More savings possible through better collaborative
procurement
“The public sector spends £220 billion a year on goods
and services. Given the potential to make significant savings, it
is vital that there is much better coordination of procurement
activities to ensure value for money is secured across the public
sector.”
Amyas Morse, head of the National Audit Office, 21 May
2010
“With all public service costs under pressure, better
procurement provides an opportunity to make significant savings
that don’t cut into front line services. Most councils already
collaborate but, even where there is collaboration, it is not
delivering all the possible benefits”
Mr Eugene Sullivan, Chief Executive of the Audit
Commission, 21 May 2010
The National Audit Office and the Audit Commission have today
called for public bodies to work together much more effectively
than they currently do to maximise savings from procurement
activities.
The public sector procurement landscape is fragmented, with no
overall governance. There are nearly 50 professional buying
organisations, as well as individual public bodies running
commercial and procurement functions. Many of these organisations
operate framework agreements for similar goods and services.
The implications for value for money are clear. Public bodies
are incurring unnecessary administration costs by duplicating
procurement activity. In addition, the public sector is paying a
wide range of prices for the same commodities, even within the
existing collaborative arrangements. For example, there was a 116
per cent (£6.84 to £14.79) variation between the lowest and highest
prices paid for the same broad specification of paper. The
difference was 169 per cent (£65 to £175) for LCD computer
monitors.
The public sector is not maximising its significant purchasing
power. There are a large number of framework agreements and
organisations are not exploiting the potential benefits of volume
when using these agreements. There are also few constraints on
brand or specification choice.
In 2007, the Office of Government Commerce established a
Collaborative Procurement Programme which has led to some real
improvements to the way public bodies buy goods and services and is
managing over £18 billion of spend under nine categories of goods
and services. However, a step change in public sector procurement
is now required, which builds on the Office of Government
Commerce’s existing work.