Few welcome contract review

7 June 2010

8 June 2010 | Lindsay Clark

Procurement managers are sceptical that the government can renegotiate large contracts, according to the SM100 survey.

As part of an announcement to cut the public sector deficit, the government has promised to review the biggest projects to see where costs can be cut or wasteful work stopped altogether.

Forty-six per cent of suppliers said they did not believe the government could renegotiate contracts in the short term. “The public sector typically lacks the expertise or bandwidth to manage complex tenders,” said Frank Omare, supply chain and operations advisory services at Ernst & Young. “The government is suggesting a significant reduction in the use of consultants and this is likely to have an impact on the management of complex tenders.”

However, 37 per cent of respondents said the government was right to think it could re-shape existing contracts to save money. “Existing deals can be re-set quickly to reflect changes in the socio-economic environment as long as they were crafted well in the first instance and are managed from a performance and relationship perspective,” said Shaun Evans, Co-operative Financial Services supplier relationship manager.

Of those surveyed 17 per cent were undecided.

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