companies that owned it (and were happy to take the profit when they could) didn't pay a bean.

[Osem]

Our glorious leaders have been rewarding themselves for failure for years so it doesn't surprise me that they're none too concerned and/or savvy about how the contracts and agreements they enter on our behalf. There's a long history of multimillion pound deals (e.g. IT systems, defence procurement, infrastructure etc.) which have gone badly wrong and which the taxpayer has been forced to stump up for.

[BenMcr]

Though if you look at the story it says

"A one-off disengagement payment of £4m was made to the outgoing service provider to secure the transfer of the existing systems to the new service provider."

So I have feeling the LSC were held to ransom - the old company could have said 'These are our systems and database' and walked away with them

Then Crapita would have had to start from scratch which would have delayed the payments by god knows how long

Originally Posted by BenMcr

Though if you look at the story it says

"A one-off disengagement payment of £4m was made to the outgoing service provider to secure the transfer of the existing systems to the new service provider."

So I have feeling the LSC were held to ransom - the old company could have said 'These are our systems and database' and walked away with them

Then Crapita would have had to start from scratch which would have delayed the payments by god knows how long

Then why the hell isn't the government and local government refusing to play the game and making these companies sign new contracts that don't allow such practices to occur..I'm sure a payment to a good solicitors would save us the taxpayer a hell of a lot of money if they were writing really airtight contracts.

[BenMcr]

Because I would assume part of contract would have included the requirement to design and build the computer systems used.

Now if I was running a business I wouldn't have made a bid unless I was guaranteed ownership of the systems I had created or an agreed payment for them instead

So private companies should always be able to exhort extra money out of public funds when they DON'T deliver what they are contracted to do?

I don't mind what private companies agree with each other and play the scratch my back routine with each other..I do however expect public money to be protected..and I'm sure everyone else does as well.

If public funding is going to be cut to the bone in the next decade then I don't still want to be reading about situations like this occurring..and I'm positive I'm not alone in that..

[BenMcr]

I agree with you - but if private companies to bid for public contracts, then this is the price you pay unfortunately. The company is going to be going for the maximum profit and the public want best value

The two are not really compatible

As for this circumstance I can't understand why the LSC didn't enforce the penalty clause -even if they did then pay them for the rights to the systems