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25 September 2012 | Adam Leach
Public sector buyers are facing a shortage of consultancy suppliers as delays to the government’s new consultancy framework and cuts in public spending force consultancy firms to focus on other markets to win business.
In its Half Yearly Report published yesterday, the Management Consultancies Association (MCA) revealed activity in the sector had expanded, despite the recession. But while there was strong growth in international markets and the financial services sector, public sector activity had declined.
Alan Leaman, CEO at the MCA, explained to SM that while a drop in public sector work always occurred in the early years of a new government, it should have picked up since. “What we’ve seen in this parliament is a combination of a natural slowdown in work and consulting that happens when a new government comes in and works out what it needs to do, combined with deliberate policies for austerity,” he said.
He added MCA members believe there is “a level of pent-up demand for consultancy” due in large part to delays in launching the consultancyONE framework agreement. As a result, Leaman said there was a risk that some consultancies might not compete for public sector work.
“The risk for the public sector is that more companies will take a business decision not to compete in that sector and therefore there will be a loss of skills and resources that would otherwise be available to them. It’s not too late, but I know a number of companies that have simply said: ‘Well, there are better prospects and better margins elsewhere so why keep banging our head against a brick wall?’.”
The consultancyONE framework, announced last November, has encountered a series of delays. In July, the Cabinet Office announced that the results of the PQQ stage would be announced for all five lots on 3 September. However, just three out of the five were in fact announced, with the remaining two to be published in November.