Press Release - Modernising Procurement
20 October 1999
Sir John Bourn, Head of the National Audit Office, today
reported to Parliament on Government procurement. Some 1,500 staff
spend some £13billion each year on civil procurement across
government. Procurement is therefore big business and getting it
right is central to the management of any organisation.
The report focuses on the scope for improved procurement and the
National Audit Office examined examples of good practice across
government and considered the role of HM Treasury in developing and
disseminating good practice. The report notes that the Treasury has
made good progress in promoting many initiatives to help
departments improve their procurement. These initiatives and the
case examples of good practice examined offer a springboard for
future innovation. The report takes on board relevant academic
research and draws in experience in the private sector and
elsewhere in the world.
Following a review published in July 1999 by Peter Gershon, the
Government announced the creation of the Office of Government
Commerce to determine procurement policy, to integrate purchasing
across government where appropriate and to act as a catalyst for
change.
The National Audit Office conclude that Peter Gershon’s
suggested target of £1 billion over three years will only be
realised if there is a sea-change in approach to strategic and
routine procurement.
- £9 billion each year is spent on the purchase of strategically
important goods and services and improvement will require a
cultural change. Procurement staff must have the authority and
management backing to influence all such purchasing decisions. The
report illustrates how both the Driving Standards Agency and
Defence Estates have adopted that approach and achieved significant
savings and quality improvements.
- Routine purchasing is time consuming and expensive. Some two to
three million such orders are placed each year for goods averaging
£100, but the processing costs can cost anything from £25 to £100.
Greater use of the Government Procurement Card could lead to annual
savings of £50 million to £75 million each year and greater use of
G-Cat, a catalogue of IT software and equipment, could yield
further savings of £20 million.
- The Government has set demanding targets for the use of
e-commerce - 90 per cent by volume of routine purchasing to be done
electronically by 2001. But if savings are to be made it is
important that procurement staff are encouraged to use the full
range of technology, otherwise they might focus efforts on
straightforward approaches such as placing orders by telephone at
the expense of those which offer the greatest return. Therefore
there need to be clearer definitions and clarity as to how the
target will be measured.
Sir John Bourn said today:
"This report is not about the faults of the past but the
opportunities for the future. Its purpose is to stimulate and
encourage good procurement practice. There are bound to be risks
associated with changing established practices but I am convinced
that these risks can be managed and minimised, fear of such risks
should not be allowed to stifle innovation".
Notes for Editors
- The Office of Government Commerce will be set up from 1 April
2000 as an Office of the Treasury funded by its own Parliamentary
Vote and responsible to the Chancellor of the Exchequer. It will
take responsibility for the Treasury Procurement Group, the Buying
Agency, Property Advisers to the Civil Estate and the Central
Computer and Telecommunications Agency. It is expected the Office’s
new chief executive will be appointed in November 1999.
- 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 58/99
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