UK Government Overhauls Public Procurement: New Controls on Consultancy Services Amid Major Reform

The UK government has announced sweeping new controls on public procurement of consultancy services, marking a significant shift in how government departments engage external expertise. This move comes as part of a broader procurement reform agenda, with the government targeting savings of ￡1.2 billion by 2026 through reduced consultancy spending.?

Enhanced Controls and Oversight

Under the new framework, government departments face stringent oversight measures:

• Contracts exceeding ￡600,000 or nine months duration require ministerial approval
• Projects over ￡100,000 or lasting beyond three months need permanent secretary sign-off
• Departments must achieve ￡550 million in savings during the current financial year

Georgia Gould, Parliamentary Secretary at the Cabinet Office, emphasised the government's commitment: "We're taking immediate action to stop all non-essential government consultancy spend in 2024-25 and halve government spending on consultancy in future years, saving the taxpayer over ￡1.2 billion by 2026."

Streamlined Procurement Framework

The government has opened bidding for a new framework agreement designed to revolutionise consultancy procurement. Key features include:

• Reduction in total framework value from ￡5.7 billion to ￡1.7 billion
• Two-year duration instead of the previously planned four years
• Creation of a centralised supplier list
• Streamlined procurement processes for government departments

The Crown Commercial Service (CCS), as the UK's largest public procurement organisation, will manage this new framework. Samantha Ulyatt FCIPS , CEO of CCS, stated: "Consultancy services are sometimes needed to support government to deliver for citizens, but taxpayers must get value for money."

Alignment with Procurement Act 2023

This announcement?coincides with the introduction of the Procurement Act 2023, set to take effect on February 24, 2025. The Act introduces several complementary reforms:

• Consolidated procurement regulations
• New digital platform for supplier engagement
• Enhanced opportunities for SME participation
• Improved transparency measures
• Stricter payment protection provisions

Market Impact and Future Outlook

The new controls represent a significant shift in government procurement strategy, particularly affecting:

• Large consultancy firms facing reduced government spending
• SMEs gaining improved access to government contracts
• Public sector departments developing internal capabilities
• Procurement processes becoming more streamlined and transparent

Industry experts suggest these changes could reshape the government consultancy market, potentially leading to:

• Increased competition for smaller contract values
• Greater emphasis on demonstrable value for money
• Rise in consortium-based approaches
• Enhanced focus on knowledge transfer to civil servants

As the government moves forward with these reforms, both public sector bodies and private sector suppliers will need to adapt to this new procurement landscape, with a greater emphasis on efficiency, value, and transparency in public spending.

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Link to press release:

https://www.gov.uk/government/news/new-controls-across-government-to-curb-consultancy-spend-and-save-over-12-billion-by-2026?