After the decision has been made on what to order from which supplier, it is important to manage the contract appropriately. The type and value of supplies, services or works procured will determine the level of monitoring and management needed.
Management and monitoring of a contract should be a two-way process. It is not simply about overseeing how the supplier is performing. It can also be about what you and your institution are doing. Where there is a service level agreement between the parties for a contract, this will form an important part of the contract management process, as will the monitoring of Key Performance Indicators (KPIs).
A review of a call-off contract may highlight a high number of relatively low value orders. This may suggest that the departments using the arrangement should consider looking to see if they could plan their orders better. For example, raising orders on a weekly or fortnightly basis rather than when a need arises. This may not always be possible, however in general a little forethought can lead to fewer orders which, in turn (when the supplier can see that there is a degree of planning) may lead to reduced prices. Where there are delivery charges, a reduction in the number of orders will save this cost element. Remember, in the case of some low value supplies, the delivery charges can sometimes be higher than the cost of the supplies themselves.
Management and monitoring should therefore be about the sharing of information to the benefit of both the institution and the supplier.
Some examples areas to monitor
A call-off contract, e.g. stationery, cleaning chemicals or computers will require regular meetings with the appointed supplier. This could be monthly at first and then quarterly to ensure that orders are being fulfilled within the agreed terms. Where for example, the management information shows that there is a significant increase in the expected level of business, there may be scope to investigate the possibility of improving the agreed terms.
The procurement of a major item of equipment - management and monitoring of this type of contract will include liaison with the supplier to ensure in the first instance, that it will be installed and commissioned at the agreed date. Later, management could include reviewing maintenance visits, the equipment's performance etc. Where for example, the volume of consumables is increasing, there may be scope to investigate the possibility of setting up a preferred-terms agreement, perhaps aggregating demand with other departments within the institution or with other institutions.
Service contracts can be the most challenging to manage and monitor especially where the service is intangible. Depending on the type of services, for example the provision of staff to work within the institution, the contract should include a service level agreement that outlines the roles, expectations and responsibilities of the parties to the agreement.
In other cases, such as the engagement of consultants, the project specification can be difficult to define in terms of the expected time and resources to complete the required task. In such cases, it is especially important that the engagement is managed as it is very easy for this type of requirement to overrun available budgets. This tends to happen where ‘another little bit of work is added’ and a relatively small commission snowballs out of control. Remember, the approach of the consultancy is to win the work (via some competitive process) and then to attract as much additional work as possible.
Key Performance Indicators (KPIs)
Management information defined by KPIs in the tender documents and agreed at contract formation should be collected and used. In practice, it is more likely that this type of management information will be available from the supplier and not the institution. The type and style of management information required under the contract should be defined in the tender documentation. You should request this information from your supplier in electronic format.
Section 71 of the Procurement Act 2023 and Regulation 39 of the Procurement Regulations 2024 set out the requirements for mandatory monitoring and reporting of KPIs when the value of a public contract exceeds £5million (incl. VAT).
School / MAT members - the information on this page aligns with the following ISBL Professional Standards: 3.2, 3.45, 3.46, 3.47