Exclusive – Crown Commercial Service Backs Down on Consulting Price Cuts

We understand that the UK government’s Crown Commercial Service (CCS) has backed down from its threats to exclude consulting firms from the ConsultancyOne contract extension if they didn’t reduce prices by 5%.

We broke the story here, and whilst it didn’t get national mainstream media publicity, the Management Consultancies Association (MCA) also kicked up a fuss. We believe some suppliers also complained strongly, saying that they had put in very competitive pricing to win a place in the first place.

As well as questioning whether it was a fair way to treat suppliers, we asked whether it was legal under EU regulations. We still have doubts about that – perhaps CCS took further advice on that issue? We also pointed out that suppliers might just respond in ways that weren’t actually helpful to taxpayer value (read our post here on that front).

So now consulting firms have been told that the contract extension will be effective from 18th February 2015, to midnight on the 16th May 2016, but that suppliers will be included even if they don’t agree to reduce their prices or presumably agree to the further volume based reductions or rebates that were also requested .

However, CCS has said that it would still very much like consulting firms to reduce their prices, and would be very grateful if they would like to do so, thank you very much. But I think we can guess what the answer will be to that request.

Alan Leaman, the MCA Chief Executive said; "This policy was damaging for buyers as well as consultancies, so it is good that it has been modified. Our priority now is to work with CCS to create an improved way of buying consulting services and to give clients a choice of quality firms and maximum value for money."

CCS was criticised the other day around their Digital Services framework (we’re staying out of that argument at the moment, we need to understand more and we certainly don’t take everything the G-cloud evangelists say at face value either). Late last year, CCS was also caught up in the failure of a major framework for construction related consultants. That competition was pulled following legal challenges; it was being run by UK Shared Business Services on behalf of CCS and fell apart, as far as we could see, after some major procurement cock-ups. In any case, CCS could do with a real success story right now.

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Voices (4)

  1. Secret Squirrel:

    Dan, I don’t know as much about those situations as I do this one but generally, I’ve no issues with someone using a leverage point to get a commercially better outcome.

    What bothers me more here is that there’s no reasonable mechanism to actually manage this properly. It will reduce headline rates that no one actually pays but CCS would have claimed 5% saving any way.

  2. Dan:

    As a genuinely question, where do you stand with the Tesco and Premier Foods situations? Are those just examples of ‘buyer with leverage tries to use it’?

  3. Secret Squirrel:

    I still think this isnt such a bad story. Buyer with leverage tries to use it. Is that such a bad thing? Which of course brings us back to the Cox/Smith debate of a few weeks back.

    That said, CCS need rather more than a success story soon if they aren’t to be culled dramatically by the next Minister

  4. Trevor Black:

    I suspect that the CCS may have fallen under the spell of it’s political masters. After all why can’t they just ignore those silly EU regs and be more like the supermarkets? There is a perception by politicians generally, that all private sector organisations just rip off the public sector but forget that most are genuinely competing on fair terms with very competitive margins. I suspect that there is someone in the Cabinet Office with a big stick issuing orders for political quick win reasons who doesn’t have a clue with regard to the constraints under which the public sector must comply.

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