It is no secret that David Cameron, the leader of the main UK opposition party – the Conservatives, and likely next Prime Minister, will seek to reduce public expenditure by cutting central and local government spending.
If the Conservative party does get in to power after 12 years of Labour rule, it will have dramatic consequences for many people who have become used to public sector budgets and expediture balooning year on year under Tony Blair and latterly, under Gordon Brown’s ‘spend our way out of recession’ strategy.
The reality is that the United Kingdom now has unprecedented levels of debt, and coupled with the Conservative party’s strategy of reducing the reliance on central government to increase government spending, will mean that the next likely government in the United Kingdom, will have to reduce public expenditure significantly.
According to the UK Office of National Statistics, ‘Public sector net debt, expressed as a percentage of Gross Domestic Product (GDP), was 56.6 per cent at the end of June 2009, compared with 44.4 per cent at end of June 2008. Net debt was £798.8 billion at the end of June, compared with £641.4 billion a year earlier’.
So, what will this mean for central and local government organisations?
Almost certainly, it will mean that they will have to cut back core services, but it will also mean that they will have to streamline their processes and procedures to deliver public services in a more efficient way in the future. Public sector organisations are already under pressure from the National Audit office to become more efficient and to ensure that public expenditure is properly managed – a report published recently highlighted that central government departments are wasting around £290 million annually in IT services contracts through poor contract management and enforcement of contract performance obligations.
Public sector procurement will come under much closer scrutiny after the next election. This means that there will be an increased focus on how public sector organisations manage key contracts with external providers. The recent MP’s expenses scandal has also focused attention on how public money is spent and justified.
Streamlining contract management processes and procedures will become ever more important and will become a central strategic issue for public sector managers.
How can Contract Management technology solutions help?
Contract Management solutions help to streamline and manage the contract lifecycle process by ensuring that contracts are drafted and negotiated in an efficient manner. They also enable key stakeholders to track and manage contract milestones and obligations that are hidden within contracts and that are rarely tracked and managed today.
You should consider investing in a Contract Management solution if you are unsure or not able to answer any of the following questions:
- Do you know how many active contracts you have?
- Do you always enforce contract terms and conditions that lead to penalties for poor supplier performance?
- Do you know how much your organisation has contracted to spend and how much you have spent year to date against your budgets?
- Do you know where your contracts are?
- Do you always review supplier contracts coming up for renewal or termination?
- Are you confident that your contracting process will stand up to the scrutiny of an official audit?
- Do you pass on key information contained within contracts to other stakeholders in your organisation (like making the finance department aware of all contracts that contain non-standard payment terms, for instance)?
- Do you feel that you and your colleagues have all of the management information to manage your contracts effectively?
Whoever wins the next general election in the United Kingdom, the writing is on the wall: Public expenditure is going to diminish. Now is the time to start planning for this new spending regime by putting in processes and solutions that will make public sector organisations more efficient. Since contract processes are typically poorly automated and managed, and therefore represent the best chance to erradicate unnecessary costs and wastage, focus on improving Contract Management should be the primary strategy for Legal, Procurement and Finance managers in the public sector.