A nationwide framework agreement for procuring vehicle fleets
for the public sector already exists. Andy Thompson asks
whether a similar scheme could also work for equipment
procurement
In the UK, public sector agencies –
especially local authorities and NHS trusts – make extensive use of
equipment leasing. They often look for ways to make the process
simpler.
Go deeper with GlobalData
European competitive tendering rules for public
sector contracts generally involve costly and cumbersome tender
invitations for each contract through notices in the Official
Journal of the European Union (OJEU).
Within vehicle leasing, central government has now
developed framework agreements to simplify the process. These
agreements are available to both central and local government
lessees. Lessors pre-tender on standardised terms held for a period
of years, eliminating OJEU notices for each new contract. However,
these centralised frameworks have yet to extend beyond
vehicles.
The frameworks operate much like price comparison
web sites. Lessees obtain quotes based on the lessors’ pre-tendered
bids for specified vehicle types, hire periods and service packages
where required.
Frameworks started first with car fleets, including
car-derived vans. Though available to all public sector lessees,
the pan-government car leasing framework was developed by the NHS
Purchasing and Supply Agency (PASA) with hospital trusts
principally in mind. In its current version it has been running for
an initial three-year period since August 2007, with an option for
a further year's extension before the next review.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataFor larger commercial vehicles (CVs), the first
central scheme started in July this year. The new fleet management
framework agreement for CVs was developed by the Buying Solutions
arm of the Office of Government Commerce, a division of HM
Treasury. It runs initially for two years, with an option to extend
for a further two years.
Some local authorities would like to see central
framework leasing agreements extend to other sectors. This could
include reprographic equipment, an area in which some local
authority schools have had unsatisfactory experiences with
point-of-sale lease contracts introduced by certain dealers.
However, variations in such factors as
service-inclusive packaging and residual value profiles, and in
trading relationships between lessors and suppliers, always need to
be addressed. These could complicate any wider moves towards
central frameworks.
Some practitioners doubt whether frameworks could
extend further. Some are even critical of the vehicle schemes,
suggesting that lessees find them more suitable for small contract
hire deals rather than operating leases more analogous to other
equipment types.
James Russell, partner at advisory group Sector
Treasury Services, said: “Local authorities need professional help
and advice, rather than just being directed to a web site. We are
setting up our own lease framework arrangements with individual
clients. We are currently developing one for Walsall District
Council that will involve a good spread of competing lessors.”
Russell added: “The national frameworks have a very
costly signing up process for lessors, engaging a lot of scarce
staffing resources. This results in patchy participation. In the CV
scheme there are five contract hire players, and only two leasing
companies that cover the whole field.
“Though many local authorities use the car fleet
framework, the CV one is not used by many key target lessees,
including most NHS ambulance trusts.”
Even the longer established car fleet framework has
its critics.
Colin Tourick, director of the consultancy Colin
Tourick & Associates, said: “It offers lower costs for the
public sector, at a very high cost to suppliers – extremely low
margins that can be wiped out by very small reductions in used car
prices.”
Data obtained by Motor Finance under the
Freedom of Information Act shows that over two years to the end of
September this year, 21,704 vehicles were leased under the car
fleet framework. This seems well below initial expectations (see
table above).
Those lessors who have taken the plunge into the
existing schemes nevertheless tend to be enthusiastic.
Terry Bartlett, managing director of Inchcape Fleet
Solutions, said: “Government departments, local authorities and the
whole public sector will be able to take advantage of the new
national agreements without having to go through a lengthy tender
process.
“The new agreements represent innovation in the way
that the public sector buys fleet management services. The rigorous
tendering and evaluation processes that we have been through over
many months means that our wide range of products and services have
been checked for quality, price competitiveness, fitness for
purpose and compliance with statutory requirements.”
FOI response for fleet orders placed
through framework agreement
|
Lessor |
NHS |
Non-NHS |
Total |
% |
|
Arnold Clark Finance |
4,196 |
86 |
4,282 |
20 |
|
Arval UK |
1,737 |
142 |
1,879 |
9 |
|
Automotive Leasing |
4,335 |
213 |
4,548 |
21 |
|
GE Commercial Finance Fleet Services |
21 |
21 |
0 |
|
|
ING Car Lease UK |
2,902 |
83 |
2,985 |
14 |
|
Lex |
72 |
1 |
73 |
0 |
|
Lloyds TSB Autolease |
4,487 |
717 |
5,204 |
24 |
|
Lombard Vehicle Management |
386 |
38 |
424 |
2 |
|
Masterlease |
1,802 |
27 |
1,829 |
8 |
|
TC Harrison Group |
408 |
51 |
459 |
2 |
|
Note: The start date of the framework |
||||
