Stage 2: Strategic decisions -
Define contract scale
Establish specific purpose
|
Choose a funding channel
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Define contract scale
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Join up funding streams
Large scale contracts can bring benefits through reduced
procurement and contract management costs, but they do not always
offer the best value for money and may, in the long term, reduce
the diversity of the supplier base. You should consider whether the
contract should be divided into smaller lots; for example, to
ensure that special requirements needed to deliver an effective
service to the local community are fully reflected and delivered
through the contract. Smaller TSOs that have strong links and
experience in working with the community should be able to deliver
good cost and quality bids in these instances [Footnote
1].
Local services are often funded by local public bodies, such as
local authorities, NHS bodies and police bodies. These
intermediaries between central government and the service-providers
can align central government funding to local needs and align
different funding streams with each other.
In some cases, where local knowledge and expertise is needed but
the programme has regional or national scope, small local TSOs can
operate as sub-contractors working with a prime contractor at the
regional or national level.
To ensure that good practice principles are applied in this
case, you must:
- Consider whether there would be advantages in
dividing the contract into smaller lots
- Permit and encourage sub-contracting where
appropriate
- Ensure that you and the prime contractor are clear
about the management fee that will be charged, what they
will do for it and that this is efficient
- Agree with the prime contractor the way that
it will behave towards the providers of the programme.
A contract with the prime contractor should be set up to define
these issues.
Notes
- [back from footnote 1] The OGC guide
'Aggregation
– is bigger always better?' can provide further advice.