07 June 2006 | Paul Snell

A new contract strategy programme will help the Ministry of Defence (MoD) make improvements to its supplier management, according to the National Audit Office (NAO).

The software tool will advise buying teams on strategy and help them to match the strategy to individual deals.

According to the NAO report released this week, effective contract strategies are key to ensuring the success of major projects.

In the report the MoD was praised for its good contracting practice in areas such as legal, financial and negotiation skills, but the report noted that "overall performance is not consistent". It also recommended improvements to managing and sharing knowledge of contracts.

The tool provides checks for buyers in three individual stages of contract management. First, it reminds procurement teams to identify factors that influence the procurement process, such as the project's importance and specifications. Second, there are guidelines to develop a contract strategy specific to the chosen procurement process. The third step is a checklist, so buying teams can see if their chosen strategy is appropriate.

Even though defence contracts, especially those involving purchasing weapons, can be complicated, the NAO believes that the common lessons are not "prescriptive" and are transferable to other sectors.

The tool is currently at "proof of concept" stage and is a work in progress. A spokesman for the NAO told supplymanagement.com that there was no strict timetable for it being introduced and it would start being used "as soon as practicable".

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