Government & Public Sector

Community Leads


The purpose of the public sector community of interest is to provide its members with insights to new trends and emerging practices in the fields of contract, commercial and relationship management. While these will be in the context of the public sector, they will draw from knowledge and ideas that are current and relevant in the private sector. A key goal is to improve the performance of public sector contracts and relationships.

The objectives will be met by sharing ideas, discussing challenges, exploring new directions and, where appropriate, initiating research or inviting experts to present on key topics related to contract, commercial and relationship management.

Meetings will be virtual (by phone or webinar) unless in specific cases there is an agreed wish to have physical meetings or workshops to develop specific initiatives.


Please take a minute to participate in the following survey https://www.surveymonkey.co.uk/r/IACCMPublicSector

Community Updates

IFRS15 will apply from January 1, 2018. Will your processes and contract management platforms be ready?

In July 2015 the International Accounting Standards Board (IASB) confirmed a one-year deferral of the effective date of the revenue Standard, IFRS 15 Revenue from Contracts with Customers, to 1 January, 2018. Companies have the option to apply the Standard earlier if they wish to do so. As of January 1, 2018 IFRS 15 comes into force to address revenue from contracts with customers. This new standard is in line with initiatives from the IASB and FASB and is relevant for almost all customer contracts. IFR's 15 replaces IAS11, IAS18, IFRIC15 IFRIC13 IFRIC18 SIC31. It does not replace IAS39 or FRS9. IAS17 (leases) remains outside the scope of IFRS15. The revenue recognition model upon which it is based comprises five steps:- - contract identification - tracking of performance obligations - transaction price management - linkage of performance obligations to transaction pricing - revenue recognition The additional complexity associated with this new standard will in many cases place enterprise process and IT system demands which existing contract visibility are not able to address. An enterprise will be obliged to address processes, compensation plans, tax implications, key performance indicators and additional employee training. Enterprises may also discover that additional roles within the organization require visibility into contract data. These additional roles may include shareholders, investors, audit committee members, Board of Directors and others. Decisions must also be taken to conceive and allocate transition mechanisms for contracts at different stages in their life ranging from contracts initiated and completed prior to January 1, 2018, contracts running across January 1, 2018 and new contracts starting only after January 1, 2018. The fundamental concepts behind IFRS15 is increasing disclosure with respect to revenue recognition with an ability to link precisely that disclosure to contract data. The implications not only impact the management of individual contracts but particularly in cases where there are multiple contracts with single suppliers and where there are complex contract hierarchies. Even within a single individual contract multiple performance obligations may be required to be unbundled requiring fine granularity visibility into contract data. The timeline recognition of revenue becomes increasingly critical with the core concept being one of revenue recognition in line with the actual delivery of products or services. There is however ever greater consideration given to the time value of money thus the revenue value required for reporting purposes may be significantly impacted by exactly when and entity fulfils its delivery requirements, performance obligations, receives customer payment and any relevant interest rate at that moment in time. In summary IFRS 15 elevates contract management from being simply a commercially beneficial activity albeit with real financial rewards to a well-run enterprise to now being a governance obligation. This new obligation demands both internal processes and contract management IT platforms be sufficiently capable and reliable to provide accurate, repeatable and auditable reporting data. Hope this is useful..........www.symfact.com


Flexibility in technology contracts with the Public Sector?

When does 'no negotiation' mean 'no negotiation' in technology contracts with the Public Sector? In principle, public procurement rules are seen in Europe as providing no flexibility for negotiation of terms and in general, policy on areas such as liabilities and indemnities allows for no variation. However, in reality, what do you experience? On these terms - and others like warranties, IP, data security - do you experience that there is no negotiation, or do you find a less consistent approach? And if inconsistent, is that because some countries are less rigid, or some situations? Thanks! Pablo Cilotta


Performance related pay (Penalties / Incentives)

I'm exploring the idea of introducing performance related pay to better manage a number of contractors delivering property maintenance (planned and reactive) on behalf of a local authority. I am keen to learn of others experience (good or bad) and particularly of models which are not so admin heavily that it outweighs the benefits. Most models put a great deal of risk on the contractor, which I want to avoid (as ultimately the buyer pays for it in the end) so it needs to feel collaborative, and preferably offer incentive for added value... as opposed to a penalty for under performance. Within the arena of property maintenance, and circa 1300 jobs per month across a variety of disciplines, I cannot see an obvious model. Any thoughts welcome.



I have seen mostly FIDIC (Yellow Book) based contracts in my work environment for offshore contraction/installation works. But also LOGIC is widely used in the industry. I have searched the internet and the IACCM website, but I do not really seem to find an answer to the following question: - What are the main differences between FIDIC and LOGIC - And following when would LOGIC be preferred or FIDIC be preferred. Looking forward reading your opinions about this


Definition of "Commercial Procedures"

I am responding to an RFI for a US Government contract. One of the questions asks whether similar services have been provided to the private sector and if so, what kinds of commercial procedures and T&Cs were used. I am looking for input on how "commercial procedures" would be defined in this context. I am guessing this would be on a par with the Federal Acquisition Regulations on the US Government side....i.e. procedures that somewhat mirror the FAR for everything from bidding work to subcontracting to contract management. Thanks in advance for any insight you can lend.


Top 5 tips to maximise value in public sector contracts

While the economic outlook for the UK looks set to improve, the pressure on public finances continues. With significant further public spending restraint expected until 2017/18, this pressure is unlikely to fade away as the 'new' conservative government beds in during the rest of 2015 and beyond. Against this backdrop of ambitious public sector savings targets over the next few years and increasing scrutiny over spending, delivering better value at lower cost is essential for all public bodies. The scale and extent of the required cuts means new ways of working are needed. Taking the right approach to contracts in the public sector has an important role to play in delivering the savings that are needed. Don't forget the service delivery phase Public sector bodies are prepared to apply significant effort in the procurement phase of large complex projects. But they generally do not continue this level of support in the critical service delivery phase. This is where most money is spent and where there is greater risk of losing essential value. The lack of robust contract management is often dramatically exposed too late...when significant value to the public sector is already lost and disputes arise a few years later. To achieve intended value for money for public spending, organisations need to consider the whole contract lifecycle and invest in robust contract management from the outset. They need to ensure knowledge is transferred from the procurement phase onwards and hold contractors to account for the full extent of what they agree to deliver. While the need for the public sector to provide robust contract management is, at times, acknowledged, the ability of public sector organisations to deliver it is sometimes limited. A lack of commercial skills and know-how to match the private sector contractors potentially puts the public sector at a disadvantage. Don't under-estimate the task Another key factor is the lack of understanding of what is required in the services phase of a contract to provide proper contract administration and to manage the often complex mechanisms in large service contracts. The level of attention and rigour required is often underestimated and the necessary complexity of the contract management task is not well understood. In underestimating the requirements of contract management, public sector organisations can inadvertently allow contractors to take advantage and transfer the risk back to them. Top tips In order to minimise the risk of losing value throughout the whole contract lifecycle here are a few things that public sector organisations should consider: 1. Focus on the entire contract lifecycle - It's in the service delivery phase where most money is spent and the risks are arguably the greatest. Public sector organisations need to extend the scrutiny and focus on procurement over the whole of the contract lifecycle in order to deliver value for money. 2. Bridging the gap between procurement and contract management - Too often the expertise of a procurement team is lost after contracts are awarded. Ensuring that important knowledge and expertise are transferred from procurement to the latter phases of the contract lifecycle is critical to delivery. 3. Continuously monitor compliance, performance and finances - Checks and balances across the contract lifecycle to prevent value leakage. Organisations must monitor and address the gap between the 'delivery promise' and the value actually delivered. 4. Independent professional advice can be crucial - The complexity of the task of contract management shouldn't be underestimated. Independent professional advice can be used proactively and cost effectively after the contract has been awarded to secure the contracted outcomes and avoid unnecessary failures. 5. Don't wait until it's too late - The lack of robust contract management is often dramatically exposed too late when significant value is already lost. Invest upfront in contract management to manage risks and ensure the value embedded in the contract is delivered. In a climate of continued public sector austerity, rising demand and increased scrutiny, the public sector needs to ensure that contracts are delivering their full value. By applying rigour in contract management to retain the procured value post award, the public sector should get exactly what it deserves - excellent value for money public services.


Public versus Private Sector Contracting: A Contrast in Values

IACCM REPORT FINDING: Private sector personnel are almost 80% more likely to be influenced by the need to promote competition and minimize operating costs -Please share your thoughts. Hoping this generates some activity. When I read IACCM article, I was perplexed by the statement above and therefore I offer the following thoughts: In the U.S. public sector procurement is the intersection between three interconnected non-complimentary forces; law, public policy, and industry. Public policy combined with Federal law dictates that competition is the single most important aspect of the U.S. Federal procurement process. In accordance with the law contracting professionals in the U.S. Government are required to consider/ research 7 different socioeconomic categories before they can compete an opportunity in a full and open environment. At each layer acquisition professionals make a business decision about the capability of industry to perform the work at hand for a reasonable price. Contracting professionals are required to do this for simple procurements and large strategically sourced contract vehicles. In fact, at the Department of Homeland Security (DHS) the initial market research described above has helped create an industry base of 15,000 current contractors 11,000 of which are small and medium sized business. Each year over 3,000 new companies win a contract with the Department. This ensures that the Department has a highly competitive marketplace that is constantly competing to meet mission objectives and win contract awards. Although the Government incurs additional labor costs to perform the market research the cost savings from the robust market place and constant competition is tremendous. Furthermore, the companies that survive in the marketplace have a keen understanding of the mission and how to achieve it at the lowest cost. At DHS, performance metrics include rate of competition on each individual procurement ( 76% in FY 12) and operational cost savings (approximately $330M from strategic sourcing alone). The interesting point here is that the level of competition is so high that contracts tend to be awarded to industry partners that have determined the best way to meet the mission at the lowest cost. This is much different than the goal of helping a corporation maximize shareholder wealth. In the public sector (many times in my experience) we are contracting for services that would normally be an individual company’s competitive advantage. Meaning that many of the contracts we write are to perform a service that many companies would never outsource. The survey results posted above seem to indicate that public sector professionals do not value competition as a way to minimize operating costs. However, I believe public sector procurement professionals value competition just as much and work in a more complex environment that challenges them to think beyond a single value proposition (maximizing shareholder wealth). I am wondering if the way the question is written generated misunderstanding. If not, then I believe we need to resuscitate the discussion around minimizing operating costs and promoting competition to ensure that public sector employees understand how valuable this can be. Thoughts? Jose

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