It reminds me of the early days of austerity, the Tory craze for 'commissioning'. If anyone remembers the EasyCouncil, was it Barnet? Which I imagine is still being implimented/unpicked. Nothing was to be done in house. The Government, government departments and Local Authorities were supposed to contract out everything. Arms length everything. Privatise everything.
There were just to be a few people employed, in practice I imagine less than the absolute minimum, to monitor the contracts. I want to blame Call me Dave and Eric Pickles, but there's plenty to go round.
I haven't the faintest idea if this does have its roots in that, but I wouldn't be surprised.
Services sold to the cheapest bidder. And who, at that time, would think to guard against something like this? Ripe for all sorts of corruption.