Spending Review: mixed bag for private sector suppliers to government
20 October 2010
Commenting on the Spending Review’s impact on private sector suppliers to government Mike Turley, head of Deloitte’s public sector practice, said: “Whilst overall spending levels will reduce, the proportion spent to deliver public services through the private and third sectors is likely to rise. But this is a mixed bag for private sector suppliers to government.”
Deloitte believes that in the short term, pressure to reduce the cost of private sector suppliers may appear more palatable than attempts to reduce public sector headcount. Evidence of this is emerging:
Mike Turley said: “Those suppliers anticipating a deal-flow of new projects to replace those cancelled or curtailed will be disappointed. Where new projects come to market, for example the welfare to work programme, payment will be heavily skewed towards the delivery of outcomes. With the resulting increase in revenue that will be at risk and there will be a need for working capital and balance sheet strength. Small to medium size suppliers to the public sector are likely to find these new contract terms difficult to meet.
“In contrast larger suppliers with a healthy balance sheet could view opportunities for further externalisation of back office functions and the delivery of frontline service as a positive market shift.“
Notes to editors:
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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The information contained in this press release is correct at the time of going to press.
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