Black hole in Green review, by Alan Downey

13 Oct 10
Sir Philip Green has highlighted numerous examples of waste resulting from poor procurement practice across government. The big question that he does not address is how to put this right

Sir Philip Green has highlighted numerous examples of waste resulting from poor procurement practice within government. The big problem he identifies is that departments act as a series of independent purchasers, with little or no co-ordination. As a result, the government fails to leverage its buying power, and there are significant price variations across departments for common items, including fixed and mobile telecoms, printing, travel and hotel booking, office supplies, laptops, IT services and vehicle hire.

The situation is much the same as far as property is concerned: individual departments are free to make their own property decisions, which leads to a lack of co-ordination and to waste and inefficiency.

None of this will come as a shock to anyone who is familiar with the way procurement is organised and property is managed in Whitehall. And no-one could argue with Green's conclusion that there is a huge opportunity to save the taxpayer billions of pounds. The big question that he does not address is precisely how to put this right.

Those of us who have been around government for long enough will remember the Property Services Agency and PSA Supplies. The former was the 'owner' of the whole government estate, responsible for building and maintaining premises and for negotiating rents on behalf of the whole of central government, including the armed forces. The latter was responsible for the procurement of all the everyday items consumed by civil servants.

The problem with both the PSA and PSA Supplies was that they were universally loathed by their customers – the individual departments and agencies that used their services. In the end, they were so unpopular and regarded as so incompetent, that their customers ganged up and secured their abolition. That was some 20 years ago. From then on government departments and agencies were free to do their own thing - and that led to the wasteful free-for-all that Green now condemns.

The answer has to be a return to more centralised, co-ordinated approach. The challenge will be to achieve this without returning to the bureaucracy and unpopularity associated with the PSA. The civil service has demonstrated its ability to swing from one unsatisfactory extreme to another. Can it now find a happy medium that allows it to exercise its procurement muscle in a co-ordinated way without recreating an unwieldy and unresponsive bureaucratic monster?

Alan Downey is KPMG’s head of public sector

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