Press Release - Purchasing Professional Services
25 April 2001
How government departments can get better value for money from
the £600 million they spend each year on professional services from
suppliers of specialist expertise advice and assistance is
highlighted today in a National Audit Office report. It concludes
that value for money improvements of at least 10 per cent (£60
million) are achievable.
Presenting the report to Parliament Sir John Bourn, the head of
the NAO, highlighted:
- £45 million in total gains that could be achieved if
departments negotiated better deals with suppliers by using
information to compare fees and understand suppliers’ costs;
and
- a further £12 million that could be saved by departments using
competitive tendering and appropriate forms of contract to get
better deals and reduce departments’ internal processing
costs.
This report focuses on consultancy or advisory services in the
areas of human resources, financial, legal and general management
consultancy which because they are in demand across departments and
because there are many suppliers have the greatest potential to
secure improvements in value for money. The report draws on a NAO
survey of 152 departments. It sets out examples of good practice in
the purchase of professional services from the public and private
sectors.
The report recommends that the Office of Government Commerce
works with departments to take advantage of their considerable
buying power to negotiate better deals with suppliers. Some
departments are starting to do this internally but there is less
evidence that it is happening between departments. The report
highlights ways in which departments get better value for money
from professional services.
- Undertaking more robust analysis of their need for
professional services to identify requirements for advice
on similar issues within and across departments, and opportunities
to pool advice to prevent unnecessary expenditure on purchasing
duplicate work, and using internal resources where available.
- Use of the most effective form of procurement.
Departments make too much use of single and informal tendering (32
per cent of contracts were awarded on the basis of single tender or
informal price tendering). Unless the cost of going out to tender
is disproportionate to the value of the contract, appointing
suppliers through competition is the best way of ensuring value for
money.
- Collect and use management information on what they spend on
professional services to determine the value for money departments
are getting from their spending, compare prices and fees paid,
evaluate suppliers performance, assess the amount of business
suppliers are receiving from departments collectively (twenty-five
suppliers accounted for 37 per cent of all departments expenditure
on professional services) and report to the Office of Government
Commerce on value for money gains.
- Develop a more effective working relationship with key
suppliers to allow both departments and suppliers to get maximum
value from the assignment by identifying opportunities to reduce
costs and adopt innovative approaches.
- Sharpen their approach to negotiations to ensure they get a
good deal from suppliers. Departments should act as intelligent
customers by discussing with suppliers all the elements of the
contract price including level of service, timescale of the
assignment, skill mix of supplier’s team and how costs such as
travel and subsistence are to be remunerated.
The report suggests some key questions which departments might
ask themselves to assess whether they are promoting value for money
in their expenditure on professional services.
Sir John Bourn said today:
"A significant amount of taxpayers’ money is spent on
these services each year. We have found excellent examples of
innovative practice but much more could be done to improve
government purchasing. Implementing the changes we propose would
free up at least £60 million a year for spending on public
services".
Notes for Editors
Professional services cover a vast range of activities and
specialist disciplines including the design, development and
implementation of information systems, advertising for recruitment
of staff, the delivery of contracted out services such as payroll
administration, the provision of expert advice for instance on
legal issues, research and development, and staff substitution.
Departments acquire professional services in two ways: either
from within government (staff they directly employ or from another
department), and externally from the private sector. Departments
seeking advice on professional services can consult the Office of
Government Commerce (OGC).
Press notices and reports are available from the date of
publication on the NAO website at http://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 employing some 750 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 29/01
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Tel: + 44 (0) 20 7798 7400