Central Finance and Treasury

Assessing the value for money of OGCbuying.solutions

“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.”

Report cover image showing delivery of boxes

"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."

Sir John Bourn, head of the National Audit Office, 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.


Publication details:

ISBN: 0102944032 [Buy from TSO]

HC: 103 2006-2007

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