Commercial capability and contract management

Central government manages contracts with the private and third sector worth about £40 billion annually. Such contracts include providing services to citizens, military equipment, back office functions, custodial services, temporary workers and consultancy.

Poor management of commercial relationships has been a major cause of failures to achieve value for money in government projects and operations. To address this, government is currently reforming its commercial profession, including centralising the purchase of common goods and services, improving departments' capability and increasing its understanding of its key suppliers. In doing so it could benefit from our work identifying good practice in five key areas: government’s commercial capability, including governance, systems, information and people capability; market management including ways to encourage innovation and avoid over-dependence on too few suppliers; effective procurement approaches; good contract management; and ensuring government suppliers are transparent and accountable.

Key NAO publications: Commercial and contract management: insights and emerging best practice (Nov 2016); Transforming government's contract management (Sep 2014); The role of major contractors in the delivery of public services (Nov 2013); and Managing government suppliers (Nov 2013)