Framework agreements between councils and private service providers offer an opportunity to save cash, says Eric Bohl.
No-one in the public sector is under any illusion that the 2010 Spending Review this autumn will be anything other than painful, and local authorities throughout the country are looking to make quick and dramatic savings.
One way of making such savings is by sharing or outsourcing services, but issues such as the long timescales or complex tendering processes involved can be off-putting.
Framework agreements are over-arching contracts between public sector bodies and private sector providers which set out the terms under which the contracting authority and other public bodies can ‘call off' services under the contract, without the need for a fresh tendering exercise.
They can offer a relatively-straightforward way of taking advantage of outsourced or shared services, but although some councils have embraced the frameworks that have been agreed over recent years, many others are holding back.
There is usually only a specified four-year window for new partners to join a framework. With some well-known frameworks due to expire next year and time beginning to run out, why don't more authorities take advantage of them?
The benefits of joining a framework vary from council to council. Hart DC's corporate director, Emma Broom, says: ‘We decided to outsource some key back-office functions – finance, HR, IT and customer services – for three main reasons. First, we wanted to make direct savings. Second, we wanted to make improvements to those services. And third, to realise the indirect benefits of running those services better."
Hart opted to join Capita's South Coast framework established by Southampton City Council, and Ms Broom calculates that the council is saving about 10% on the four key services by outsourcing them – which translates into about £170,000. On top of these direct savings, the framework's private sector provider Capita must deliver efficiency savings over the eight-year contract.
For Havant chief executive, Sandy Hopkins, the benefits of joining the South Coast framework were clear. She says: ‘It meant we didn't have to reinvent the wheel. But, because we were involved in developing the framework, we had considerable influence. It gave us the advantage of ownership.
‘It was cheaper than going it alone, too. A district council can't afford the cost of procurement, and the bigger package attracted bigger players, ones which could afford to invest in regeneration.'
Despite the benefits, as Richard Marchant, local government strategic partnerships director at Capita, acknowledges, take-up of service outsourcing through frameworks has been slow.
He suggests this could be down to several factors, including some reluctance on the part of local decision-makers and the need for more effective communication between the public and private sectors when it comes to articulating and understanding the benefits that can be achieved.
He says: ‘Frameworks offer certainty on price and allow authorities to tap into expertise which has already been developed and delivered elsewhere.
‘They also enable authorities to implement solutions more quickly than they usually could alone. The public sector needs to be alive to these benefits, and we need to make sure they are fully understood.'
Richard Sealy, client and performance manager at Taunton Deane BC – one of three bodies which set up the South West One framework with IBM – thinks there's another reason too.
Taunton Deane reports significant savings thanks to the outsourcing of much of its back-office and some frontline services. Having much more procurement muscle will also help to realise huge savings.
But, despite these savings, no-one else has joined the partnership – and Mr Sealy suspects he knows why,.'I think some authorities are waiting to see if we can make it work,' he says. ‘It's not surprising really.'
From our experience, there are some key issues to think about when considering whether to join a framework, including:
