Framework Contracts - a false science in the making

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.