Carillion: Were ministers and officials ignorant, negligent or complicit?

A cabinet member said to me yesterday, in all seriousness, that it would have been "illegal" for the government and public-sector bodies to have rejected bids from Carillion for government contracts in the second half of last year, when it was very publicly warning that its profitability was far less than it had been expecting and almost the entire City of London knew it was in serious difficulties.

There are two interpretations to put on what the minister told me.

Either it was rubbish, to cover up the mistakes of officials and ministers.

Or there is something very seriously wrong with government procurement rules.

I tend to the view he was spinning like a political whirling dervish to cover up incompetence or worse.

Because it is inconceivable that officials are banned from factoring into their contract-awarding decisions the balance-sheet strength or weakness of the bidding companies - or whether the successful bidding company is going to be alive long enough to deliver on the contract.

In fact the minister slightly gave the game away when he said: "Think about it, if we refused to award the contracts on the basis of its profit-warnings, we would have been hastening Carillion’s demise."

Good grief, to quote the management guru, Charlie Brown.

The minister was basically admitting that government and public-sector contracts were being awarded to prop up a business known to be teetering on the brink.

He implies that ministers and officials were aware that Carillion could only be kept going by taking on more and more contracts, such that the cash flow from new contracts would provide confidence that losses on older contracts could be absorbed.

Till the music stopped, as it always does.

So there is the nub of what any official investigation into Carillion’s demise needs to determine about the role of government and Whitehall.

Were ministers and officials willfully ignorant of Carillion’s perilous condition?

Were they seriously negligent? Or with their eyes open were they using public procurement to delay Carillion’s day of reckoning?