At a time when councils need to deliver year on year savings, ensuring they get value for money when managing contracts is clearly more of an imperative than ever. Cabinet Office Minister Francis Maude has been one of the biggest advocates of driving greater value from outsourced contracts through effective contract management.

But whilst local government has become an increasingly efficient procurer of services, the range of providers is more fragmented than ever. The need to manage multiple contracts with a broad range of suppliers has created new challenges, while the Comprehensive Performance Assessment regime has come to an end, leaving no statutory comparative regime.

Margaret Hodge MP, chair of the House of Commons Public Accounts Committee, has drawn attention to the lack of ‘openness' in many public sector contracts and the fact that ‘commercial confidentiality' can impede transparency. In its 10th report on implementing the Government's transparency agenda, the Committee recommended that the Cabinet Office should set out policies and guidance for public bodies to build full information requirements into contractual agreements in a consistent way.

Following on from that recommendation, at the end of last year the National Audit Office published a report, Managing government suppliers, which drew attention to lack of transparency over the role contractors play, the business they do, the rewards they make and the way they perform.

Practice shows that the lack of reliable, robust and comparable performance data that prevents local authority commissioners from getting the most out of their outsourced contracts.

An independent review on one Midlands authority, from an external source, where consultants were brought in to review the performance of an environmental services contract, found performance failures against a number of indicators and identified; a need to improve the robustness of data and reporting systems; ambiguities in the contract; a failure to complete contract requirements; and gaps in the relevant documentation.

All of this points to a need for robust benchmarking data as a tool to drive improvement and demonstrate public value. In our own report Measure for Measure, which looked at using performance information in the context of financial austerity, former director of studies at the Audit Commission, Michael Hughes, pointed out that: 'In tough times councils simply cannot afford the risk of basing decisions about the future of local public services on poor information.'

APSE's performance networks service (PN) has collected data from councils across the UK on a voluntary basis since 1999 in order to benchmark the performance, cost and quality of a range of front-line services – including street cleansing, refuse collection, building maintenance, leisure facilities, grounds maintenance and highways.

As well as working with in-house providers to help enhance efficiency, this data can be used to drive efficiency in the management of external contracts. PN information has recently been applied by the APSE Solutions team in a number of authorities to benchmark the performance of external contractors and help councils assess whether they are getting value for money.

Two particular case study examples (below) illustrate how savings can be made through careful analysis of such data. In both cases, local authorities were able to generate significant savings through benchmarking productivity, cost and service quality.

While the figures are from actual situations, everyone in local government will understand why commercial sensitivity means the authorities and companies have been anonymised.

As local authorities manage declining budgets, it has become imperative to generate efficiencies from contracts with all suppliers and benchmarking provides transparency and agreed measures of performance to help maximise value from both internal and external service providers.