Press Release - Modernising procurement in the Prison
Service
4 April 2003
Sir John Bourn, the head of the National Audit Office, reported
to Parliament today that the Prison Service has made good progress
in improving its procurement of goods and services but that scope
exists for further financial savings to be made. Performance
in monitoring and controlling the consumption of goods and use of
services and in optimising stockholdings varies widely from prison
to prison.
The Prison Service spent £461 million on essential supplies in
2001-02, including prisoners’ food, clothing, and drug and
educational programmes. Today’s report found that the Prison
Service has reported savings of £5.76 million in 2001-02 and a
further £6 million saving is expected in 2002-03. Procurement
practice has been improved through the centralisation of a number
of purchasing functions and through developing the skills and
training of procurement staff to negotiate and manage contracts
better. The Prison Service has successfully reduced stock
holdings from £62.7 million in March 2000 to £47.6 million in March
2002.
According to the NAO, however, many prisons have yet to make the
necessary changes to their procedures to realise the full financial
savings available. Recognising that the Prison Service needs
to maintain sufficient stock to meet demands that may arise from a
fluctuating prison population, the NAO estimated that reducing
overall stock levels to around a maximum of three months’ supplies,
for example, would achieve a further stock reduction of £12
million.
The costs of procurement also differ significantly between
similar prisons. Staff costs, for example, range from £56,000
to £329,700. The Prison Service estimates that there are some
2,600 staff involved in prisons’ procurement activities, equivalent
to over 1,100 full time staff. Apart from the governor, there
is often no single person with the authority and responsibility to
oversee the various procurement activities in a prison. Some
prisons have reduced costs by negotiating contracts involving
groups of local prisons rather than individually but this remains
the exception rather than the rule.
Procurement within the Prison Service also lacks as yet, common,
service-wide information technology support for purchase order
processing and stock control. The Prison Service sought to
introduce an integrated purchase order processing system in 2001 to
enable electronic processing of orders, better management
information and better stocks management. The project has been
postponed pending the introduction of suitable information
technology infrastructure. Communication between the central
procurement team and prisons is likely to be improved by the
introduction of a service wide intranet.
To improve performance, the report concludes that the Prison
Service needs to establish clear responsibilities within prisons
for procurement, further reduce stock holdings by setting
benchmarks across prisons, encourage establishments to make greater
use of central contracts, improve local purchasing power by linking
with other prisons in the vicinity, and reduce the administrative
cost of procurement.
Sir John Bourn said today:
"The Prison Service has done well to improve its
purchasing of goods and services in recent years. But further
financial savings can be achieved by streamlining procurement
activities, reducing stock levels and maximising the benefits of
the Service’s purchasing power through central contracts and
locally negotiated contracts covering several prisons. The
weaker performing prisons need to learn from the success of the
best."
Notes for Editors
- The Prison Service spent £952 million in 2001-02 purchasing a
range of goods and services. Whilst £491 million was spent by
Prison Service headquarters on central projects and services, such
as construction and information technology projects, the remaining
£461 million was spent by prisons on supplies essential to daily
running. Certain items required by the Prison Service are
time-critical, and delays in delivery could put the security of a
prison at risk.
- The Prison Service has sought to reduce the cost of goods and
services bought in recent years. The Service reported procurement
savings of £6.3 million in 2000-01 and a further £5.76 million in
2001-02. A further £6 million saving is expected in 2002-03.
- The Central Procurement Unit within the Prison Service
negotiates and manages 420 central contracts. Most of these
contracts provide bespoke services (such as prisoner education) to
prisons and 74 contracts provide a catalogue of goods and services
that can be ordered by prisons without the need to let local
contracts themselves.
- Press notices and reports are available from the date of
publication on the NAO website 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 800
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 29/03
All enquiries to Barry Lester
NAO Press Office:
Tel: 020 7798 7937