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Framework is 'poor value for money'

The philosophy of framework contracts is, to reduce the costs of procurement for both purchaser and service provider, thereby making savings. Sadly, it would appear that the chances of this particular framework doing so are very low indeed, says WYG’s Len Attrill.

Any authority choosing to use the framework will be charged a fee of 0.5% of the value of contracts let. 

On this basis the fee for a waste and street cleansing contract worth £3m per annum over a seven-year period would amount to £105,000; and for a multi-service contract covering grounds maintenance, waste and street cleansing for a London Borough worth £15m per annum over a seven-year period it would be £525,000 – both of which are much higher than the current market rate.

We believe that authorities will get a set of ‘conditions of contract’ plus a basic specification plus a list of shortlisted contractors.  This is very poor value for money indeed.

Turning to the costs to the contractors: in addition to the (significant) cost of the time they have put in to get onto the framework, they are each required to pay an annual fee of £10,000 per annum per lot to be on this four-year framework (although there is a discount for contractors qualifying for more than one lot).

There is, of course, no guarantee that any of the shortlisted contractors will get any work out of the framework at all, and there is not even any guarantee that many contracts will be let under it. 

Around 140 authorities are named as potential users but we believe that around 50 will have no contracts to let in the lifetime of this framework. 

A further 50 or so currently deliver their services in-house and a number of these have publicly stated that they have every intention of keeping services in-house. The 40 that remain would need to be sure that their contract fitted with the framework, and there are certain features which might mean it is unsuitable.

We understand that a significant amount of public money (possibly up to £0.5m) has been invested in it. How this could be justified is not at all clear.

Most of our recent procurement exercises have seen considerable savings to local authorities, and some of the savings have been spectacular; whilst all have been achieved at a lower cost to our clients than they would need to pay via the framework.

Len Attrill is a project director at infrastructure consultancy WYG

 

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