What is contract consolidation?
Contract consolidation is when a number of contracts for similar goods or services are combined together to form one single, larger contract. This can help governments and local authorities save money and cut down on admin.
Where have you heard about contract consolidation?
Government agencies in the US have used contract consolidation for more than 20 years. It has become the norm for administrations to try to save money by bundling federal contracts into fewer, larger awards to bring down costs for taxpayers.
What you need to know about contract consolidation.
Contract bundling is frowned upon in some quarters, because the size of a contract once it’s been consolidated often means that only companies equipped to handle large orders have a chance of being awarded it.
Small businesses are often muscled out, ultimately making the market less competitive. It’s also thought that multi-service providers might not match the quality delivered by more specialist single-service contractors.
In the US, when government agencies are considering contract consolidation, federal law requires them to identify any negative impact on small firms.