Procurement contracts: Avoid getting caught out

Written by: Dorothy Lepkowska | Published:
Image: Adobe Stock

Busy headteachers are often warned against the dangers of signing up to procurement contracts without proper caution. Dorothy Lepkowska seeks some advice on avoiding common pitfalls

The photocopier man seemed friendly and knowledgeable enough. He said he was new to the role, but appeared confident of the various deals he could offer to the headteacher and his office staff.

“We had no reason to be wary,” the headteacher in question told Headteacher Update. “We had dealt with this company over a period of years and it was a good relationship. We hadn’t even thought of shopping around for a new deal as there seemed no need. So when our contract came up for renewal I felt confident we’d get a good deal as a loyal customer.”

The sales rep visited the school three times to discuss a new contract but never when the school’s part-time business manager was around. While this was probably a coincidence, nevertheless it meant that the head made a decision he might not otherwise have taken for his London primary school with the benefit of a second opinion from a trusted and more experienced colleague.

“The new deal appeared to offer more for less,” he said. “It included a maintenance package and a new for old replacement in case something went wrong. But it was the cost per copy that had fallen sharply. To be honest, it did ring alarm bells with me as it seemed too good to be true, but I didn’t expect the company to rip us off after so many years of business.”

He signed the new agreement but soon realised he had been had. Over the course of a couple of years, the new deal cost an additional £8,000. Far from being cheaper it was eating into the school’s budget and using money that could have been better spent elsewhere. He is now negotiating to get out of the deal and trying to find a new supplier.

Stories such as this are nothing new. Back in 2012, in its programme entitled Reading Writing and Rip-Offs, the BBC’s Panorama revealed how some schools are being mis-sold IT and office equipment, often leaving them signed up to unreasonable contracts and unmanageable debt.

Two years later, a national newspaper investigation discovered how one company was found to be omitting exact costs in its contracts to schools for the printing of colour and mono copies, and so failing to alert them to how much they’d be spending. The maths setting out how the copier and printer use would be calculated was buried away in the small print.

That incident prompted Chas Jordan, a businessman who had worked in the office equipment business for 30 years, to set up a company called Fair Contract Associates, to advise organisations, including schools, on how to negotiate deals and get out of contracts if they feel they have been misled.

Peter Sumner, a former primary head in Lancashire and now the chief executive of Headstart Primary, which produces curriculum resources for schools, knows all about the lack of transparency in such deals. His company stood to lose £17,000 when he was misled about how much printing would cost.

“I did query the maths but the rep kept reassuring me it would be cheaper,” he explained. “The alarm bells did ring but he was so insistent. And this is exactly the problem. Busy headteachers are often distracted and thinking about other things when these reps turn up in school.

“The terminology in these contracts is often vague and misleading, and I believe it is deliberately designed to be so, so it is up to schools to check and double-check what they are signing.

“Most of the publicity around these contracts has been around printers and copiers because these have been the high-profile cases, but it could equally apply to any resources that are rented or leased, such as sport equipment. Schools need to be clear what they are signing up to.”

The National Association of Head Teachers has expressed concern in the past about some of the high-profile cases involving the mis-selling of lithographic and other services, and said that while many problems were now historic, schools should continue to exercise vigilance before signing on the dotted line.

It has produced its own advice on procurement and runs courses on the financial management of schools, including one on the use of technology. The guidance stresses that headteachers are responsible primarily for teaching and learning and should not be afraid to delegate responsibilities for procurement to business managers or seek advice from governors or parents who run their own businesses.

Valentine Mulholland, the NAHT’s head of policy, said many schools became tied into unfavourable contracts in the early days of local management of schools in the 1990s, and were often misadvised by local authorities into accepting deals that weren’t always financially prudent. Schools were then obliged to keep these contracts for years, needlessly losing money in the process.

“Some of these procurements are quite complex so schools need to know exactly what the contract states and what the specifications are,” she said. “We advise schools to get three quotes and compare the costs over a lifetime.

“Years ago when these sorts of contracts were new and quite novel, schools were on a steep learning curve and often found themselves on the receiving end of some poor advice. These days people are wiser and more experienced, but schools still need to take care.”

Most recently, schools leaving the control of local authorities to become academies have also had to negotiate their own deals when they may lack that experience. Any legal obligations taken out during the time of local authority control would be transferred to the new academy.

Ms Mulholland said the rise of business managers to senior roles in schools was taking some of the financial responsibility from heads, and this was to be welcomed.

“Heads are responsible for teaching and learning, so the recent development of school business managers, who are accountable for financial decisions, is good news and canny heads will make good use of them,” she said.

Earlier this year, the Department for Education released its guidance for schools, called Leasing and Subscription Services for School Equipment, (aimed at maintained schools, academies and free schools) which offers advice on how schools should link these agreements with their financial planning. The publication was, partly, in response to technological advances which have the capacity to enhance teaching and could prove attractive to schools.

Where possible, it says, schools should make use of public sector frameworks agreements set up specifically to provide value for money agreements for public bodies, and it lists the advantages and disadvantages of entering leasing and subscription arrangements compared with buying equipment outright.

Some of the issues to consider when negotiating a contract include the actual value of the equipment, what the sum total is of the lease payments, and whose responsibility is it to provide support and maintenance. This could be included in your payments, but you need to find out. Schools should also find out at what point during the deal they can upgrade the equipment and whether there is an opt-out clause for getting out of the contract during its duration.

Our London headteacher added: “Replacing one piece of lithographic equipment with another might seem easy enough, but there are so many pitfalls and things to consider.

“Heads and business managers need to be on the ball. Schools, which are busy and bustling working environments, can be particularly vulnerable to getting caught out by unscrupulous salesmen and companies wanting to seal a quick deal. We all need to be vigilant and careful.”

  • Dorothy Lepkowska is a freelance education journalist.

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