Press Release - Procurement in the Culture, Media and Sport Sector

 

30 November 2005

 

• Full report - Procurement in the Culture, Media and Sport Sector

The Department for Culture, Media and Sport and the organisations it sponsors spend some £575 million a year buying goods and services. Today’s report to Parliament by the head of the National Audit Office Sir John Bourn concludes that procurement capabilities and practices amongst the organisations are, on the whole, underdeveloped and that better procurement practice could result in overall annual savings of £14 million by 2008-09 and double this within five years.

 

The Department for Culture, Media and Sport sponsors a wide range of organisations including national museums and galleries and distributors of lottery funding, and the National Audit Office report covers the 25 largest of these organisations. The NAO found that the organisations are not using their buying power effectively: 60 per cent of organisations’ procurement spend is on generic goods and services, such as facilities management and ICT, but only 4 per cent of their spending is done collaboratively. The NAO identified considerable scope for organisations to work together better to share knowledge and resources and to harness their buying power. In addition, there was a lack of co-ordination of procurement activity within many organisations which presents significant risks to value for money.

 

The cost of processing procurement transactions is significant. In 2004-05, the 25 organisations processed 350,000 purchase orders, an average of 14,000 orders each at an average cost of £44 per order. The NAO found that more investment in computerised systems and greater use of payment cards by the sector could reduce the administrative cost of processing purchase orders and paying invoices by up to £5 million a year.

The NAO also proposes action to encourage a more strategic approach to procurement within organisations, supported by improved information systems and better trained staff. To help the organisations meet the challenging target the report sets, the Department for Culture, Media and Sport is committed to working with the organisations to implement the report’s recommendations.
 

Sir John Bourn said:

 

"Procurement is an area where the Culture, Media and Sport sector can achieve significant savings and improvements. Whilst the sector has made some progress in improving its procurement capabilities and practices, a great deal more can be done. A greater level of commitment from organisations to adopting good practice, as well as addressing specific issues such as greater collaboration between organisations when buying common goods and services, will result in greater value for money."

 

Notes for Editors

1. The Department for Culture, Media and Sport sponsors one Executive Agency and 45 executive non-departmental public bodies. In 2004-05 the combined annual procurement spend of the sector was some £575 million. This report covers the 25 largest organisations – those spending over £3 million each year on procurement – which are:

   • Arts Council England
   • Big Lottery Fund
   • British Library
   • British Museum
   • Department for Culture, Media and Sport
   • English Heritage
   • National Heritage Memorial Fund
   • Historic Royal Palaces
   • Imperial War Museum
   • Museums, Libraries and Archives Council
   • Museum of London
   • National Endowment for Science, Technology and the Arts (NESTA)
   • National Gallery
   • National Maritime Museum
   • National Museums Liverpool
   • National Museum of Science and Industry
   • National Portrait Gallery
   • Natural History Museum
   • Royal Armouries
   • Royal Parks Agency
   • Sport England
   • Tate
   • UK Film Council
   • Victoria & Albert Museum>
   • VisitBritain

2. In the NAO report, the term "procurement" refers to the whole life-cycle process of acquiring goods, services and works from third parties.
3. The NAO examination was based on a comprehensive survey of the 25 organisations, focus groups of procurement staff and a web survey of internal customers working for these organisations, a detailed review of procurement processes and costs at four organisations, and a telephone survey of businesses supplying the sector.
4. 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.
5. The Comptroller and Auditor General, Sir John Bourn, is head of the National Audit Office, employing 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 63/05
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