Providing quarterly comparative analysis to monitor the value for money offered by a multi-million-pound government service
Telecoms are a major investment for a large organisation. Even with a good deal at procurement, it’s not always easy to know if you’re still getting good value later on in a contract. An independent review can provide the necessary information to take on suppliers.
The department purchases a wide range of telecoms and associated management services. All of them are provided under a single contract from a UK service provider. The department required an independent third-party to ensure value for money was being achieved from this multi-million-pound contract.
We provided a quarterly comparative analysis to monitor the value for money offered by the overall service contract and each contributory service. The review typically included point-to-point services, packet switched services, circuit switched services, LAN interconnect services and Internet services.
To undertake the review, we worked out a market comparator for each of the services (securing a suitably close match in the marketplace), and then isolated any elements of the contract that were not present in the comparator, adjusting for differences (such as size of contract, level of fixed costs, or specialised aspects such as information security features). The model we created used these inputs to generate a benchmark for each service and the overall contract. Although this is a highly complex contract, the output of the model allows for straightforward comparison of the service tariffs with the marketplace. Key to the success of the delivery of this assignment was our timely acquisition of relevant and accurate information from the marketplace that could be regularly refreshed. In addition to the quantitative analysis described above, we tracked relevant trends and events in the marketplace.
As well as this quarterly reporting process, we undertook a number of specific reviews for the department. For example, seven years into the contract, the department commissioned a high-level assessment of the options for re-negotiation or re-competition. Our assessment considered current and anticipated market conditions, the capability of service providers to meet requirements, the risks associated with re-negotiation or re-competition, and the impact on contract exit and transference.
The provision of the value-for-money services has withstood strict scrutiny from external bodies, including the National Audit Office.
By tracking the evolution of the indices over time, and combining this with our observations on key trends and developments in the market, we were able quickly to identify changes in value for money in our traffic-light reports, supported by our analysis of the reasons for the changes, and forecasts for the next quarter. From this intelligence, our client could, when required, initiate action to renegotiate tariffs with its supplier.