About five years ago I went to a talk about local government procurement. As a fairly new local government officer with a slightly over-egged sense of my own understanding of the inner workings of the council I was fully prepared for a discussion of how poor local councils were at negotiating contracts with the private sector.
I was thus fairly surprised when the speaker, a procurement consultant whose name I can’t remember and thus regrettably I can’t credit, said that on the contrary he felt that the problem with local councils was not their procurement (although there was room for improvement) but actually managing the contracts they had already let.
The procurement and management of those contracts are obviously linked but it does feel like contract management is the less ‘sexy’ of the two and thus gets far less attention. Indeed, I can’t imagine David Cameron commissioning Sir Philip Green to review management arrangements of contracts in Government.
I was reminded of this early local government lesson twice last week. Firstly, when an IT consultant I know told me that her (private sector) clients spent hundreds of thousands of pounds on systems that they rarely used and then later the same day when Birmingham City Council announced that they would be renegotiating their IT contract with Capita and saving £150m:
‘Birmingham City Council says it can save £150m over seven years by renegotiating its contract with Capita. The council’s cabinet is being asked to approve the continuation of the Service Birmingham contract with Capita "in return for substantial savings".
It sounds like this renegotiation is being done within the context of a contract extension but it does show the willingness of suppliers to work with you as situations change and also shows the importance of keeping an eye on the contract and what you are receiving from it.
The lesson here is twofold. Firstly councils need to be better at managing their contracts and only paying for the elements of the contract they are actually using or if costs change massively just paying a reasonable price for those services. Secondly, just because a contract is signed doesn’t mean that the issue is moot for, say, the next 5 years. On the contrary there are always negotiations to be had and adjustments that can be made.
It’s not sexy but unlocking £150m of savings really doesn’t need to be.