Government targets SMEs in £2bn consultancy deal

The government is setting up a new framework agreement for buying consultancy services worth up to £2bn over the next four years.

The government is setting up a new framework agreement for buying consultancy services worth up to £2bn over the next four years.

The Consultancy One deal is designed to cut the levels of spending on consultants across Whitehall and make it easier for small businesses to win consulting contracts.

The framework will cover all central government consultancy contracts worth more than £100,000, and will be mandatory for every department once it is introduced in spring 2012.

The Cabinet Office stressed that the new arrangements are intended to give more business to small and medium-sized enterprises (SMEs).

“The government wants to get better value for money from consultancy – giving SMEs the opportunity to get involved this way will help them do it,” said Stephen Allott, the Crown Representative for SMEs.

The Cabinet Office last year introduced greater controls on consultancy spending, with central approval required for any contracts longer than nine months or over £20,000 in value. As a result, spending on consultants was reduced by 70%. In 2009/10 the government spent £1.4bn on consulting, which fell to £500m in 2010/11, according to a Cabinet Office spokeswoman.

“This is about a new way of working – aggregating all of the government’s reducing spend through this contract framework and ensuring that all departments use it will end the days of disjointed, needlessly expensive spend on consultancy across government,” she said.

“And where we do still spend money on consultants, this framework will give smaller players a chance, as it is less bureaucratic and more accessible to SMEs.”

The agreement will replace all current central government frameworks for consultancy services to become the single route for procurement, and will be available to other public sector organisations.

"The framework will also help to stop consultants being used as staff substitutes - consultancy is only to be used in operational necessity rather than as a default position if there is a vacancy," said the Cabinet Office.

The move is the latest in a line of government announcements aimed at radically changing its relationship with suppliers – with IT suppliers a particular target.

“I really mean it about being passionate about procurement,” said Cabinet Office minister Francis Maude earlier this week, at a conference on new ways of working with Whitehall suppliers. “[Government has] not got it right for quite some time.”



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