Government seeks new £2bn consultancy deal despite concerns from SMEs

Cabinet Office setting up £2bn agreement for the purchase of consultancy services across government, despite SME concerns

The Cabinet Office is setting up a new £2bn agreement for the purchase of consultancy services across government – despite concerns from small to medium-sized enterprises (SMEs) over the existing framework and an apparent preference among buyers to use the G-Cloud deal instead.

The Crown Commercial Service (CCS) – the government purchasing agency in the Cabinet Office – has invited suppliers to take part in a series of “industry days” to discuss the new ConsultancyTwo framework, which will replace the current ConsultancyOne deal which expires in May 2016.

The current arrangement was set up in 2013 to centralise purchasing of a wide range of consultancy services across the public sector – 65 suppliers signed up to the deal, which was designed to get better value for money by aggregating demand and to open up the market for more SMEs to win contracts.

However, only about 10% of the consultancy purchased has gone to SMEs, against a government-wide target of 25%. Buyers in Whitehall departments have meanwhile shown enthusiasm for buying similar services through G-Cloud – the online catalogue intended for sourcing of cloud products and services.

In February, total G-Cloud sales exceeded half a billion pounds for the first time – reaching a cumulative £517m. Lot 4 of G-Cloud – designed for buying specialist cloud services – has proved to be by far the most popular part of the framework, taking up 80% of all G-Cloud purchases. Insiders say 80% of the Lot 4 spending has gone on agile development, consultancy and temporary staff – in contravention of CCS rules that say buyers should use the Digital Services Framework, ConsultancyOne and Contingent Labour One frameworks, respectively, for such services.

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CCS has issue detailed guidance on when to use G-Cloud Lot 4, and when to use the other frameworks. For consultancy, G-Cloud should only be used for contracts worth less than £100,000. But a growing number of SME suppliers say they would prefer to see G-Cloud become the vehicle for all similar purchases.

“Frameworks with supplier lists and rate cards locked in over three or four years don’t work. You need a more flexible, adaptable system. The huge burden of bidding to get on ConsultancyOne – which can be tens of thousands of pounds – is a massive disincentive for SMEs,” said Alan Leaman, CEO of the Management Consultancies Association (MCA).

“While ConsultancyOne brought a bit more order to public sector buying of consulting, it disappointed on many fronts. We are pushing for a more radical rethink of the relationship. Calling this new framework ConsultancyTwo sends out all the wrong signals to our industry. We need a break with the past and to be more creative and constructive about putting a better solution in place.”

CCS said it recognised it has more to do to help SME consultancy providers, and that G-Cloud is becoming increasingly popular. The agency said it is at the start of the procurement process and various options are being considered, and it is seeking input from consultancy providers. A final decision will not be taken until market and customer consultation has been completed.

CCS confirmed that it will ensure that any future commercial arrangement for consultancy services takes into account other existing routes to market, including G-Cloud and the Digital Services Framework, and it will continue to work with those teams.

SME spend under ConsultancyOne has been increasing, according to CCS, but the agency said it knows there is more to do and it is examining the best way to make the arrangements more relevant, such as a new framework, a G-Cloud-style purchasing system or another arrangement.

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