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Government issues policy note on applying open book contract management

The Government has issued a procurement policy note setting out the obligations of contracting authorities when applying open book contract management (OBCM) to public contracts.

OBCM is the scrutiny of a supplier’s costs and margins through the reporting of, or accessing, accounting data.

The note – published by the Crown Commercial Service (CCS) alongside guidance – says: “Its use is often associated with managing and controlling delivery of large, high value, high risk and complex contracts.

“This transparency allows both parties to be clear on the supplier’s charges, costs, and planned return. It also provides a basis to be able to review performance, agree the impact of change and to bring forward ideas for efficiency improvements.”

If implemented well, the technique should help both to improve value for money outcomes and to build mutual understanding and trust between government and its suppliers, the CCS said.

The CCS added that the intention of the note was to ensure a proportionate and consistent Open Book approach was applied to a broad range of different contracts.

“This starts with an assessment of the needs of the contract, to determine the type and level of Open Book practices that should be applied,” it says.

“This assessment uses a tiered framework, which allows Open Book to be used in a proportionate way depending on the risk level and complexity of the contract. Open Book should be used on those contracts where the additional cost is justified by the perceived level of benefits and risk.”

A copy of the procurement policy note can be viewed here and a copy of the guidance can be viewed here. The note’s contents apply to all central government departments, their executive agencies and non-departmental public bodies.

The note says such in-scope organisations should begin assessing their contract portfolios by no later than 24 June 2016, and mobilising resources to begin implementing OBCM by no later than 24 July 2016.

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