Birmingham increases contract savings eight-fold in a year

23 July 2010

24 July 2010 | Angeline Albert

Birmingham City Council saved £36 million in 2009-10 through savvy negotiations with suppliers.

This is eight times more than the £4.5 million saving gained from negotiations and renegotiations the previous year. The achievement did not, however, lead to a fall in the council’s £3.5 billion annual spend because more funds were needed overall.

Most of the savings gained by procurement in the last financial year – and revealed this week – resulted from the renegotiation of an existing contract for a housing repair, maintenance and gas servicing deal. The council originally agreed to pay Willmott Dixon and three gas servicing contractors £120 million for the five-and-a-half-year deal, but when it renegotiated with the vendor in February 2009 it managed to shave £30.9 million off the total bill.

Nigel Kletz, assistant director of procurement at the council, told SM: “We carried out a much more detailed and robust analysis of the supply market than we had previously. And at the time of the renegotiation we were able to capitalise on the economic climate to lower costs.”

Meanwhile, greater collaboration with local authorities and public sector bodies in the West Midlands helped Birmingham save £1.5 million on a three-year contract for the supply of stationery, paper and electrical equipment. And joint work on another deal lead to £1 million in savings on a contract signed in 2009-10 for the provision of groceries and catering equipment.

Councillor Paul Tilsley, deputy leader of the authority, said: “We have made a concerted effort to refine our procurement processes to extract the maximum value from any contracts we sign, not only in terms of our bottom line but the benefit the deal will gain for the wider community and economy.

“In the past year we have proven that through our corporate procurements services team, we will continue to leave no stone unturned to ensure that this continues to be the case in years to come.”

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