Good contract basics and the benefits of a contracts register

Education Buying - Good contract basics and the benefits of a contracts register

Keep on top of your contract expiry dates

When it comes to good contract management, one of the pivotal points is the expiry date; you need to know when it’s going to end. If you don’t, there is a chance your contracts will roll over and you’ll be rushed to make a decision you don’t actually want to make. You also risk coming to the end of the lead time to be able to procure the products in your contracts. Knowing the expiry date is fundamental for good contract management and mitigating risk.

Supplier relationship management

Supplier relationship management is a key activity to conduct. Good contract management is having a good relationship with your supplier; this is essential for building trust between you and your supplier. It’s vital to meet with your suppliers on a regular basis to keep on top of your contracts. Meeting with your supplier means you can make sure that both you and your supplier are delivering on what was set out in the contract.

During the meetings you should look at your SLAs, are they being met and delivered? Are your KPIs being achieved? Are you getting the value for money that you thought you were going to get? Is the social value in the contract being delivered? These questions will not only help you manage your contracts effectively, but they will ensure you’re getting the best value for money.

A KPI is a key performance indicator, this is what you measure the performance of the supplier on, this indicates on whether they have delivered against the SLA. For example, a KPI for a cleaning supplier could be paper hand towels will not fall below 30% each day.  SLA means service level agreement; this is what you’re expecting from your supplier, it defines your expectations during the contract term. For example, for a catering contract, you set certain expectations about the quality of the food.

Education Buying - Good contract basics and the benefits of a contracts register

Risk and compliance

Far too often we see supplier relationships breaking down because nobody was assigned responsibility for the contract during the tender process.

Signing someone as responsible for the contract means your supplier knows who the contact is. It also means there is one person managing the contract, mitigating the risk that changes will be made without you knowing and mitigating the risk that changes won’t be made unless using the correct procedures set out in the contract. The relationship between the school and supplier is important, it is crucial to record any changes that are made.

What makes good contract management?

Public sector procurement is constantly evolving. Mismanagement of your contracts can result in your school losing thousands of pounds.

Effective communication is key. You need to document any changes to the terms of the contract; follow the procedures of the contract to ensure changes are properly recorded.

It’s vital to meet with your suppliers on a regular basis to keep on top of your contracts. It’s good to make sure that both parties are delivering on what was set out in the contract. Look at your SLAs and KPIs and discuss these during your meetings to ensure they are being met.

You need to comply with notice conditions, suppliers can sometimes hide contract stipulations and say that you can give 3 months’ notice, but will stipulate in the contract that this can only be from a certain date, and if you don’t, then you aren’t able to give notice for another 12 months etc. It is important to read the fine print so that if you need to give notice, you can comply with the notice conditions. This is another reason why it’s important to assign the responsibility of the contract to someone.

Lastly, you need to involve procurement services as early as possible in the procurement process. The earlier you involve them the sooner you can get what you need out of a contract. If you would like support

Example of what could go wrong

Your school cleaning contract is due to expire in 2 weeks, you didn’t realise until the incumbent supplier has sent you a letter with a renewal notice.

This presents multiple problems:

You may not have time to consider the options
  • You won’t have time to go to market to see what’s out there in terms of innovation, pricing and technology.
  • The supplier has greater leverage
  • The supplier knows you won’t have time to go through the tender process before the contract ends. This could result in them increasing the price or adding more into the contract.
  • You have breached your procurement obligations

    • Being in the public sector, you are custodians of the public purse and, therefore, by not running a tender you’ve effectively awarded a contract without any further competition. Depending on the value of the contract, you could have breached the PCR2015 rules.
    Lost opportunity
  • Letting your contract roll over means you’ve missed an opportunity to save money, or just generally secure a better deal within your contract, whether this is through social value, innovation etc.
  • Reputation
  • Bad news spread quickly, it’s important that you don’t risk losing a supplier through poor contract management.
  • What is a contracts register and how can it help?

    A contracts register is a record of your contracts and agreements held in one place. A contract register allows you to benchmark your contracts, so you can compare them to other deals and ensure you’re getting the best value for money. It also means you can be efficient about your contract management; it allows you to view your spend data and complete your risk analysis.

    Lastly, a contracts register allows you to view what is at immediate risk of rolling over, what is something you need to be working on right now and what is currently a low risk.

    We recommend using a contracts register to save yourself time, mitigate risk and to help you achieve potential savings. Ours is free to use, all you need to do is sign-up!
    Education Buying - Good contract basics and the benefits of a contracts register

    If you would like to access any of our frameworks or DPS or would like to contact us and see how we can help, don’t hesitate to do so! Our procurement specialists are here to help your schools save money, time and eliminate stress from your workdays.