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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.


  1. The OGC guide ‘Aggregation – is bigger always better?’ can provide further advice.

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