Public bodies must dramatically improve their ability to manage suppliers as the public spending pinch takes hold, consultants have warned.
But, while some problems with supplier management still exist across local government, they are not as stark as the challenges facing national agencies, a report by Deloitte has concluded.
Deloitte's critical study into the way public bodies use third party suppliers to procure goods and services from IT to education, published on 8 September, urges organisations to reconsider their contracting, risk management and contingencies planning.
The UK is now the second-largest market for government suppliers after the US, with government bodies spending around £175bn on goods and services. Yet the study suggests that as the requirement for public bodies use of suppliers has shifted from mere corporate support to direct service provision, ‘public bodies have not always adapted their own capabilities, cultures and processes to reflect their new role'.
The report cites a ‘number of systemic problems where mismanagement of suppliers has led to high costs, late programme delivery and poor service quality'.
The Cabinet Office has attempted to tackle problems within central government through initiatives such as Professional Skills for Government, which has forced Whitehall departments to employ highly-skilled procurement staff. But, the study warns: ‘The introduction of significant public finance constraints after 2010 will increase the pressure to accelerate this process. To ensure public bodies are fit for purpose as their budgets contract, it is now critical that managers act swiftly to refresh their commercial and procurement capabilities, and modernise their approach to dealing with suppliers.'
The consultants suggest three key remedies:
But Mark Lawrie, local government partner at Deloitte, said local government, which spends £42bn a year on external contracts, is better placed than Whitehall to tackle the challenge ‘because it has more experience of using private sector partners'.
