29 July 2005
The Office of Government Commerce's trading arm this week reported that it had made efficiency savings worth £321m on £2bn worth of procurement deals during 2004/05.
OGC Buying Solutions, which has managed purchasing for central government on behalf of the OGC since 2001, made most of the savings through bulk purchases undertaken on behalf of several departments. It is an encouraging sign for a government keen to promote a collaborative approach to efficiency.
Hugh Barrett, OGC BS chief executive, said: 'We have met all of our ministerial targets and in particular have made a significant contribution to the OGC's [broader] Public Service Agreement target of delivering value-for-money gains for the public sector.'
Barrett's savings target for 2004/05 was £300m. More than £1bn of the organisation's purchases were made using the Government Procurement Card, introduced in 1997, which acts like a credit card to manage purchases at no extra cost to departments. GPC expenditure has led to savings of more than £168m since 1997 and £70m in 2004/05, Barratt's annual report states.
Staff also managed to secure a 20% reduction in mobile phone tariffs for 500,000 government employees, saving £15m last year.
A three-year memorandum of understanding with Microsoft has realised cumulative savings worth £84m on computer licensing deals since 2002 – a large proportion coming this year. That could appease critics who felt the government was at the mercy of the software giant over pricing.
Bulk purchases of energy sources and other communications tools make up further savings.
A spokeswoman for OGC BS said that many of the savings would count towards central and local government's £40bn efficiencies' target to be achieved under the Gershon programme by 2008.
Richard Bacon, a senior member of the Public Accounts Committee, Parliament's spending watchdog, said he had not yet analysed the annual report.
But he added that the savings announced by Barrett were 'encouraging in the light of moves to make efficiencies through cumulative and co-ordinated spending across Whitehall'.
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