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A new public sector framework agreement for vehicle leasing will become the first of its kind to be mandatory when it comes into effect in February next year.
The outsourcing agreement is being set up by Buying Solutions, the Government's procurement department, and is expected to save the Government at least £200 million a year on its fleet costs.
The new vehicle leasing agreement is being drawn up to now include fleet management and will supersede the existing, optional lease-only framework agreement. The new agreement is expected to offer greater savings than the existing framework and is part of the Government's "centralised procurement agenda".
According to Buying Solutions, previously the Office of Government Commerce, the agreement will be mandatory for the main Government departments: "The use of this framework agreement for the supply of leased motor vehicles as well as additional services associated with the implementation and management of outsourced fleets to central Government departments, executive agencies and non-departmental public bodies will be mandatory."
The mandatory arrangement will mean only those leasing suppliers that sign-up for approval will be able to do business with the main Government bodies covered by the agreement.
The initial deadline for these leasing and fleet management firms to become approved is 27 August.
The outline for the framework also states the agreement will be worth £1-£2 billion over its four-year life.
Buying Solutions does not specify the saving expected to be made as a result of this contract, but one expert in the field said a 10% to 15% saving was "typically achievable" when outsourcing a public sector organisation's fleet purchasing and management.
Commenting on the agreement, Stuart Walker, brand director for public sector leasing experts Automotive Leasing, said: "Our understanding is that it will be mandatory for central Government only, not every single public sector body. The new framework is a sign of things to come.
"The challenge for the agreement will be to meet the different needs of the different departments, but if they can do that it will offer significant savings for public sector fleets."
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