Press Release - Assessing the value for money of
OGCbuying.solutions
14 December 2006
OGCbuying.solutions, an executive agency of the Office of
Government Commerce providing procurement services to the public
sector, achieved value for money savings of £412 million in
2005-06, up 71 per cent from 2003-04. But, according to a report
published today by the National Audit Office, OGCbuying.solutions
has the potential to increase its value for money savings still
further. It is well-placed to take a greater lead in the public
sector getting better value for money from procurement; but this
will require a step change in its performance.
The report shows that OGCbuying.solutions has provided its
customers with good value for money. The majority of prices paid by
its customers are lower than average public sector market prices;
OGCbuying.solutions has increased its customer spend by 150 per
cent over the past four years; and using OGCbuying.solutions saves
public sector organisations significant operational costs by
avoiding the need to let and manage individual procurement
contracts.
However, there is significant potential to increase value for
money savings. Given its potential to exert significant buying
power, OGCbuying.solutions should aim for its prices to be in the
lowest 25 per cent of public sector prices. This could be achieved
by securing greater volume commitment from customers when letting
new framework agreements; reviewing its prices more regularly with
suppliers; using eAuctions where applicable; and minimising the
cost to suppliers of dealing with OGCbuying.solutions.
There is also scope to increase customer take-up: by consulting
more with customers to ensure that products and services meet their
requirements (63 per cent of central civil government and 73 per
cent of wider public sector customers did not consider that
OGCbuying.solutions consulted them enough); by further improving
its website; and by providing clearer information to non-customers.
In addition, it could improve the performance of its suppliers by
consulting more with customers on the performance of suppliers and
by developing its supplier performance monitoring.
Currently, central government spending through
OGCbuying.solutions represents only five per cent of central
government procurement spending. For the wider public sector,
spending through OGCbuying.solutions is under one per cent of total
procurement spending. The report highlights the need for greater
co-ordination between the public sector bodies carrying out
procurement to avoid duplication of effort and to signpost where to
find the best deals. This, combined with a remodelled
OGCbuying.solutions, has the potential to increase value for money
savings by an additional £520 million to £660 million a year.
Sir John Bourn, head of the National Audit Office, said
today:
"Public sector organisations are being challenged now to
gain greater value for money from their procurement activities.
OGCbuying.solutions has made good progress in enabling public
sector organisations to achieve good value for money in the
procurement of goods and services. But it could do much more by
improving its performance. This would be helped by greater
co-ordination of the many public sector bodies carrying out
procurement activities."
Notes for Editors
- OGCbuying.solutions is an executive agency of the Office of
Government Commerce and a Trading Fund. Its primary role is to
maximise the value for money obtained by government departments,
and other public bodies, through the procurement and supply of
goods and services.
- A framework agreement is a pre-tendered contract with one or
more suppliers from which public sector organisations can purchase
goods and services. The agreement sets the terms and conditions
under which it is to be used, and prices are usually
negotiable.
- An eAuction is a dynamic online negotiation process between
pre-selected suppliers for a specific piece of business. Suppliers
compete online and in real-time using the internet to communicate
offers.
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office which employs some 850 staff. He
and the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 69/06
All enquiries to Donna Watson, NAO Press Office:
Tel: 020 7798 7038
Mobile: 07917 555 388