Framework Contracts - a false science in the making
Blog Overview
Subscribe to RSS Feed
- About the Author
- Ken Cole has worked in senior positions in both the public and private sectors and was one of the founding Directors of SPS in 2001. He recently completed a three year secondment as Director of the London Centre of Excellence. Ken has thrilled many public and private audiences with his incisive analysis, robust delivery and his belief in 'telling it as it is'. His blog is a regular commentary of the improvement and efficiency agenda.
Make sure you pay a frequent visit to find out Ken's latest thoughts on the workings of government, the latest policy initiatives and much more...
Hardly a week goes by without an announcement about the letting of another framework contract in the name of efficiency. Usually, they are accompanied by claims of potential savings often running into millions of pounds. Saving someone a day of work? - Well that must be worth £300 multiplied by 1,000 for all the projected transactions going through the contract. Voila, a £300k saving! It is almost like the absurd statement in a National eProcurement Project (NePP) guidance document several years ago which claimed the wonders of "e" could deliver local government over £1 billion worth of savings. Sadly, people actually believed such nonsense which was all based around notional transaction cost reductions.
Let us put frameworks into context. For tactical goods and services with lots of potential suppliers and proportionately low costs, they are a Godsend. In the eyes of a smart purchasing organisation, they remove the stress and hassle, free up scarce resources and allow online customers a fast track to getting all their commodities/services to run the business quickly and efficiently, and usually backed up by a service level agreement.
Deployed in the wrong markets they are often a licence for suppliers to print money as well as restricting innovation. Shortening the procurement timetable is the perceived gain, but the penalty in reality is often increased actual cost and inferior service levels as suppliers exploit their captive market. Organisations that think that putting a bulk of their third party portfolio under frameworks will deliver vast cashable savings are going to be in for a rude awakening. They are one of the many tools in the efficiency armoury which need to be selected by people with commercial acumen if they are to deliver measurable cashable gains.
Be the first to comment on this post by using the form below.
This comment section is moderated in the interests of a civil, relevant and productive brainstorm. Divergence, disagreement and passion are welcome. We'll try to exclude flaming or spam and reserve the right to edit or delete anything we consider offensive, actionable or inappropriate to the subject.