How Can I Get Off-Contract Spend Under Control?

In today’s challenging economic environment, local authorities must prioritise cost efficiency, visibility, and compliance. Yet controlling off-contract spend continues to be a pressing issue for many. These costs, incurred outside formal procurement frameworks and Managed Service Provider (MSP) contracts, lead to inflated expenses, heightened risks, and reduced oversight. But how can local authorities effectively get off-contract spend under control? Here’s a comprehensive guide based on proven strategies.

Why is controlling off-contract spend crucial?

Off-contract spend undermines financial control and introduces multiple risks, including:

Increased costs: Rates outside formal agreements are often higher and unnegotiated.

Compliance challenges: There’s a heightened risk of IR35 breaches, safeguarding issues, and other non-compliance scenarios.

Reduced transparency: Lack of visibility complicates workforce management and Freedom of Information (FOI) responses.

Eroded supplier trust: Suppliers may lose confidence in the procurement process due to inconsistent practices.

By addressing off-contract spend, local authorities can cut costs, reduce risks, and ensure smarter, more sustainable procurement processes. This leads to better governance while maintaining the quality of public services.

What causes off-contract spend?

Understanding why off-contract spend occurs is the first step in addressing it. Common causes of non-compliant spend include:

Urgent or perceived necessity: Departments sometimes bypass formal procurement channels to address immediate needs, assuming that traditional processes are too slow.

Poor supplier and MSP relationships: Suppliers may avoid the MSP to protect their margins, sidestep compliance checks, or avoid new governance practices. Similarly, hiring managers may turn to “quick fixes” when MSP services are perceived as bureaucratic or slow.

Lack of awareness or miscommunication: Staff may not fully understand the available contracts or the importance of using compliant routes for procurement.

Gaps in contract coverage: When existing contracts don’t meet all staffing requirements, managers may feel compelled to seek solutions outside of formal agreements.

Decentralised governance: A lack of centralised oversight and historic working practices can result in departments acting independently, often to the detriment of broader organisational objectives.

Four key strategies to reduce off-contract spend

Controlling off-contract spend requires a multifaceted approach. Here are four strategies that can make a significant impact:

1. Ensure transparent and fair practices

Suppliers need to trust the procurement process. Avoid hidden costs, complicated onboarding, or unfair practices. Transparent and straightforward approaches foster loyalty and long-term engagement.

2. Strengthen communication

Consistent and proactive communication ensures that all departments understand the value of staying on contract. Training sessions, accessible guidance, and regular updates can reduce inadvertent non-compliance.

3. Leverage data and insights

Use analytics to identify patterns of off-contract spend. By addressing root causes, building alliances across departments, and showcasing success stories, you can encourage adherence to formal procurement processes.

4. Build strong relationships with suppliers and managers

Treat suppliers as partners, not just providers. Engage them early, listen to their feedback, and reduce unnecessary barriers. Similarly, support hiring managers by demonstrating the speed, flexibility, and reliability of the MSP process.

Effective off-contract spend management is not just a financial necessity in procurement spend control; it’s a strategic imperative. Comensura’s experience highlights the benefits of a thoughtful, relationship-focused approach to procurement. By fostering transparency, trust, and collaboration, local authorities can achieve cost savings, improve supplier relationships, and ensure sustainable workforce management.

Next step in bringing off-contract spend under control

Take the next step toward smarter procurement spend control. Download our comprehensive guide to mastering off-contract spend and unlocking cost savings, enhanced compliance, and stronger supplier relationships. Empower your local authority to implement transformative strategies today.