Maude clamps down on Whitehall contracts

Millions saved by getting tough on suppliers plus more cost cuts to come

The Government will this week step up pressure on firms which supply it with services and equipment to cut their charges and costs.

The move comes as the Cabinet Office reveals that it has achieved savings of around £70m from just two software suppliers, Microsoft and SAP.

Later this week, Francis Maude, Minister for the Cabinet Office, is meeting 22 key suppliers who between them have contracts worth £15bn with the Government. These include Amey, BT, Capita, G4S, IBM, Logica and Sodexo.

Mr Maude said: "The Government's message to business is clear: the landscape for government contracts has changed irrevocably. Tough negotiations are here to stay, and to work with government you have to be prepared to offer the best value for money. But reform on our side is here to stay too; there will be exciting opportunities for business, and pitching for them will be quicker and cheaper for everyone."

Among the current savings, Microsoft has agreed to increase the discounts on its software licences to the tune of some £65m, while SAP has come up with an extra £3m of discounts, rising to £5m by 2015.

According to the Cabinet Office, since it began renegotiating contracts two years ago the Government has agreed savings of more than £800m.

At this coming Thursday's meeting with industry bosses, Mr Maude will explain that the Government has now assembled a "team of skilled negotiators [Crown Representatives] from the private and public sectors who act as representatives of the Government and interact with key suppliers, ensuring government acts as a 'single client'."

He will tell them that the new system works in their favour because it has made the Civil Service procurement system quicker and cheaper.

Mr Maude will also call on the company leaders to come up with views on how government could do business better and differently and how changes should be implemented.

He will warn them that: "This Government will not tolerate poor supplier performance, and this is one of the areas that the next phase will look at. All contracts have performance criteria written into them.

"The Government wants to strengthen its contract management by reporting on suppliers' performance against criteria and sharing the information across government."