Adopting contract management framework a lesson for government

Government entities are making progress implementing National Treasury’s (NTs) Contract Management Framework released in 2011, Paul Maddison, Managing Director at Realyst Contract Management, tells SmartProcurement.

There are indications that some public sector entities are beginning to take contract management seriously, already embarking on strong initiatives to get to grips with the requirements set by Treasury. However, others are simply unaware of their obligations to comply, says Maddison.

The fact that this is new territory for the Public Sector makes it challenging: there are no local test cases as yet – implementation teams must learn from each other.

However, once the first completed implementations start to come through, there will be valuable lessons for Government on the value of contract management. Some of these benefits are already evident in the early stages of the existing projects, says Maddison.

The Contract Management Framework clarifies the process that all Government entities and national and provincial departments must follow to achieve best practice in contract management while providing government departments with an achievable timeline in which to do so, i.e. it is to be implemented by 2013.

So why did National Treasury embark on such an extensive initiative?

Many Departments and entities were qualified by the Auditor General on their contract management practices, yet no guidelines existed for entities to adopt. Certainly the Government entities now have no reason not to comply: the documents available are comprehensive, world class, and above all else, practical in their objectives and implementation requirements. So much so, that the private sector entities companies that don’t have any contract management initiatives in place, would do well to take the concepts on board, notes Maddison.

The drivers for contract management as described in the Framework include:
• Improved information for making policy choices (allocation of resources to programmes).
• More efficient use of resources in delivering chosen programmes.
• Increasing the rate of delivery of basic services and associated elimination of delivery backlogs.

Government expects this to be achieved through enhancing transparency and credibility of information; and improving financial management and internal controls.

Government sees contract management leading to:
• Increasing awareness of all forms of contracts and their implications.
• Identifying non-performing suppliers, buyers and other stakeholders.
• Developing strategic supplier, buyer or other stakeholders with a view to improving service delivery and reducing costs.
• Better value for money.

Adopting the Framework has the ability to make a significant difference to the effectiveness of Government entities in service delivery, which is evident in the work being done in this sector, says Maddison.

It is expected that as entities adopt the concepts in the Framework, suppliers of goods and services to the Public Sector will feel its impact: advantages for those that perform; and closer scrutiny and the imposition of tighter controls for those that don’t.

In future articles SmartProcurement contributors will look to extract and comment on the components of the Framework as they relate to the practical internal processes and tightening of controls, the alignment of contract management with strategic objectives, together with supplier and performance management.

To address and analyse the whole issue of Contract Management Governance in the Public Sector, SmartProcurement will facilitate two one-day Technical Workshops:

Wednesday, 14th March 2012 in Cape Town (venue TBA); and

Wednesday, 18th April 2012 in Centurion (venue TBA).

To register now contact Erieka Santos on 086 133 4326 or e-mail her at admin@smartprocurement.co.za

Please note that Framework applies to all Public Sector entities, which therefore includes Municipalities.