Public sector contracts.

[Danthus]

How many times do you see this.

http://www.bbc.co.uk/news/uk-england-hampshire-12223558

About 1,200 jobs are set to be axed at Hampshire County Council under plans to save £55m for 2011/12.

The authority says it plans to save £7m by cutting senior management, implement a recruitment freeze and save £10m by renegotiating contracts.

It blamed the cuts on a reduction of £30.9m (14.3%) in its government grant.

Staff and unions are being consulted over the job cuts - 8% of the workforce. The council said it hoped it could minimise compulsory redundancies.

Other savings include a reduction in the county council subsidy it gives commercial bus operators to run less used services.

Is it just me or is this all to frequent within the public sector, contracts that are negotiated but can later be miraculously renegotiated for better value.

 

[neil3k]

I used to work for HCC and still have mates there.

Bad times.

 

[Cosimo]

It's just you. Contracts being renegotiated is a non-story.

 

[Danthus]

Maybe it wouldn't be so bad if people could negotiate best value to begin with?

 

[fini]

Requirements change, performance dates and levels become more flexible and as you move towered completion you're better able to analyse necceaary functionality and merely desirable functionality. In long-term standing contracts semi-regular negotiation is just a practical neccessity otherwise you're always going to get a bad deal - it's like moving your car insurance each year; just because it's smart doesn't mean you got a bad deal the first time around.

 

[Cosimo]

Maybe it wouldn't be so bad if people could negotiate best value to begin with?

They probably do at the time but circumstances change and the economic climate forces the change.

 

[semi-pro waster]

Maybe it wouldn't be so bad if people could negotiate best value to begin with?

It's not always that simple, say it's a completely new supplier that is being used - at this point the only idea you have about volumes is based on an estimate (i.e. best guess), you don't know precisely what services will be utilised most or whether you will need to continue with all of them, you aren't taking account of any technological advances that may occur (as a point of principle in accounts you must utilise the worst possible likely scenario - the prudence principle*) so you're almost always likely to overestimate the costs at least initially. If it's a semi-decent contract you will have provisions for renegotiation at regular intervals with agreed procedures to true-up (match actuals to the forecast costs and get refunds/make payments as appropriate) and this should theoretically lead to the best value. It's also better to overestimate the costs provided you can reclaim any overpayments than underestimate and have to attempt to pull money back from other areas to cover this.

In some cases I'm sure that better care could/should be taken over negotiating contracts in the public sector but just because renegotiation is possible doesn't mean the initial contract was a bad one.

*This is a gross oversimplification of the principle here but it'll do to illustrate the idea.

 

[Deleted member 77746]

This sort of stuff is happening everywhere now in the public sector. I recon Privatization will happen.

 

[scorza]

Is it just me or is this all to frequent within the public sector, contracts that are negotiated but can later be miraculously renegotiated for better value.

A lot of the time when contracts get renegotiated it results in worse value for the customer, but less overall cost. This happens in the private sector as well.