# What Is Off-Contract Spend?

> Off-contract spend is money spent outside the agreements you negotiated. Here is why it happens, how to measure it and how to bring it back without policing every purchase.

Source: https://www.spendcraft.com/blog/what-is-off-contract-spend/

Aditya Chavali, 2026-10-07

Procurement spends months negotiating an agreement. Better price, better terms, a preferred supplier.

Then a year later, a large share of the spend in that category is still going somewhere else.

That gap has a name.

## What is off-contract spend?

Off-contract spend is spend that happens outside the agreements an organization has negotiated. It covers purchases from suppliers with no agreement in a category that has one, purchases from an agreed supplier that do not use the agreed terms, and purchases that should have gone through an agreement but did not.

You will also hear it called spend leakage, or maverick spend when the cause is someone choosing not to follow policy.

The opposite is spend under management, or contract coverage: the share of spend that runs through negotiated agreements.

## Why it happens

In my experience, off-contract spend is rarely about bad intent. It is usually about friction and information.

**People do not know the agreement exists.** A site was acquired, a buyer is new, or the agreement was never communicated beyond the team that signed it.

**The agreed supplier is harder to use.** Longer lead times, a clunky ordering process, or a minimum order that does not fit a small site.

**Urgency.** Something is needed today, and the local supplier can deliver today.

**The agreement does not cover what people actually buy.** The catalog is too narrow, so related items go elsewhere.

**Prices drift.** Purchases go to the right supplier, but invoices no longer reflect the agreed price.

## Why it matters

Off-contract spend undoes the work of negotiating.

The savings in an agreement assume the volume will follow it. When volume leaks, the supplier sees less business than promised, the organization pays more than it negotiated, and the savings that were reported never show up in actual spend. That last point is often where finance starts asking questions.

## How to measure it

Measuring off-contract spend needs three things.

**A clear list of agreements**, with the supplier, the category and ideally the items and prices they cover. This does not need a contract management system. A well kept spreadsheet works.

**Clean, classified spend.** That means knowing which category each purchase belongs to and which supplier it really went to. Normalization and classification do that. See [What Is Spend Classification?](/blog/what-is-spend-classification/)

**A comparison.** For each category with an agreement, how much spend went to the agreed supplier on the agreed terms, and how much did not?

The result is a coverage number per category, and a list of where the leakage goes.

## How to bring it back

Policing every purchase does not work, and it makes procurement unpopular. These approaches work better.

1. **Start with the biggest gaps.** A few categories usually account for most of the leakage.
2. **Ask why before you push.** If a site buys elsewhere because the agreed supplier cannot deliver there, the fix is the agreement, not the site.
3. **Make the right choice easy.** Catalogs, preferred supplier lists and clear guidance do more than reminders.
4. **Widen the agreement where it is too narrow.** If people keep buying related items elsewhere, include them.
5. **Check invoices against agreed prices.** Some leakage is not about the supplier at all. It is about the price on the invoice.

## How SpendCraft helps

SpendCraft does not manage contracts. It reads the agreement information you already keep, in whatever spreadsheet shape you keep it, as reference.

From there, the Leakage Caddie shows spend outside agreements, so a category manager can see where it goes and work it to a decision. Contract Alignment is one of the five opportunity types a Savings Opportunity Scan surfaces, as a Min to Max range scoped to Processed Spend. The Billed Above PO Price Caddie surfaces invoice lines charged above the PO for review. Scouts can watch for prices creeping back after award, so drift is caught early instead of at year end.

## What good looks like

Coverage will never be complete. Some spend should stay flexible.

What good looks like is knowing your coverage by category, knowing why the gaps exist, and seeing the number move in the right direction after each agreement, not just on the day it is signed.