Define your purchasing strategy

Your purchasing strategy must show you have considered commercial and technology aspects, and contractual limitations.

To meet point 11 of the Technology Code of Practice your plan or design must show your sourcing strategy and how your contracts meet government rules and guidelines.

You’ll have to explain how you’re doing this as part of the spend control process.

How defining your purchasing strategy will help your project

Your technology project or programme will benefit from:

  • competitive and innovative commercial products and opportunities
  • long-term financial savings
  • improved supplier negotiations
  • a commercial approach that supports the disaggregation of contracts
  • managing contract exits successfully, making sure the exiting supplier passes over any relevant knowledge and capabilities
  • help with the transition to the cloud, commodity and common technology services
  • shorter, more manageable contracts with a streamlined renewal process
  • a clearer view of contract status, risks and issues

Commercial approach

Your sourcing strategy must demonstrate that you have a thorough understanding of the commercial undertakings required to deliver, use and manage your programme. You should plan how to manage multiple suppliers, where that structure is appropriate for the organisation’s operating model, and when they’re working as part of the same delivery teams. This includes:

  • routinely challenging your sourcing strategies to consider whether your requirements can be simplified or broken up to allow for greater competition in the marketplace, including by small and medium-sized enterprises.
  • using value chain mapping to help identify the products and their components you need, and whether it would be better to build or buy depending on their maturity as a product
  • moving from large contracts with a single supplier to multiple suppliers where there’s an operational and value for money justification
  • understanding where and how you’ve disaggregated the technology that underpins your programme and the contracts that supply the technology
  • considering what skills and capabilities your organisation needs to deliver and support the product or service you’ll purchase
  • using a sourcing model that fits your services, and works in your organisation’s specific circumstances

Technology considerations

Your sourcing strategy must consider technology approaches that will encourage the future use of your product or service, including:

  • breaking up services in line with industry best practices including using a lean sourcing approach, pre-procurement market engagement and being as open as possible
  • using off the shelf products and services where possible - avoid customising these products in a way that stops you from maintaining, upgrading or removing them in future
  • complying with the Greening Government Commitments to reduce your organisation’s environmental impact

Use common government sourcing routes

Find appropriate services and suppliers to avoid lengthy and expensive procurement processes. Work with your departmental commercial team to understand which route is most appropriate. Use approved sourcing routes including:

Follow government contractual rules and guidelines

Contracts must:

  • not be over £100 million in value – unless there’s an exceptional reason
  • be explicit about the ownership of government data, including data created through the operation of the service
  • be explicit about the ownership of intellectual property involved in the delivery of a technology service (including software code and the business rules that process information between user interfaces and stored data)

Contracts should:

  • where economic, include a break clause at a maximum of 2 years which allows you to terminate the contract with minimal exit costs
  • ensure competition from the widest possible range of suppliers using smaller contracts where they improve value
  • include usage-based billing models where appropriate and where this represents best value for money
  • address the need for continuous improvement, maintaining market competitiveness and flexibility to meet changing requirements

Remember that:

  • you can use the CCS technology category framework agreements which have pre-defined terms and conditions
  • suppliers must not provide either systems integration, service integration or service management services at the same time as providing a component service within that system
  • you cannot automatically extend contracts unless there are extenuating circumstances
  • you should align contract duration to current best practices for the product or service in question
Published 6 November 2017