The Department of Work & Pensions (DWP) has set out its business plan from 2013 to 2015, with milestones to measure progress.
The big-spending government department said it spent £3.4bn on third-party suppliers in 2012-13, which was 43 per cent of its total running costs and around eight per cent of central government commercial spend.
Most of this spend was incurred under legacy contracting agreements through managed service arrangements for categories such ICT, welfare to work, estates and business services - with many of the contracts expiring or close to expiring, during the period covered by the DWP's commercial strategy.
As part of its ‘steps to achieve', DWP said it needs to organise its structure around what it buys and the markets and suppliers it operates in, with the aim of implementing a new organisational structure by April 2014.
It has a target of £34m in savings on ICT for 2013/14, £38.5m for 2014/15 and £135m for 2015/16.
DWP said it wants to increase its spend with SMEs, either directly or indirectly through the supply chain - by 22 per cent by March 2014 and 25 per cent by March 2015, although this is under review following discussions with the Cabinet Office.
Cabinet Office minister Francis Maude has since said that the government has made much progress in the way that it deals with suppliers.
"We always said that where we have a relationship with a big supplier, we want it to be a strategic relationship and we want it to feel like a partnership, which means that we expect to see consistent pricing and a very high degree of visibility and transparency," Maude stated.
"So we don't expect the partnership to contain very opaque contracts, we don't expect to see automatic extensions to contracts. We expect to see smaller contractions and more capacity in-house for us to do the integration ourselves," he added.
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